Steuerausländer, die inländische Einkünfte gem. § 49 I EStG erzielen, unterliegen der beschränkten Tax liability. Die Qualifikation als inländische Einkünfte erfolgt nach strengen Anknüpfungskriterien, z. B. ist eine Betriebsstätte oder ein ständiger Vertreter im Inland für die Qualifikation als gewerbliche Einkünfte erforderlich.
However, the allocation criteria, namely the subsidiarity regulations, of unlimited income tax liability are not fully applied here. The principle of subsidiarity is most consistently developed in corporations; they basically generate income from business operations. This also applies to foreign corporations that rent out business property located in Germany.
The income is classified as business income; they would therefore remain tax-free in the absence of domestic points of contact (permanent establishment / permanent representative). In order to close this taxation gap, the principle of the isolating approach was developed by case law, which has been regulated in the Income Tax Act since 1973 (Section 49 II EStG) and also applies to corporation tax law via Section 8 I KStG.
According to this principle, foreign relationships are disregarded if their consideration would lead to them being assigned to a different type of income and thus remaining tax-free. According to this, in the example, the foreign corporation would generate income from renting and leasing in Germany (Section 8 I KStG in conjunction with Sections 49 I No. 6 and 49 II EStG). The scope of § 49 II EStG is not undisputed.