Germany: Profit participation certificates; binding ruling fees; expense allocation

Germany: Profit participation certificates

The KPMG member firm in Germany prepared a report that discusses the following tax-related developments:

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  • The regional tax office of North Rhine-Westphalia issued an administrative guideline concerning the treatment of profit participation certificates for corporate income tax purposes—whether equity or debt—and concluding that if profit participation certificates are qualified as equity under commercial law, they also have to be qualified as equity in the tax balance sheet, and any distribution is consideration to be an appropriation of income.
  • The federal tax court (BFH) concluding that when binding ruling requests regarding the same matter are filed by both the controlling company and the controlled company, these requests will trigger fees for both requesting parties—and not just a single fee for processing the request(s).
  • The federal tax court (BFH) issued a decision noting that giving a requirement that a mutual insurance company must create actuarial reserves, this is attributable to the domestic insurance business, and thus, the related business expenses and declines in value of business assets are not attributable to the foreign income of a domestic business.
  • A decision of the tax court of Lower Saxony concerning whether a profit and loss absorption agreement would be recognized for tax purposes has been appealed to the federal tax court.

 

Read an August 2016 report [PDF 350 KB] prepared by the KPMG member firm in Germany: German Tax Monthly

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