Germany - Tax evasion-related proposals 

December 5: A coalition agreement in late November 2013 includes an explanation of the tax policies proposed by the coalition parties of the German lower house (Bundestag).

Among the proposed tax provisions are measures concerning: (1) tax simplification and tax enforcement; (2) containment of tax evasion and tax avoidance; and (3) additional measures.

Tax simplification and tax enforcement

  • Introduction of pre-completed tax returns for all taxpayers by 2017 (for retirees and pensioners already from the assessment period 2015 onwards)
  • Development of electronic communication system with the tax administration
  • Increased usage of IT-supported risk analyses
  • Advancement of the self-assessment procedure (beginning with corporate income tax)

Containment of tax evasion and tax avoidance

  • Support of the OECD base erosion and profit shifting (BEPS) initiative
  • Limitation on the deduction of business expenses for license expenditure and for payments to “letterbox” companies
  • Prevention of “double non-taxation”
  • Introduction of country-by-country reporting between tax administrations

Read a December 2013 report [PDF 1.5 MB] prepared by the KPMG member firm in Germany: German Tax Monthly (December 2013)

Also included in the KPMG report are discussions of the following topics:

  • Update on Germany-US FATCA intergovernmental agreement)
  • AIFM taxation adjustment act
  • Proposal to amend the EU parent-subsidiary directive
  • Participation exemption for S corporation (United States) according to the income tax treaty with the United States
  • Application of double tax treaty measures for partnerships
  • Allocation of special partner business property under tax treaty law (I R 47/12)
  • Write-downs to lower going-concern value of loans to foreign related companies (12 K 12056/12)
  • Contribution to a partnership against “mixed consideration” (X R 42/10)
  • Limitation of real estate depreciation for foreign corporations incompatible with EU law (10 K 2408/10)

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