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Federal Fiscal Court judgement: scope of exemptions from the EU Parent-Subsidiary Directive

BFH-Insights

The European Union Parent-Subsidiary-Directive aims to eliminate economic double taxation within a corporate group in the case of cross-border distributions of profit. To do this it avoids burdens from withholding tax on distributions within the EU, among other things. In its implementation in Germany, in section 43b of the Income Tax Act [Einkommensteuergesetz–EStG], full exemption from withholding taxes is tied to a twelve-month holding period and a minimum shareholding of 10%. Alongside this is an exception under section 43b(1) sentence 4 for investment income as defined by section 20(1) no. 1 received in connection with the liquidation or reorganisation of a subsidiary. The Federal Fiscal Court has now ruled on this particularity (file ref. VIII R 8/24).

Dr Martin Weiss
| 6 min read | 28 May 2026

New administrative practice and higher permanent establishment risk for machinery and plant engineering firms in 2026

International tax law | Permanent establishments | Machinery and plant engineering

Building sites and construction and installation projects abroad are a key part of business for international machinery and plant engineering firms. So is the risk of unintentionally establishing a tax-relevant permanent establishment. For the first time since 1999, the new draft Federal Ministry of Finance Circular of 13 February 2026 has updated administrative practice on the concept of permanent establishments, again placing a particular focus on permanent establishments relating to building sites and construction and installation projects. Alongside the familiar duration thresholds and issues of attribution, the draft also shows that permanent establishment risks do not only arise from standard construction and installation activities. Accompanying planning, monitoring, and subsequent services, maintenance or repairs abroad, such as the long-term use of even very small spaces at the customer’s premises (e.g. a locker), may also establish a “general” permanent establishment under Art. 5(1) of the OECD Model Tax Convention. This article presents the main changes and evaluates their significance, particularly to machinery and plant engineering firms. For simplicity, in the following we will often refer simply to construction and installation projects, though building sites are also covered.

Philipp Woltering
Matthew Harrison
| 11 min read | 28 May 2026

Federal Fiscal Court ruling: deduction of losses from other income under section 22 of the Income Tax Act

BFH-Insights

The ninth chamber of the Federal Fiscal Court has issued a ruling on the conditions for off-setting losses against other income. In accordance with long-established case law, the pro-visions in section 22 no. 3 sentences 3 and 4 of the Income Tax Act and section 23(3) sen-tences 7 and 8 of the Income Tax Act are constitutional. In typical cases, a waiver on grounds of equity is not an option.

Dr Martin Weiss
| 5 min read | 26 May 2026

Federal Fiscal Court ruling: when does trade tax liability for notional business activities arise?

BFH-Insights

Trade tax liability under section 2(1) of the Trade Tax Act [Gewerbesteuergesetz–GewStG] is substantively linked to business activity under section 15(2) of the Income Tax Act [Einkommensteuergesetz–EStG]. However, there are differences in the timing between income tax and trade tax. Trade tax liability under section 2(1) of the Trade Tax Act only arises once all the conditions that constitute business activity have been met and the business activity has been started. Income tax, on the other hand, covers all business activities starting from the first preparatory step to open a business. With regard to notional business activities (section 15(3) of the Income Tax Act), which also give rise to a trade tax liability, the Federal Fiscal Court [Bundesfinanzhof–BFH] has again now ruled on this issue (file ref. IV R 5/24).

Dr Martin Weiss
| 8 min read | 18 May 2026

The Legal Digital Health Check – setting up legally complaint digital processes and avoiding liability risks

Health Check Part 7

Digital business models and IT-enabled processes play a key role today in being successful in business. And the regulatory requirements are constantly increasing at the same time – particularly in data protection law, cyber security and in the use of artificial intelligence (AI).

Katharina Lehner
Wiebke Werner
| 5 min read | 18 May 2026
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Press releases

Grant Thornton increases annual revenue to EUR 264 million in financial year 2024/25

11 Mar 2026

The audit and advisory firm Grant Thornton in Germany ended the 2024/25 financial year on September 30, 2025, with consolidated revenue of EUR 264 million (up 6 percent on the previous year). The Audit & Assurance division recorded particularly strong growth with an increase of 14 per cent compared to the previous year.

Grant Thornton Germany wins Martin Biegel for the new position of CFO/COO

09 Feb 2026

Martin Biegel joined the Senior Leadership Team of the audit and advisory firm Grant Thornton Germany in February as the new Chief Financial Officer/Chief Operating Officer (CFO/COO) and in this role will actively help drive the firm’s strategic development.

Grant Thornton Germany and Cinven enter into strategic partnership

13 Oct 2025

The Equity Partners of Grant Thornton AG Wirtschaftsprüfungsgesellschaft (“Grant Thornton Germany”) have approved the strategic partnership with international private equity firm Cinven. This marks a key milestone for the transaction initially announced on 10 September 2025, which is expected to close in the first quarter of 2026. The partnership further strengthens Grant Thornton Germany’s position as a leading, trusted service provider in the German audit and advisory market, ushering in its next phase of growth.

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