GERMANY LAW AND PRACTICE Contributed by: Wolfram H Krüger, Barbara Rybka, Markus Wollenhaupt and Alexander Zitzl, Linklaters
If an investor maintains a permanent establish - ment in Germany, profits from the sale of real estate allocable to this permanent establish - ment can be offset by accounting for a reserve that reduces taxable income, subject to specific conditions. This reserve will reduce the acquisi - tion costs of real estate that are acquired in later years. Thus, the built-in gains of the sold real estate are not realised upon the sale of such real estate; hence, the tax on such built-in gains may economically be suspended by transferring the built-in gains to newly acquired real estate.
Tax benefits have recently been introduced regarding photovoltaic facilities. VAT-zero-rat - ing applies to the supply of small photovoltaic facilities for residential buildings. Income from the operation of small photovoltaic facilities will be exempt from income tax.
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