Tax exemption for joint ventures (BFH) – NWB Livefeed

Online message – Thursday 06/04/2023

Corporate Income Tax | Tax exemption for joint ventures (BFH)

A consortium not established in the legal form of a corporation under public law accepts iS
Section 5 (1) no. 21 sentence 1 KStG performs the tasks assigned to it by law if its services are provided to a corporation under public law as part of a business of a commercial nature (BFH, judgment of 12/15/2022 – VR 12/21; published on
6.4.2023).

background: According to
Section 5 (1) no. 21 sentence 1 KStG are in particular “the working groups of the medical service of health insurance within the meaning of the
§ 278 of the Fifth Book of the Social Code” exempted from corporation tax “insofar as they carry out the tasks assigned to them by law”.

facts: It is disputed whether the services provided by one medical service to other medical services in the form of archiving services and paperwork in accordance with
§ 5 para. 1 no. 21 KStG are tax-free: The plaintiff is the legal successor of a medical service of health insurance (MDK) in the legal form of a registered association (hereinafter: association). In 2004, the MDK of the federal state A (MDK A) commissioned the association to archive and digitize the expert opinion files of the MDK A for a fee. The FA took the view that the archiving services of the association were taxable to the MDK A, the lawsuit against this was unsuccessful in the first instance. According to the judges, the requirements of
§ 5 para. 1 no. 21 KStG not fulfilled if tasks were performed that were assigned to another MDK. This also applies if this is done by way of administrative assistance.

The judges of the BFH overturned the preliminary decision and referred the matter back to the Lower Tax Court:

• § 5 para. 1 no. 21 KStG aims to tie in with the statutory performance of tasks according to its legal justification (BT-Print 13/3084, p. 24) one Equal tax treatment of the MDKwho was active in the legal form of a corporation under public law in some federal states and in the legal form of a registered association in other federal states.

• When examining whether and to what extent “tasks assigned by law” are performed, it is therefore particularly important to consider whether these services, when provided by an MDK constituted as a corporation under public law, constitute a business of a commercial nature subject to corporation tax (§ 1 Para. 1 No .6,
  § 4 paragraph 1 sentence 1 KStG) or take place within the framework of a so-called sovereign operation, which does not exist if the content of an activity does not differ significantly from the activity of a private commercial company (cf. e.g
  BFH, judgment of 12.7.2012 – IR 106/10BStBl II 2012, 837, margin no. 9).

• According to this, the Lower Tax Court erred in law in rejecting a corporation tax exemption without the necessary examination as to whether the plaintiff’s services would be provided by a corporation under public law as part of a business of a commercial nature.

• The determination of whether the archiving services of the association are carried out within the framework of a facility within the meaning of
  § 4 paragraph 1 sentence 1 KStG and have taken place in accordance with an order data processing, the FG will have to catch up in the second legal process.

Those:
BFH, judgment of 12/15/2022 – VR 12/21; NWB Database (the)

Source(s):
NWB HAAAJ-37152