In line with the opinion on the Draft Annual Tax Act 2013, the Federal Council has addressed a request to check solutions for the avoidance of tax structuring models using so-called real estate transfer tax (RETT) blocker partnerships. In response thereto, the Federal Ministry of Finance has drafted a Wording Proposal, which was forwarded to the members of the Federal Parliament by September 19, 2012. It is possible that the wording will still find its way into the draft law. As a result, the abolition of such tax structures could, within the framework of the 2013 Annual Tax Act, take place during this year.

The anti-treaty shopping rule of Sec. 50d (3) of the German Income Tax Act, which has been subject to much controversy and has been amended and tightened repeatedly since its introduction, has been amended yet again as a result of the formal EU treaty violation proceedings initiated against Germany by the Commission. The new rule has eliminated the 10% threshold but has introduced a complex rule allowing a pro-rata relief on a case-by-case basis. The elimination of the 10% threshold will only mean an improvement for a handful of foreign companies. Only if the "good" income of the foreign company does not exceed 10% of the foreign company¹s gross earnings will the new rule grant pro-rata relief. In many cases, the new rule will mean a tightening of the previous legislation. In addition, the new rule will lead to significant additional documentation obligations and a permanent monitoring of income streams and activities of the foreign company.

The Tax Court of Düsseldorf has submitted the question whether the flat-rate taxation of in-transparent investment funds pursuant to § 6 of the German Investment Tax Act (Investmentsteuergesetz, or "InvStG") constitutes a disguised restriction on the free movement of capital (Art. 58 (3) EC) and thus violates European Community law (Art. 56 EC) (ECJ-C-326/12) to the European Court of Justice ("ECJ").

Investors should therefore ensure that tax assessments remain appealable with reference to the preliminary matter currently pending before the Court by submission of an appeal.