Facts
This judgment addresses the question of whether the refund of withholding tax on the earnings of a condominium association must be claimed by the association itself or by the individual condominium owners.
The condominium association K. had applied to the Federal Tax Administration for a refund of the withholding tax for the year 1995. The tax administration rejected the application, as the right to a refund belongs not to the association, but to the individual condominium owners in proportion to their share of the earnings and assets. The association's appeal was rejected by the Federal Tax Appeal Commission and ultimately by the Federal Supreme Court.
Considerations
The Federal Supreme Court explains in its reasoning that while the condominium association has certain corporate characteristics, it is not a legal entity. It is a legal community of property law, established to safeguard the interests of the condominium owners, but not for the pursuit of a common purpose.
According to the provisions of the Withholding Tax Act and the associated Ordinance, either natural persons or legal entities or general partnerships without legal personality have a right to a refund of withholding tax. The condominium association falls under neither category.
A right to a refund for the association could potentially arise from the Ordinance provision on joint ventures. However, the Federal…