PKF WULF GROUP

The legislation left many questions about invoicing and input tax deduction unanswered and so, on 16.12.2022 already, the fiscal administration published a list of FAQs and, on 26.1.2023, a Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) draft circular was published.

A great number of businesses – even smaller ones, such as, pharmacies or bakeries – use bonus point systems or loyalty card schemes to strengthen customer loyalty and to create incentives for future purchases. A recent Federal Fiscal Court (Bundesfinanzhof, BFH) ruling, of 29.9.2022, departed from the previous prevailing opinion relating to recognition in the financial and tax accounts in this regard and, in many cases, this will now lead to a recognition requirement.

Processes in personnel and legal departments can be digitalised and speeded up by using legal tech. In the following section we outline legal tech applications and the benefits associated with them.

If business functions are relocated from Germany to affiliated foreign companies or permanent establishments then the German fiscal authorities will tax not only the hidden reserves that exist in the individual transferred assets, but generally also the potential overall gain associated with the transferred function. Following the reform of the transfer of functions rules in the Foreign Transactions Tax Act (Außensteuergesetz, AStG) – which took effect from the 2022 calendar year and, in some cases, involved significant tightening – now, the ordinance on the transfer of functions (Funktionsverlagerungsverordnung, FVerlV) has also been updated. The amended version of the FVerlV was published in the German Federal Law Gazette on 25.10.2022 and has, thus, likewise come into effect for 2022.

PKF’s Worldwide Tax Update considers notable tax changes and amendments around the world