Germany MOF Releases Court Decision Explaining Tax Consequences of Foreign Spin-Off for Domestic Private Investors

The German Ministry of Finance Oct. 14 released Tax Court Decisions Nos. VIII R 9/19 and VIII R 15/20, explaining the tax consequences of foreign spin-offs for domestic private investors. Multiple U.S. corporations distributed shares to taxpayer shareholders upon corporate spin-offs. The taxpayers receiving theses shares believed they should be treated in a tax-neutral manner, while the tax office asserted that the shares should be treated as investment income. The court explained that even though the taxpayers were subject to unlimited tax liability and lived in Germany, because the shares were allocated as part of a spin-off, the process didn’t ...