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Tax & Legal

Tax & Legal

Finance Bill 2019 gets green light from Federal Cabinet


On 31 July, the Federal Cabinet adopted a draft Finance Bill 2019 referred to as the “Act on the Further Tax Promotion of Electric Mobility and on the Amendment of Further Tax Regulations”. As its name suggests the bill focuses on tax incentives for electro-mobility but includes legislation in numerous other areas of tax law. Continue reading

R&D Subsidy Bill


The government draft bill, published on 22 May 2019, provides for the introduction of a subsidy for research and development (R&D). The subsidy – up to a maximum amount of €500,000 – should be available to all taxpaying businesses regardless size, profitability or purpose. The aim is to make Germany more attractive for investment generally and in particular for start-ups. The promotion of small and medium-sized enterprises is a particular focus but the desire remains to promote larger enterprises also. The planned law is to be re-evaluated five years after its entry into force to examine whether its aims, in particular its contribution to the promotion of Germany as a centre of innovation, are met. Continue reading

Draft bill – Brexit Ancillary Regulations


On 13 December 2018 the Federal Ministry of Finance published a draft bill for the enactment of tax and other regulations for Brexit (“Brexit Bill”)designed to alleviate certain legal consequences arising by reason of Brexit alone.
Effective date
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Finance Act 2018


On 8 November 2018, the Finance Bill 2018 was adopted by the German parliament and received the consent of the Bundesrat on 23 November 2018 in the form of “The Act for the Avoidance of VAT Losses on the Trading of Goods on the Internet and Amendments to other Tax Regulations”(hereafter “Finance Act 2018”). This article sets out a selection of the new regulations. Continue reading

Bundesrat reacts positively to exchange of information for tax-saving schemes


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. Continue reading

Bundesrat approves legislation introducing restrictions on the deduction of royalty payments


In its sitting on 2 June 2017 the Bundesrat (the Upper House) approved the Act to Combat Harmful Tax Practices in connection with the Licensing of Rights. The new legislation is intended to prevent multinational businesses from transferring their royalty income to countries, which offer such income preferential treatment. Such preferential tax regimes (so-called Licence Boxes, Patent Boxes or IP-Boxes) are considered not to meet the demands of the OECD and G20 BEPS Project. The new provision should be applied to expenses arising after 31 December 2017 and is to be introduced by way of a new provision in the Income Tax Act (ITA). Continue reading

Federal cabinet approves new rules as part of the fight against money laundering and financing of terrorism


On 22 February 2017 the federal government approved a draft bill to implement both the fourth EU money laundering directive and the EU regulation on the transfer of funds as well as to reorganise the Central Financial Transactions Investigation Agency. The intention is to up-date and strengthen measures developed to prevent money laundering and the financing of terrorism.

The Central Financial Transactions Investigation Agency (“Zentralstelle für Finanztransaktionsuntersuchungen” – “FIU”) will be restructured and will obtain more staff

Previously the FIU was known as the Central Authority for Suspect Reporting (“Zentralamt für Verdachtsmeldungen”) at the Federal Police Department within the Ministry of the Interior. It will now be transferred to the General Customs Directorate, i.e. within the Ministry of Finance. Furthermore its responsibilities and competencies will be revised according to the provisions of the fourth EU directive on money laundering. One area of focus will lie in operative and strategic analysis.

In addition the FIU should, for the first time, have a filter function, the aim of which is to reduce the burden on the prosecution authorities. In future only credible suspicions should be passed on to the prosecutor.

Draft bill lays the foundations for a central electronic transparency register

This is intended to disclose information on the beneficial owners of an enterprise. The aim being more transparency and thus to hinder the abusive use of companies and trusts for the purpose of money laundering and offences underlying it, such as tax evasion and the financing of terrorism. The bureaucracy for businesses should however be kept at a minimum by the utilising information on any interests held already available in existing registers, such as the commercial register.

Penalty levels to be significantly increased

Penalties for serious, repeated and systematic offending are to be significantly increased to secure compliance with the money laundering regulations. Furthermore, in future the authorities will publish all penalty notices, which can no longer be disputed, on their website.