Tax Treaty Case Law around the Globe 2018
1. Aufl. 2019
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S. 135Chapter 13 Germany: Commercial Activities and Losses – The Negative Progression Proviso
Roland Ismer
13.1. Introduction
The so-called Goldfinger model amounted to an international tax avoidance scheme. It relied on the asymmetric effect of the progression proviso in German income tax law. Legislators have in the meantime closed the gap for most such structures. Nevertheless, several decisions by regional fiscal courts and the Federal Fiscal Court of Germany (BFH) involved this topic. The main questions of the case at hand are (i) whether the gold trading transactions represent commercial activities, and (ii) whether the losses may be recognized in the German tax assessment through the negative progression proviso.
13.2. Facts of the case
A British general partnership (GP) was incorporated under British law in 2007. The business purpose of GP included the purchase, sale, trading and other activities regarding precious metals as well as the trading of options and derivatives for risk mitigation. Two German residents, A and B, are shareholders of this GP, holding 80% and 20% of the shares respectively. The legal structures of GP can be compared with that of a German partnership. Therefore,...