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Germany - Case Closed: Tax Treatment of US S-Corporations under the Germany-United States Income and Capital Tax Treaty – Treaty Benefits for Hybrid Entities

Country:
Germany
Author:
R.X. Resch
Issue:
European Taxation, 2014 (Volume 54), No 5
Published:
10 April 2014
The author discusses a series of recent German court decisions addressing the issue of whether US S-Corporations must be granted the reduced withholding tax rate of 5% on German-sourced dividends under the Germany-United States Income and Capital Tax Treaty. The final Federal Fiscal Court decision clarifies the interpretation of treaty article 1(7) concerning income derived by and through fiscally transparent persons and is relevant for the application of the treaty to all hybrid entities.
 
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