EC Criticises Germany Over Tax Treatment Of Executors

by Ulrika Lomas, for LawAndTax-News.com, Brussels

19 January 2006

The European Commission announced this week that it has decided to send Germany a formal request to change its laws and resulting administrative practices regarding the place of taxation of the services provided by executors of wills.

German law treats the place of taxation of such services as that from which the executors provide their services.

However, the Commission considers that these services are similar to the services provided by lawyers and therefore that the place of taxation should, under the European Community VAT rules, be the place of residence or establishment of the customer.

It argues that Germany's interpretation may lead to cases of double taxation, and is inconsistent with Article 9 of the Sixth VAT Directive, and additionally not in line with the interpretation by other Member States.

The Commission's request is in the form of a Reasoned Opinion, the second stage of infringement procedure under Article 226 of the EC Treaty. In the absence of a satisfactory amendment to the German tax rules within two months of receipt of the reasoned opinion, the Commission may refer the matter to the Court of Justice.

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