Germany Fiscal Court Clarifies Taxation of Interest on Trade Tax Refunds

The German Federal Fiscal Court Feb. 5 posted online Decision No. IV R 16/23, clarifying the taxation of interest on trade tax refunds. The taxpayer, a partnership engaged in business consulting and insolvency administration, sought to exclude refund interest from taxable income for the years 2013-2015, arguing that Section 4(5b) of the Income Tax Act assigns trade tax and related charges to the non-taxable sphere. The Tax Office denied the exclusion and treated the refund interest as taxable business income. On appeal, the Federal Fiscal Court upheld the Tax Office’s assessment, finding that: 1) refund interest under Section 233a of ...