Clifford Chance

Capital gains 100% tax-exempt instead of only 95% for foreign corporate shareholders

26 October 2017

In a decision dated 31 May 2017 (I R 37/15), which has been released on 25 October 2017, the German Federal Fiscal Court (Bundesfinanzhof) ruled in favour of foreign shareholders selling shares in a German corporation. Capital gains realised upon sale of shares in a German resident corporation by non-resident corporate shareholders should be 100% tax-exempt irrespective of the existence of or the provisions in a double tax treaty. This decision is in particular relevant for holding entities in the real estate sector and holding entities in jurisdictions without a double tax treaty.

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