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Tax & Legal | 6-2022

24 October 2022

Roland Speidel, Certified Tax Advisor, Lawyer, Senior Manager, Department Tax & Legal |

Dear Sir or Madam,

In our new issue of Tax & Legal, as usual, we present interesting case law of the BFH. Of particular importance for internationally operating companies is a recent ECJ ruling on the consideration of final losses of an exempt permanent establishment.

In collaboration with our cooperation company BDO Legal Rechtsanwaltsgesellschaft mbH, we also explain the BAG's fundamental ruling on the recording of working hours of September 13, 2022. Furthermore, we provide GmbH managing directors with practical advice on the implementation of compliance structures and on social insurance law.

Your BDO

 

For all Taxpayers

Overview of the Platforms Tax Transparency Act and the modifications to the German Fiscal Code

On August 24, 2022, the German Federal Cabinet approved the government draft of a law implementing Council Directive (EU) 2021/514 of March 22, 2021, amending Directive 2011/16/EU on administrative cooperation in the field of taxation (EU Mutual Assistance Directive) and to modernising tax procedural law.

Unannounced flat inspection by the tax office

An unannounced inspection of a flat by an official of the tax investigation department for the purpose of verifying information on a home office is unlawful if the taxpayer cooperates in clarifying the facts, according to the BFH in its ruling of July 12, 2022 (Case No. VIII R 8/19).

Effectiveness of Tax Assessment Notices in Insolvency Proceedings

Pursuant to the BFH ruling of April 5, 2022 (Case No. IX R 27/18), tax assessment notices that include a refund amount in the settlement section can also be validly issued during insolvency proceedings.

No tax reduction for craftsman services if the shareholder settlement account is debited

The tax reduction for craftsman services is not granted if the invoice is paid by set-off through the shareholder settlement account of the service recipient, as stated by the BFH in its decision of June 9, 2022 (Case No VI R 23/20).

 

FOR CORPORATIONS, THEIR SHAREHOLDERS AND MANAGING DIRECTORS AND BOARD MEMBERS

Managing director is required to set up a compliance structure!

In its ruling of March 30, 2022 (Case No. 12 U 1520/19) the Higher Regional Court of Nuremberg deals with the comprehensive obligations of diligence, monitoring and organisation of a managing director. Pursuant to this ruling, organisational precautions must be taken to prevent employees from committing legal violations.

Social insurance: Changes in the obligation to pay contributions by employed GmbH shareholders

Since April 1, 2022, the status determination of employees who are majority shareholders but not managing directors must be based on the individual supervision of the employees of the GmbH as provided for in the articles of association. There may be a need for action.

 

FOR EMPLOYEES

Landmark ruling on the time recording of employees: The German Federal Labor Court preempts the German legislature on the time recording of employees’ working hours.

With its decision of September 13, 2022 (Case No. 1 ABR 22/21), the BAG has set a sensational precedent. As a result, the obligation imposed by the ECJ on all employers to systematically record the working hours of their employees already applies.

 

FOR REAL ESTATE OWNERS

Trade tax liability of a rental company when a service company is involved

Pursuant to the BFH ruling of February 23, 2022 (Case No. III R 35/20), the mere delegation of tasks to a service provider without simultaneous on-site operational activities of its own does not make the supplier’s domestic permanent establishment into the principal's permanent establishment.

 

FOR INTERNATIONAL COMPANIES

On the consideration of final losses of an exempt permanent establishment

Final losses of a foreign exempt permanent establishment are not deductible in Germany even considering the aspect of the freedom of establishment guaranteed under EU law, pursuant to the ECJ in its ruling of September 22, 2022 (Case C-538/20).

German withholding Tax Software Development Services

In the letter dated August 2, 2022, the German Federal Ministry of Finance (BMF) commented on the tax treatment of remuneration in connection with software development services.