VAT treatment of supervisory board members – the tax authorities are making improvements
The entrepreneurial status of supervisory board members is one of the hot topics in VAT, as reflected in the frequency of the letters published by the Federal Ministry of Finance (Bundesministerium der Finanzen – BMF). Just half a year after the BMF letter of 8 July 2021, the tax authorities have once again issued a […]
Personal liability of the representative of a UG acting in legal relations
According to a recent ruling by the Federal Court of Justice (Bundesgerichtshof – BGH) (ruling dated 13 January 2022, case no. III ZR 210/20), a representative acting in legal relations on behalf of an entrepreneurial company (Unternehmergesellschaft – UG) is personally liable on the basis of a prima facie case (Rechtsscheingesichtspunkten) pursuant to § 179 […]
ARBITRABILITY IV: ANOTHER CHAPTER ON THE ARBITRABILITY OF DISPUTES REGARDING PARTNERS‘ RESOLUTIONS IN PARTNERSHIPS
If a dispute arises between shareholders/partners about shareholders‘/partners‘ resolutions, there is often an interest in a quiet resolution outside the ordinary court proceedings. However, it is important for arbitration agreements between shareholders/partners to meet the legal requirements. These have been developed by the Federal Court of Justice in its decisions Arbitrability II and III. With […]
No limitation of the formation expenses to 10% of the share capital in the case of other free assets of a GmbH
In its decision of 26 October 2021, the Berlin Appellate Court ruled that the assumption of the formation expenses by a company is not limited in each case to an amount equivalent to 10% of the share capital. A takeover with a higher percentage is possible in particular if the company has free capital available […]
Special tax features and pitfalls in the taxation of management bonuses of controlling shareholder-managing directors of a GmbH
In addition to the arm’s length principle, the decisive factor for the recognition for tax purposes of legal relationships between a shareholder and “his” GmbH (German limited liability company) is the respective shareholder’s ability to exert influence. In a ruling dated 12 July 2021, Case No. VI R 3/19, the German Federal Fiscal Court (Bundesfinanzhof […]
Update on employee co-determination rights within supervisory boards
If the number of employees employed by a company exceeds a certain threshold, the law provides for the establishment of a supervisory board co-determined by employees. In accordance with established case law, the number of employees is determined by taking into account past and future developments on the basis of reference periods of several months. […]
Corporate transactions and the GDPR: data protection obstacles in due diligence and asset deals
The GDPR is not only omnipresent on the Internet, where it says “We use cookies” e.g. on websites of bakeries, but it also has an impact on (almost) every area of law, including the transaction business. In order to illustrate this, two aspects will be examined in more detail below, firstly the data protection law […]
Incongruent profit distributions
Incongruent profit distributions and their tax recognition are a perennial topic in case law and consulting practice. While the tax authorities tend to classify deviating resolutions on the distribution of profits as an abuse of the tax system (§ 42 German Fiscal Code (Abgabenordnung – AO)), acceptance is much greater in the case law of […]
Modernization of the law on partnerships: evolution from practical experience – but still a need for action
The modernization of partnership law has been completed. The provisions of the Act on the Modernization of Partnership Law (Gesetz zur Modernisierung des Personengesellschaftsrechts – MoPeG) will come into force on 1 January 2024. It is true that the main purpose of the new provisions is to eliminate the current discrepancy between the regulatory concept […]
Changes in the law on sales and new rules for contracts for digital products
In order to cope with the ongoing digitization and networking of the economy and society, the European Union wants to create the legal framework for a common digital single market. The Sale of Goods Directive and the Digital Content Directive are intended to contribute to this. Both directives were implemented in German law with effect […]