The Resource Re E-LP (English Private Equity Fund) : I R 46/10

Re E-LP (English Private Equity Fund) : I R 46/10

Label
Re E-LP (English Private Equity Fund) : I R 46/10
Title
Re E-LP (English Private Equity Fund) : I R 46/10
Creator
Contributor
Subject
Language
eng
Summary
Judgment by the Bundesfinanzhof (Federal Fiscal Court) dated 24 August 2011. The two plaintiff German companies (both GmbHs) were both members of an equity fund formed in 1994 as an English limited partnership, (E-LP); they each held £5m of E-LP's £63m capital. E-LP was a closed fund with a lifespan in principle to 31 December 2002. E-LP's general partner was originally an English company, but in May 1996 the general partner became another limited partnership, GP-LP, whose general partner was a Scottish company, GP-Ltd. The directors of GP-Ltd were all employees of a London-based company, EV-Ltd which had premises in London. E-LP and EV-Ltd entered in to a management agreement under which EV-Ltd agreed to supply management services to the limited partnership. The limited partnership (E-LP) acquired interests in ventures, with a view to selling those interests possibly on a stock market flotation. By the end of 1998, they had acquired 22 interests, ranging from 3% to 61.1% in the ventures, and retained 16 at the end of that year. The two plaintiffs claimed that they were exempt from tax in Germany on dividends, interest and gains derived by E-LP under the relevant provision of the 1964 UK-Germany double taxation convention. They contended in essence that they had derived commercial profits through a permanent establishment in the UK, and so were taxable only in the UK (though not in fact taxable there). The Revenue authorities challenged the taxation for the year 1998. The lower tax court of Baden-Württemberg held that the income was commercial profits and that the members of E-LP had a permanent establishment in the UK through the offices of the management company, EV-Ltd. The income and gains were therefore exempt from tax in Germany. The Revenue authorities appealed to the Bundesfinanzhof, which held (dismissing the appeal) that (1) The purchase and sale of assets by E-LP was a trading activity and was of a commercial nature; it was not asset management. The income therefore fell within art III(1) of the treaty as commercial profits and as capital gains within art VIII(2). (2) The members of the limited partnership had a permanent establishment in the UK through the offices of the management company, EV-Ltd. (3) Consequently the income and gains were taxable only in the UK and exempt in Germany under art XVIII(2) of the convention
Citation source
In: International tax law reports. - London. - Vol. 14 (2012),
http://bibfra.me/vocab/relation/comm
-EFKkDunBqw
http://library.link/vocab/creatorName
Lüdicke, J. (Jürgen)
Geographic coverage
  • Europe
  • European Union
Language note
English
http://library.link/vocab/relatedWorkOrContributorName
Baker, P
http://library.link/vocab/subjectName
  • case law
  • tax treaty
  • PE
  • investment income
  • exemption
Label
Re E-LP (English Private Equity Fund) : I R 46/10
Instantiates
Publication
Label
Re E-LP (English Private Equity Fund) : I R 46/10
Publication

Library Locations

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