Trade tax addition for franchise fees: exclusion of legally unprotected know-how under § 8 No. 1 lit. f GewStG

The Federal Court of Finance (BFH) held in favor of the taxpayer regarding the trade tax treatment of franchise fees, establishing that expenses for legally unprotected know-how are not subject to the trade tax addition under § 8 No. 1 lit. f GewStG. The dispute concerned whether a unified franchise fee paid by a franchisee could be fully added to the taxable trade profit, with the taxpayer challenging the full addition by the tax authorities. The court ruled that only the portion of the fee attributable to the granting of commercial intellectual property rights (such as patents or trademarks) is subject to the statutory addition, while payments for unprotected technical, commercial, or business know-how are exempt; consequently, the court ordered that the relevant portion of the franchise fee must be determined by estimation to correctly calculate the taxpayer's trade tax liability.