German Domestic Anti-Abuse Rules Regarding The Taxation Of Partnerships Possibly Unconstitutional

Author:Dr. Martin Bünning and Andreas Köster-Böckenförde
Profession:Jones Day
 
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In recent years, the German legislature introduced a number of special anti-abuse provisions that seek to deny certain tax benefits of a tax treaty or an EU tax directive in cases of perceived and actual abuse. The German domestic anti-treaty shopping provisions that deny such benefits dependent on whether the taxpayer meets certain specific substance requirements are a prominent example.

The German Federal Tax Court (Bundesfinanzhof), the highest tax court, took the view that these provisions constitute unconstitutional treaty override and has referred a specific case to Germany's Constitutional Court (Bundesverfassungsgericht) and has requested that a specific anti-abuse provision applicable to the taxation of...

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