We are glad to let you know that the 14th edition of the Newsletter of our network LEXUNION is now available.
It’s a free quarterly newsletter that deals with legal and tax developments in member countries of the Lexunion network, with the purpose to help french compagnies and persons clients of our network.
In matters relating to certificates of succession, national jurisdiction is now determined solely by EU Succession Regulation no. 650/2012. Such was the ruling of the Court of Justice of the European Union (ECJ) in its order of 21.06.2018 (C-20/17 – Oberle). In this case, the deceased, a French national, had been the owner of property located in Germany and France. Upon his death, his son asked a court of first instance in Berlin to draw up a certificate of succession for the property in Germany. The court declared its lack of jurisdiction based on Articles 4 and 15 of the aforesaid Regulation. Following an appeal, the court of appeal sought a preliminary ruling from the ECJ to determine whether the jurisdiction provided for by the Regulation also applied to national succession certificates. The ECJ answered in the affirmative: international jurisdiction on succession, including certificates of succession, is governed uniformly by EU Regulation no. 650/2012. The latter stipulates that the jurisdiction of the country of last habitual residence is competent to rule on his entire estate. Therefore, French courts alone had competence to draw up the certificate of succession.
The Regulation does not apply in Switzerland since it is not a signatory. As a result, when a Swiss national having fixed property in Germany dies in Switzerland, the German authorities will continue to demand the production of a certificate of succession issued by German courts in order to settle the part of the estate relating to property in Germany even though Swiss law is applicable to the succession.
- Treatment of French-source dividends
Reacting to two fiscal court judgments (Cologne of 31.08.2016 and Munich of 13.03.2017), the German tax authority published its decision to amend as from 2018 the taxation of French-source dividends received by German shareholders owning a stake of more than 10%, in a circular dated 13.03.2018, as from 2018. From now on, the rule of § 8b para. 5 KStG (Corporate Tax Act) providing for the total exemption of dividends from tax except for a 5% share of costs and charges will apply to French-source dividends whilst, due to its interpretation of Art. 20, para. 1 of the Franco-German Tax Agreement, this 5% sharewas only included previously when the actual costs and charges exceeded 5% (OFD NRW [Regional Tax Office North Rhine-Westphalia], 13.03.2018 – S 2750a-2014/0001-St 131).
- Instruction of 20.04.2018
The German tax authority published an instruction dated 20.04.2018 in which it fixes the administrative principles applicable to the matter of determining whether a transaction carried out between a shareholder and the company can qualify as a gift and is, therefore, subject to the gift taxation system. In particular, it specifies that a 50% shareholder who transfers assets to the company without receiving the full consideration therefore does so by making a – taxable – gift to their co-shareholder (see Instruction no. 3). Likewise, a shareholder leaving the company and waiving full or partial payment of an indemnity does so by making a – taxable – gift to their co-shareholders – (see Instruction no. 2.5).
Within the framework of a revision of Swiss Company Law, the Swiss National Council (that is, one of the two Parliamentary chambers at Federal level) intends to introduce quotas for women of at least 30% on Boards of Directors and 20% in company management. However, nothing has been done so far as the Council of States still has to pronounce on the issue.
Following the resounding rejection of company taxation and old-age pension reforms, during referendums, the Council of State wishes to push the idea of a draft agreement that combines the two issues. It simply needs to convince the National Council and the Swiss people of the merits of this idea, in the knowledge that many political and economic players have already expressed their condemnation of such an agreement.■