5.

The Gewerbesteuergesetz (Law on trade tax (‘the GewStG’), in the version in force at the time of the facts in the main proceedings, ( 2 ) includes, inter alia, the following provisions: ‘Paragraph 2 Subject of the tax (1) Any industrial or commercial undertaking which operates within Germany shall be subject to the trade tax. Industrial or commercial undertaking means an industrial or commercial undertaking within the meaning of the Einkommensteuergesetz [Law on Income Tax, “the EStG”]. An industrial or commercial undertaking shall be regarded as operating within Germany when it maintains a permanent business establishment on German territory or on a merchant vessel registered in Germany. (2) Activity carried out by capital companies (in particular European companies, public limited liability companies, limited liability companies and limited partnerships), cooperative societies, including European cooperative societies, and insurance funds and mutual pension funds, shall in all cases be regarded fully as a business undertaking. If a capital company is a controlled company [Organgesellschaft] within the meaning of Paragraphs 14, 17 or 18 of the Körperschaftsteuergesetz [Law on corporation tax, “the KStG”], it shall be regarded as constituting a permanent establishment of the controlling company. … Paragraph 8 Add-backs The following amounts shall be added back to the profit from the business operation (Paragraph 7) if they have been deducted when ascertaining the profit: … (5) the surplus of shares of profits (dividends) which has not been taken into account under Paragraph 3(40) of [the EStG] or Paragraph 8b(1) of the [KStG] and income and earnings treated as such from holdings in a company, in an association of persons or in corporate funds within the meaning of the [KStG], provided that they do not fulfil the requirements set out in Paragraph 9(2a) or (7), after the deduction of operating expenses which are economically linked to those revenues, earnings and benefits, where they are not taken into account under Paragraph 3c(2) of [the EStG] and Paragraph 8b(5) and (10) of the [KStG]. This provision shall not apply to distributions of profits which are subject to Paragraph 3(41)(a) of [the EStG]; … Paragraph 9 Allowances/reductions The sum of the profit and of the add-backs shall be reduced … (2a) by profits from shareholdings in a capital company incorporated under national law which is non-tax-exempt within the meaning of Paragraph 2(2), in a credit institution or an insurance fund governed by public law, in a trading and business cooperative [Erwerbs- und Wirtschaftsgenossenschaft] or in an investment company [Unternehmensbeteiligungsgesellschaft] within the meaning of Paragraph 3(23), where the shareholding at the beginning of the period in which such profits are received is at least equal to 15% of the initial capital or share capital and where that share of the profits has been entered in the accounts for the purpose of ascertaining the profit (Paragraph 7). In the absence of initial capital or share capital, it is necessary to use the holding in the assets or, for trading and business cooperatives [Erwerbs-und Wirtschaftsgenossenschaften], the holding in the total amount of contributions. The charges directly related to shares in the profits shall reduce the amount of the allowances in so far as the corresponding earnings from those shares are taken into account; in this context, Paragraph 8(1) shall not apply. Non-deductible operating expenses under Paragraph 8b(5) of the [KStG] do not constitute profits from shareholdings within the meaning of the first sentence. In relation to life and health insurance companies, the first sentence shall not apply to profits from shareholdings attributable to capital investments; this shall also apply to pension funds; … (7) by profits from shareholdings in a capital company whose registered office and central management and control are outside the territorial area to which this law applies, and at least 15% (subsidiary) of whose share capital the undertaking has held, without interruption, since the beginning of the reference period, and which derives its gross revenues exclusively, or almost exclusively, from activities covered by Paragraph 8(1)(1) to (6) of the Außensteuergesetz [Law on foreign transaction tax, “the AStG”], and by profits from shareholdings in companies in which the undertaking directly holds at least a quarter of the share capital, where those shareholdings have been held without interruption for at least 12 months before the accounting date for the purpose of determining the profit and where the undertaking establishes (1) that those companies have their registered office and central management and control in the same State as the subsidiary and that their gross revenues are derived exclusively, or almost exclusively, from activities covered by Paragraph 8(1)(1) to (6) of [the AStG], or (2) that the subsidiary possesses shareholdings which are economically linked to its own activities covered by Paragraph 8(1)(1) to (6) and that the company in which the shareholding is held derives its gross revenues exclusively, or almost exclusively, from such activities, where the shares of profits were entered in the accounts as profits (Paragraph 7); this provision shall also apply to the profits from shareholdings in a company fulfilling the requirements set out in Annex 2 to [the EStG], which reproduces Article 2 of Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (OJ 1990 L 225 p. 6; OJ 1997 L 266, p. 20 and OJ 1997 L 16, p. 98), most recently amended by Council Directive 2006/98/EC of 20 November 2007 (OJ 2007 L 363, p. 129), which has neither its management nor registered office on national territory and in which the undertaking holds at least a tenth of the share capital at the beginning of the reference period. The third sentence of Paragraph 9(2a) shall apply by analogy. The fourth sentence of Paragraph 9(2a) shall apply by analogy. If an undertaking which, through a subsidiary, indirectly owns at least 15% of a capital company having its central management and control and its registered office outside the territory of application of this law (a lower-tier subsidiary) makes profits in the course of a financial year from its shareholdings in the subsidiary and if the lower-tier subsidiary distributes profits to the subsidiary during that financial year, the same rule shall apply, at the request of the undertaking, to the part of the profits received by it and corresponding to the distribution by the lower-tier subsidiary of the profits allocated to the undertaking on account of its indirect shareholding. If, during the financial year concerned, the subsidiary has received other revenues additional to the shares of profits of a lower-tier subsidiary, the fourth sentence shall apply only to the share of the distribution allocated to the subsidiary corresponding to the proportion of those shares of profits in the sum of the profits and other revenues, within the limits of the amount of those shares of profits. Application of the fourth sentence presupposes that (1) the lower-tier subsidiary has, in the course of the financial year during which it carried out the distribution, derived its gross revenues exclusively, or almost exclusively, from activities covered by Paragraph 8(1)(1) to (6) of [the AStG] or from shareholdings covered by the point (1) of the first sentence and that (2) the subsidiary fulfils the requirements laid down by the first sentence as regards the shareholding in the capital of the lower-tier subsidiary. Application of the foregoing provisions requires that the undertaking provide all evidence, in particular, (1) that it establish, by the submission of relevant documents, that the subsidiary derives its gross revenues exclusively, or almost exclusively, from activities covered by Paragraph 8(1)(1) to (6) of [the AStG] or from shareholdings covered by points (1) and (2) of the first sentence, (2) that it establish, by the submission of relevant documents, that the lower-tier subsidiary derives its gross revenues exclusively, or almost exclusively, from activities covered by Paragraph 8(1)(1) to (6) of [the AStG] or from shareholdings covered by point (1) of the first sentence, (3) that it establish the distributable profits of the subsidiary or of the lower-tier subsidiary by the production of balance sheets and profit and loss accounts; those documents must be presented on request with the certificate required or usually used in the State of management or registered office and drawn up by an officially recognised supervisory body or an equivalent body. Sentences 1 to 7 shall not apply, as regards life and health insurance companies, to profits from shareholdings attributable to capital investments; this shall also apply to pension funds; ...’