Tax & Legal

The Federal Ministry of Finance has published its draft bill to combat tax avoidance and to amend further tax provisions.

In a most recent decision, the European Court of Justice held that that Belgium acted in breach of its obligations under the Anti-Tax Avoidance Directive (ATAD) laying down rules against tax avoidance practices that directly affect the functioning of the internal market by failing to adopt the laws, regulations, and administrative provisions necessary to comply with Article 8 (7) of that directive.

On 21 December the German government adopted a bill to combat tax avoidance and to change certain other tax provisions. The Government’s main intention is to make it more difficult for German taxpayers to avoid tax by using letter-box companies. In addition to numerous provisions imposing obligations on the taxpayer to co-operate with the tax authorities, the bill abolishes the bank secrecy rules.

On 24 March 2021, a government draft bill aiming to implement the Anti-Tax Avoidance Directive (ATAD) passed the cabinet (in the following referred to as “Draft”) after lengthy political efforts.

On 24 March 2021, a government draft bill aiming to implement the Anti-Tax Avoidance Directive (ATAD) passed the cabinet (in the following referred to as “Draft”) after lengthy political efforts.

In its sitting on 2 June 2017 the Bundesrat (the Upper House) approved the legislation which the government introduced at the end of last year following the publication of the Panama Papers.

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 OECD has published an interim report on the first seven of its fifteen planned suggestions towards combatting base erosion and profit shifting (BEPS) by multinationals through aggressive tax planning and tax avoidance projects.

On 10 June 2021, the Bundestag approved the "Act to avert tax avoidance and unfair tax competition and to amend other laws". In doing so, the Bundestag followed the recommendation of the Finance Committee.

On 10 December 2019, the Federal Ministry of Finance (MoF) provided various federations and associations with a draft bill on the Implementation of the Anti-Tax Avoidance Directive (ATAD Implementation Act) for comment. The decision of the Cabinet has already been scheduled for 18 December 2019.

The Act on the Defence against Tax Avoidance and Unfair Tax Competition (DTAUTC) of June 25, 2021 (BGBl. I p. 2056 introduced certain administrative and legislative measures in relation to those states and territories (tax jurisdictions) which qualify as non-cooperative tax jurisdictions under Section 2 (1) DTAUTC.

An online form enabling the taxpayer to meet his extended duty to cooperate under Section 12 (2) of the Tax Haven Defence Act (in full “Act on Defence against Tax Avoidance and Unfair Tax Competition and amending other laws”) has been published on the homepage Federal Central Tax Office.

On 22 December 2021 the European Commission presented a draft directive to prevent the abuse of shell companies for tax purposes whereby amending the Anti-Tax Avoidance Directive (ATAD 3). The proposal should ensure that entities in the EU that have no or minimal economic activity are unable to benefit from any tax advantages and do not place any financial burden on taxpayers.

The EU Council Directive for mandatory automatic exchange of tax information in cross-border arrangements provides that all intermediaries and, in their absence, the taxpayer involved in potentially aggressive cross-border tax arrangements (that may lead to tax avoidance and evasion) must report them to the competent tax authorities. In a Belgian case the European Court of Justice took the chance to comment on various general aspects of the Directive.

At its session on 25 June, the Bundesrat approved several tax laws.

In this issue: PwC Reports, Official pronouncements, Supreme Tax Court Cases and From Europe

On 10 October 2024 the Federal Ministry of Finance (MoF) published a first draft of a revised BMF circular on the interest limitation provisons in Section 4a Income Tax Act (ITA) and Section 8a Corporate Tax Act (CTA). Due to various amendments which took place in the course of the Act to Promote the Secondary Credit Market (Kreditzweitmarktförderungsgesetz) the tax administration sees the need for revisions.

In a Bulgarian case the European Court of Justice (ECJ) held that EU law does not preclude national legislation imposing withholding tax on notional market-based interest (mandated under local tax anti-avoidance rules). Such withholding tax cannot be exempt under the regimes of the IRD (EU Interest - Royalty Directive 2003/49/EC) and the PSD (EU Parent-Subsidiary Directive 2011/96/EU) as there have been no actual payments of interest.

At its sitting on 22 September 2017 the Bundesrat (Federal Council/upper house) expressly welcomed the proposal for an amendment of Council Directive 2011/16/EU on administrative cooperation in the field of taxation to impose a reporting obligation on cross-border schemes. It has long been a demand of the Bundesrat that rules on reporting obligations be introduced.

Our December 2019 Newsletter includes news about forthcoming legislation and news from the Supreme Tax Court.