Germany Federal Fiscal Court Clarifies Tax-Neutral Deposit Guarantees From Non-EU Member Countries

The German Federal Fiscal Court (BFH) Sept. 12 posted online a decision clarifying that equity from a non-EU member company may qualify as tax-neutral deposit guarantees instead of non-deductible business expenses. The taxpayer, a resident corporation fully owned by a U.S. based company, received services from the U.S. parent company. The tax office deducted the payments from the domestic company’s tax base and determined that they were non-deductible business expenses because non-EU member countries cannot provide tax-neutral deposit guarantees. The court disagreed and held that: 1) the determination of deposit refunds should be based off the commercial and corporate laws ...