Thursday January 31, 12:12 PM
EU takes legal action vs Germany on tax rates for non-residents, property VAT
BRUSSELS (Thomson Financial) - The European Commission said it has sent Germany a supplementary reasoned opinion, the second stage of infringement proceedings, on its discriminatory rules for non-resident taxpayers such as artists, sportsmen
and journalists.
Since April 2007, there has been a restricted possibility to deduct business expenses from the gross income and increase the withholding tax rate to 40 pct from 25 pct in case business expenses were allowed for deduction.
The commission says this is incompatible with the principle of freedom to provide services in the Internal Market.
If there is no satisfactory reaction to the reasoned opinion within two months, the Commission may decide to refer the matter to the European Court of Justice.
Separately, the commission sent another reasoned opinion to Germany to change its law regarding the VAT taxation of withdrawals for private use of immovable property from business assets.
The withdrawal of land or buildings from business assets is subject to VAT pursuant to German administrative instructions while the commission says that they should be VAT exempt.
Again, Germany has two months to respond or potentially face court action.
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