BFH doubts the conformity of Section 20 (2) AStG with European law

The change in methodology in Section 20(2) of the German Foreign Tax Act (AStG) is once again in the spotlight of EU law. The Federal Fiscal Court (BFH) doubts whether the German switchover clause is compatible with fundamental freedoms if it forces even substantial EU structures to apply the credit without any possibility of relief. The referral to the ECJ therefore not only concerns the dogmatic question of whether exemption or crediting should apply, but also touches on the very foundations of combating abuse in European tax law. This article shows how the BFH justifies its doubts, why the practical scope of Section 20 (2) AStG is now greatly relativized in the EU context by activity clauses in treaty law, and what course the legislature is setting with regard to additional taxation and trade tax reductions in the private equity sector.