Particularly, the focus of the event was on § 20 Abs. 4a EStG, a German tax provision that was introduced over ten years ago in the context of the introduction of the final withholding tax on dividend payments to private investors. This law aims to alleviate the burden of tax determination and collection for banks in certain situations where no final loss of domestic tax revenue is imminent. Although the relief is particularly necessary for foreign transactions, there are similar types of transactions under domestic law which can benefit from tax deferral treatment if certain requirements are met. Taxpayers, financial institutions, and tax authorities are therefore faced with the challenge of comparing foreign capital market transactions with certain privileged transactions under domestic law. Since 2021, the Federal Tax Court has issued several initial decisions, with outcomes which indicate a rationale for extending certain German deferral concepts to transactions undertaken under foreign law. However, the most recent decision raises a significant degree of uncertainty on the limits of deferral treatment.
During the event, Mr. Letzgus presented these recent jurisprudence and showcased how they apply to different factual scenarios. He highlighted the opportunities and challenges presented by the law and discussed areas where uncertainty and risks remain and how the cases might be reconciled. The expert briefing provided valuable insights for companies and investors to navigate the legal complexities of international capital market transactions.
Members of AmCham Germany had the chance to get a better understanding of the current state of the law and its practical implications. We look forward to continuing this conversation and providing valuable insights to our members in the future. If you want to learn more about our Expert Briefing & Webinar formats, please contact membership@amcham.de.
