Private Equity Magazin

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News on the taxation of a holiday home held through a corporation

In many cases, holiday homes and other self-used properties are not held directly, but through a corporation. This is particularly the case in Spain, which is very popular with Germans, but also in many other regions of the world, such as the United Arab Emirates (Dubai) or South Africa. However, in a much-publicized decision in 2013, the German Federal Fiscal Court (Bundesfinanzhof, BFH) ruled that the private use of the property by the shareholders, either free of charge or at a reduced rate, constitutes a so-called hidden profit distribution, which leads to taxable income from capital gains for the shareholders in Germany. In a new decision dated October 1, 2024, the BFH once again confirmed its legal opinion and specified when a hidden profit distribution can be assumed and how it should be calculated....
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Carried interest from US funds – No ‘commercial profit’ within the meaning of Art. 7 DTT-USA

The Schleswig-Holstein tax court has ruled that carried interest of US asset management funds does not constitute ‘commercial profits’ within the meaning of Art. 7 DTT-USA. Carried interest can therefore only be taxed in Germany if it is paid to a person resident in Germany. This affects all those carry beneficiaries who are also taxed abroad on their carried interest and is particularly relevant in light of the possible change in the taxation of carried interest in the United Kingdom....
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Potential Double Taxation of Distributions from a Foreign Trust

In individual cases, distributions from a taxopaque foreign family trust to a German tax resident beneficiary may be subject to both gift tax and income tax. This was recently decided by the Munich Fiscal Court, basically confirming the guidelines laid down by the Federal Fiscal Court. ...