On 12.11.2020, the Tax Court of Baden-Württemberg ruled that in the case of tax-exempt foreign income subject to the progression proviso, there is no impermissible excess taxation within the scope of Section 32b (1) Sentence 1 No. 3 EstG even if there is a tax burden of more than 49% related to the foreign income. (FG BaWü, 12.11.20, K1279/18, appeal under I R 53/20).
According to the Tax Court, there is no impermissible taxation contrary to European law, since an application of the progression proviso does not lead to a different tax burden on domestic and foreign income. It is irrelevant that the total burden of domestic and foreign tax is higher than the tax burden that would have been incurred if the income had been earned exclusively in Germany.
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