On 7 June 2017 Germany together with the representatives of over 60 countries signed the multilateral convention, which should transpose the main recommendations of the G20/OECD Project against Base Erosion and Profit Shifting (BEPS Project) into existing bilateral tax treaties.
The adjustments made by the so-called “Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting” (MLI) should ensure that German tax treaties are more resistant to abusive tax arrangements. The emphasis will now not only be on the avoidance of double taxation but also on the avoidance of non-taxation. The overriding principle is that profits should be taxed at the place where the entrepreneurial activities and thus the value creation take place.
The ratification of the MLI in Germany should go ahead in the coming legislative period. The first changes in the German bilateral treaties could then apply as early as 2019.
Source: Federal Ministry of Finance Press Report 7 June 2017:
The German Finance Ministry has commented on possible profit adjustments under Sec. 1 Foreign Tax Act with respect to the use of group name and logo between the taxpayer and a related party. Continue reading
In light of global trading of multinational corporations the tax offices are in constant pursuit of stronger international tax compliance. The German Federal Finance Ministry has now issued guidelines on coordinated external tax audits with foreign tax administrations. Continue reading
The tax authorities have now published the final Ministry of Finance circular answering questions in connection with the application of the exchange of financial information and the FACTA agreement. The draft versions of the circular had previously been released and these are now in a final version.
In the fight against cross-border tax evasion and other practices showing a lack of discipline for tax purposes, the OECD has developed a standard for the automatic exchange of information on financial accounts (CRS – Common Reporting Standard). On 29 October 2014 Germany committed itself – in conjunction with numerous other countries – to implement a system for exchange. The CRS obliges financial institutes to report to the German tax authorities information on financial assets, which are managed in participating countries on behalf of taxpayers. This information is exchanged between the tax authorities of participating states.
The conclusion of the so-called FACTA agreement between the USA and Germany on 31 May 2013 also introduced rules on the automatic exchange of tax relevant data from financial institutes. This was also intended to induce more honesty in tax matters cross-border.
The Ministry of Finance has now produced a 96 page document to clarify the various issues.
Ministry of Finance circular of 1 February 2017 (IV B 6 – S 1315/13/10021:044), published on the Ministry’s home page on 3 March 2017
The federal government and federal states have agreed unanimously upon the criteria for a revision of the tax treatment of existing cum/cum structures. The tax authorities of the federal states could then – according to comprehensive and standardised criteria – attack cum/cum transactions, which were executed before the change in the law as at 31 December 2015.
The agreement was reached when the heads of the tax departments of the respective federal and states Ministries of Finance met in Berlin between 1 and 3 March 2017. A new Ministry of Finance circular will be prepared to implement the decision. The existing Ministry of Finance circular of 11 November 2016 will continue to apply to the beneficial attribution of securities transactions.
The Federal Finance Ministry issued a decree dealing with the Value Added Tax situation for the public sector as revised in the course of the Tax Amendment Act 2015. Continue reading
In December 2016 the Finance Ministry issued a decree dealing with the tax implications of privately used comapny cars in case of a leasing, whereby also commenting on an earlier judgment of the Supreme Court on a so called “government lease”. Continue reading
On November 17, 2016 a new law came into force providing for tax incentives (income tax / employee withholding tax) in the area of electrical mobility, namely for electric-powered cars and hybrid vehicles. The Federal Finance Ministry has issued a decree dealing with Details of the new regulation. Continue reading
On December 22, 2016 the finance ministry has finally published its detailed administrative principles on the allocation of profits between a business and its foreign branches. Continue reading
In its last session of the year, the Federal Assembly (Bundesrat) gave its assent today to the Act to Implement the Amendments to the EU Mutual Assistance Directive and to Introduce Further Measures to Combat Profit Reduction and Profit Shifting
This packet of measures, which will come into effect on 1 January 2017, will give almost € 25 billion worth of relief to taxpayers. In particular low earners, families and lone parents will benefit.
The Bundesrat also gave its assent to the law amending the rules regarding the utilisation of losses upon change of control. (See our Blog: http://blogs.pwc.de/german-tax-and-legal-news/2016/12/06/bundesrat-set-to-approve-draft-for-relief-from-curtailment-of-loss-utilization)