Germany: Binding rulings applying to several taxpayers | KPMG | GLOBAL

Germany: Binding rulings applying to several taxpayers

Germany: Binding rulings applying to several taxpayers

The Federal Ministry of Finance (BMF) in late March 2017, published a draft bill that would amend the regulation governing the issuance of binding rulings. The proposal would aim to clarify the rules when a binding ruling affects several taxpayers—for example, a tax group or in instances of a uniform assessment of the profit regarding the partners of a partnership.

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Under current regulations, taxpayers can seek a binding ruling from the competent tax authorities for as yet unrealized matters. The tax authorities are bound by the ruling when a legal assessment of the actually realized matter is required. Binding rulings are subject to a user fee. 

The BMF was authorized to issue rules concerning when an identical binding ruling may be issued uniformly to several parties. The BMF has now used its authorization by publishing the ministerial draft bill. According to the draft bill, binding rulings are to be requested jointly by all requesting taxpayers and issued in an identical manner for all taxpayers involved when:

  • The binding ruling concerns a matter attributable for tax purposes to several parties (e.g., uniform assessment of the profits of a partnership, effective for all partners).
  • The binding ruling concerns a tax group for corporate income tax, value added tax (VAT), or real estate transfer tax purposes.

The ministerial draft bill only requires approval by the Bundesrat to be effective.

 

Read a May 2017 report [PDF 322 KB] prepared by the KPMG member firm in Germany


Other topics discussed in this KPMG report concern:

  • A decision of the federal tax court (BFH) holding that income from the waiver of repayment of a loan taken out to purchase real property is not to be counted among the “commercially fictitious income” from the rental and lease or sale of the domestic immovable property of a corporate entity subject to non-resident taxation.
  • A decision of the BFH finding the “banking privilege” exemption from the trade tax may also be applied to group finance companies even if they are not subject to official banking supervision. 
  • A decision of the lower tax court of Schleswig-Holstein concluding that when a company changes its legal form from a corporation to a partnership, off-balance sheet adjustments are not to be considered for the taxation of the deemed distribution of retained earnings. 
  • The BMF issued guidance on how to apply § 1 foreign transactions tax law (AStG) to distinguish between the mere use of name within a corporate group and a permission to use or enjoy trademark rights and other intangible assets directly connected with the use of the name.

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