Treaty override

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As Treaty override (English for avoidance of the contract or contract abrogation ), also agreements override is called an act of national legislation that is contrary to a treaty under international law , in particular a double taxation agreement (DTA) , stands and the latter thus breaks. The law of the agreement is thus unilaterally overwritten by a national law .

In particular, contractual provisions that are susceptible to abuse should be quickly eliminated and lengthy contract amendment procedures or even termination avoided.

functionality

International treaties become part of federal law via an approval law in accordance with (cf. Art. 59, Paragraph 2, Sentence GG ). The agreement then has the rank of federal law. This leads to the question of how contradictions with other national tax laws can be resolved. Section 2 (1) AO grants international agreements priority over national tax laws ( lex specialis ). The tax legislator tries to deviate from this principle through special exceptions ( lex posterior ). This special legal regulation contrary to treaty law is called a treaty override.

Examples of such an agreement override are:

Example § 50d Paragraph 8 Clause 1 EStG

Section 50d (8) sentence 1 EStG :

"If income [...] is to be excluded from the assessment base of German tax under an agreement to avoid double taxation, the exemption for the assessment will only be granted regardless of the agreement if the taxpayer can prove that the state to which the agreement governs the taxation right is entitled, has waived this right to tax or that the taxes set on the income in this state have been paid. "

Section 50d (8) sentence 1 of the Income Tax Act aims to prevent foreign income from not being taxed at all because, for example, it has not been properly declared abroad. If the foreign state does not exercise its right to tax, the German state taxes the income. However, the agreement does not provide for such a right to tax (hence Section 50d (8) sentence 1 EStG, regardless of the agreement ).

Example Section 50d (10) sentence 3 EStG

Section 50d (10) sentence 3 half-sentence 1 EStG :

" Regardless of the provisions of an agreement to avoid double taxation on the allocation of assets to a permanent establishment, the shareholder's remuneration is to be allocated to that permanent establishment of the company to which the expenditure for the service on which the remuneration is based is to be allocated.

The background to the regulation is as follows: According to national tax law, payments by a partnership to its partner (special payments ), e.g. B. Interest on a loan , for the partner income from business operations , cf. Section 15 (1) sentence 1 no.2 sentence 1 EStG . The double taxation agreement could actually classify this as interest from his point of view. These are regularly privileged in the treaty law to attract outside capital . Section 50d (10) sentence 3 EStG would like to ensure this qualification of the interest as income from commercial operations regardless of the provisions of the agreement .

Admissibility under international law

As a breach of contract, the treaty override is contrary to international law and leads to the other state's right of termination.

Constitutional admissibility

The compatibility of the overwriting of this deliberate breach of contract with the Basic Law (GG) has long been highly controversial in literature and case law. The legal dispute culminated in a decision by the Federal Constitutional Court on December 15, 2015.

Representative of unconstitutionality

The BFH and some representatives in the literature were convinced of the unconstitutionality of the overwriting of the agreement. Based on Klaus Vogel , this was justified primarily with the principle that the Basic Law is friendly to international law. This should oblige the legislature through the rule of law of Article 20.3 of the Basic Law to observe international treaty law. Exceptionally, according to this opinion, a treaty override can be justified if it is necessary to avert a violation of fundamental principles of the constitution. However, it is hardly conceivable that this exception for double taxation agreements could ever apply. The exception would therefore be empty in tax law agreements with the consequence that these would always be unconstitutional.

Constitutionality

The overwhelming opinion in the literature and parts of the fiscal court jurisprudence rejected the fundamental unconstitutionality. The Federal Constitutional Court endorsed this view in its decision of December 15, 2015 on the overwriting of the agreement through Section 50d (8) sentence 1 EStG.

In contrast to the few general rules of international law according to Article 25 of the Basic Law , the international treaties according to Article 59, Paragraph 2, Sentence 1 of the Basic Law “only” have the rank of a simple federal law. The German legal system, unlike many European ones, does not know that international treaties take precedence over national laws. The legislature could therefore not give up its original parliamentary legislative authority and legislative responsibility through a simple act of consent to the agreement. A binding of parliament to past legislative decisions would contradict the principle of democracy from Article 20.1 and 20.2 of the Basic Law and the principle of discontinuity . The principle of friendliness to international law does not include a constitutional obligation to comply with all norms of international law without restriction and cannot override the assignment of rank by the Basic Law. The rule of law in Article 20.3 of the Basic Law also does not change these constitutional evaluations.

Moris Lehner also cites the general rule of international law pacta sunt servanda as a standard. According to Art. 25 GG, this takes precedence over simple law and is therefore not increasingly bound to the content of the agreement, but is nevertheless bound to the validity of the agreement. It follows from pacta sunt servanda that breaches of contract should be avoided if possible, for example through renegotiations, and the treaty override is thus the last resort. In Lehner's view, if this requirement were disregarded, this would not lead to the unconstitutionality of the overwriting of the agreement, but would violate a general rule of international law which, according to Art. 25 sentence 2 GG, takes precedence over the law. However, the violation of the agreement could in turn be justified by the constitutional requirement of fair taxation under Article 3 (1) of the Basic Law in order to be able to take effective action against non-taxation.

literature

General

  • Moris Lehner : International scope of state taxation sovereignty. In: Josef Isensee, Paul Kirchhof (ed.): Handbook of the constitutional law of the Federal Republic of Germany. International references. Volume 11, 3rd edition, 2013, ISBN 978-3-8114-6666-1 , § 251 subsection 53 ff.
  • Moris Lehner, in: Klaus Vogel, Moris Lehner (Hrsg.): Double taxation agreement of the Federal Republic of Germany in the field of taxes on income and assets. Comment based on the model convention. 6th edition, Verlag CHBeck, Munich 2015, ISBN 978-3-406-64929-5 , Basics of Convention Law, Rn. 193 ff (Section: D. II. Treaty Override).

Individual agreement overrides

  • Gerrit Frotscher: Treaty Override and Section 50d (10) EStG. In: Internationales Steuerrecht (IStR) 2009, Issue 17, pp. 593–600.
  • Moris Lehner: Treaty Override within the scope of § 50d EStG. In: Internationales Steuerrecht (IStR) 2012, Issue 11, pp. 389–404.

Constitutional admissibility

  • Lars Hummel: Comment on the decision of the BVerfG from December 15, 2015 - 2 BvL 1/12. In: Internationales Steuerrecht (IStR) 2016, issue 8, p. 335.
  • Roland Ismer, Stefanie Baur: Constitutionality of Treaty Overrides. In: Internationales Steuerrecht (IStR) 2014, Issue 12, pp. 421–427.
  • Moris Lehner, in: Klaus Vogel, Moris Lehner (Hrsg.): Double taxation agreement of the Federal Republic of Germany in the field of taxes on income and assets. Comment based on the model convention. 6th edition, Verlag CHBeck, Munich 2015, ISBN 978-3-406-64929-5 , Basics of Convention Law, Rn. 201 f.
  • Moris Lehner: Parliament does not dispose of its norm-setting authority. On the order for reference of the BFH of December 11, 2013, IR 4/13 on Section 50d (10) EStG. In: Internationales Steuerrecht (IStR) 2014, Issue 6, pp. 189–192.
  • Moris Lehner: Treaty Override is not unconstitutional. Comment on the decision of the BVerfG v. December 15, 2015 - 2 BvL 1/12. In: Internationales Steuerrecht (IStR) 2016, issue 6, pp. 217–220.
  • Andreas Musil: Treaty override as a permanent problem in international tax law. In: Internationales Steuerrecht (IStR) 2014, Issue 6, pp. 192–196.
  • Martin Schäfer: Treaty Overriding. A contribution to the constitutional admissibility of federal laws that override agreements. Verlag Mohr Siebeck, Tübingen 2020, ISBN 978-3-16-158995-9 .
  • Torsten Stein: Are international law and national tax law in conflict? In: Internationales Steuerrecht (IStR) 2006, Issue 15, pp. 505–509.
  • Klaus Vogel, in: Klaus Vogel, Moris Lehner (Hrsg.): Double taxation agreement of the Federal Republic of Germany in the field of taxes on income and assets. Comment based on the model convention. 5th edition, Verlag CH Beck, Munich 2008, ISBN 978-3406572531 , introduction to the OECD-MA, Rn. 205.

Individual evidence

  1. ↑ Bundesfinanzhof (BFH), order for reference dated December 11, 2013, file number IR 4/13 , Collection of the decisions of the Bundesfinanzhof (BFHE), Volume 244, page 1, subsection 44.
  2. ↑ Moris Lehner, in: Klaus Vogel, Moris Lehner (Ed.): Double taxation agreement . 6th edition, Verlag CHBeck, Munich 2015, ISBN 978-3-406-64929-5 , Basics of Convention Law, Rn. 194.
  3. ↑ On the following “legal mechanics” Moris Lehner, in: Klaus Vogel, Moris Lehner (Hrsg.): Double taxation agreement . 6th edition, Verlag CHBeck, Munich 2015, ISBN 978-3-406-64929-5 , Basics of Convention Law, Rn. 200.
  4. ↑ Decision on Section 50d (8) sentence 1 EStG Bundesfinanzhof (BFH), order for reference of January 10, 2012, file number IR 66/09 , Collection of the decisions of the Bundesfinanzhof (BFHE), volume 236, page 304.
  5. ↑ Moris Lehner: Treaty Override within the scope of Section 50d EStG in detail on Section 50d (8) EStG . In: Internationales Steuerrecht (IStR) 2012, issue 11, p. 389 (394 f.).
  6. ↑ For Section 50d (10) EStG Moris Lehner: Treaty Override within the scope of Section 50d EStG . In: Internationales Steuerrecht (IStR) 2012, Issue 11, p. 389 (396).
  7. ^ Moris Lehner: International scope of state taxation sovereignty. In: Josef Isensee, Paul Kirchhof (ed.): Handbook of the constitutional law of the Federal Republic of Germany. International references. Volume 11, 3rd edition, 2013, ISBN 978-3-8114-6666-1 , § 251 subsection 56.
  8. ↑ File number 2 BvL 1/12
  9. ↑ Bundesfinanzhof (BFH), order for reference of January 10, 2012, file number IR 66/09 , Collection of the decisions of the Bundesfinanzhof (BFHE), Volume 236, page 304, subsection 6; Federal Fiscal Court (BFH), order for reference dated December 11, 2013, file number IR 4/13 , Collection of the decisions of the Federal Fiscal Court (BFHE), Volume 244, page 1, subsection 8
  10. ↑ Klaus Vogel, in: Klaus Vogel, Moris Lehner (Ed.): Double taxation agreement . 5th edition, Verlag CH Beck, Munich 2008, ISBN 978-3406572531 , introduction to the OECD-MA, Rn. 205; Torsten Stein: Are international law and national tax law in conflict? In: Internationales Steuerrecht (IStR) 2006, issue 15, p. 505.
  11. ↑ Klaus Vogel, in: Klaus Vogel, Moris Lehner (Ed.): Double taxation agreement . 5th edition, Verlag CH Beck, Munich 2008, ISBN 978-3406572531 , introduction to the OECD-MA, Rn. 205.
  12. ↑ Bundesfinanzhof (BFH), order for reference of 10 January 2012, file number IR 66/09 , Collection of the decisions of the Bundesfinanzhof (BFHE), Volume 236, page 304, subsection 18.
  13. ↑ Bundesfinanzhof (BFH), order for reference of 10 January 2012, file number IR 66/09 , Collection of the decisions of the Bundesfinanzhof (BFHE), Volume 236, page 304, subsection 18.
  14. ↑ Bundesfinanzhof (BFH), order for reference of 10 January 2012, file number IR 66/09 , Collection of the decisions of the Bundesfinanzhof (BFHE), Volume 236, page 304, subsection 34.
  15. ^ So Moris Lehner, in: Klaus Vogel, Moris Lehner (Ed.): Double taxation agreement . 6th edition, Verlag CHBeck, Munich 2015, ISBN 978-3-406-64929-5 , Basics of Convention Law, Rn. 201.
  16. ↑ Moris Lehner: Parliament does not dispose of its authority to set norms. On the order for reference of the BFH of December 11, 2013, IR 4/13 on Section 50d (10) EStG. In: Internationales Steuerrecht (IStR) 2014, issue 6, p. 189; Andreas Musil: Treaty override as a permanent problem in international tax law. In: Internationales Steuerrecht (IStR) 2014, issue 6, p. 192; Roland Ismer, Stefanie Baur: Constitutionality of Treaty Overrides. In: Internationales Steuerrecht (IStR) 2014, issue 12, p. 421 (426 f.).
  17. ↑ Finance Court Munich, order of July 19, 2011, file number 8 V 3, decisions of the tax courts (EFG) 2012, pages 522-523.
  18. ↑ Federal Constitutional Court (BVerfG), decision of December 15, 2015 - 2 BvL 1/12 .
  19. ↑ cf. Federal Constitutional Court (BVerfG), decision of December 15, 2015 - 2 BvL 1/12 , subsection 37–48; so already Moris Lehner: Treaty Override within the scope of § 50d EStG. In: Internationales Steuerrecht (IStR) 2012, issue 11, p. 389 (401 f.).
  20. ↑ International overview by Moris Lehner, in: Klaus Vogel, Moris Lehner (Ed.): Double taxation agreement . 6th edition, Verlag CH Beck, Munich 2015, ISBN 978-3-406-64929-5 , Basics of Convention Law, paragraphs 203 ff.
  21. ↑ Moris Lehner, in: Klaus Vogel, Moris Lehner (Ed.): Double taxation agreement . 6th edition, Verlag CHBeck, Munich 2015, ISBN 978-3-406-64929-5 , Fundamentals of Agreement Law, paragraph 201 at the end.
  22. ↑ Emphasizing Moris Lehner: Parliament does not dispose of its normative authority. On the order for reference of the BFH of December 11, 2013, IR 4/13 on Section 50d (10) EStG. In: Internationales Steuerrecht (IStR) 2014, issue 6, p. 189 (191 f.); approving Roland Ismer, Stefanie Baur: Constitutionality of Treaty Overrides. In: Internationales Steuerrecht (IStR) 2014, issue 12, p. 421 (426 f.); also Andreas Musil: Treaty Override as a permanent problem of international tax law. In: Internationales Steuerrecht (IStR) 2014, issue 6, p. 192 (194).
  23. ↑ cf. Federal Constitutional Court (BVerfG), decision of December 15, 2015 - 2 BvL 1/12 , subsection 37-48.
  24. ↑ Federal Constitutional Court (BVerfG), decision of December 15, 2015 - 2 BvL 1/12 , subsection 64–76.
  25. ↑ Federal Constitutional Court (BVerfG), order of December 15, 2015 - 2 BvL 1/12 , subsection 77-81.
  26. ↑ Moris Lehner: Parliament does not dispose of its authority to set norms. On the order for reference of the BFH of December 11, 2013, IR 4/13 on Section 50d (10) EStG. In: Internationales Steuerrecht (IStR) 2014, issue 6, p. 189 (191).
  27. ↑ Moris Lehner: Parliament does not dispose of its authority to set norms. On the order for reference of the BFH of December 11, 2013, IR 4/13 on Section 50d (10) EStG. In: Internationales Steuerrecht (IStR) 2014, issue 6, p. 189 (191).
  28. ↑ See Moris Lehner: Treaty Override is not unconstitutional. Comment on the decision of the BVerfG v. December 15, 2015 - 2 BvL 1/12. In: Internationales Steuerrecht (IStR) 2016, issue 6, p. 217 (219); Moris Lehner, in: Klaus Vogel, Moris Lehner (Hrsg.): Double taxation agreement . 6th edition, Verlag CHBeck, Munich 2015, ISBN 978-3-406-64929-5 , Basics of Agreement Law, paragraph 202; in agreement Roland Ismer, Stefanie Baur: Constitutionality of Treaty Overrides. In: Internationales Steuerrecht (IStR) 2014, issue 12, p. 421 (426 f.).
  29. ↑ See Moris Lehner: Treaty Override is not unconstitutional. Comment on the decision of the BVerfG v. December 15, 2015 - 2 BvL 1/12. In: Internationales Steuerrecht (IStR) 2016, issue 6, p. 217 (219).
  30. ↑ In this way Moris Lehner: Treaty Override is not unconstitutional. Comment on the decision of the BVerfG v. December 15, 2015 - 2 BvL 1/12. In: Internationales Steuerrecht (IStR) 2016, issue 6, p. 217 (219); Moris Lehner: Treaty Override within the scope of § 50d EStG. In: Internationales Steuerrecht (IStR) 2012, issue 11, p. 389 (403).