The collection of taxes resulting from German tax investigation amount to additional 3.1 billion EUR in 2012. That is a surplus of about 40 percent in comparance with the year 2011 where a record sum was collected as well. In the years before, a surplus of 1.5 to 1.7 billion EUR was the average outcome of German tax investigation. The numbers provided by the Federal Ministry of Finance (BMF) do not yet include taxes from voluntary disclosures which were especially caused by CD-ROMS from international banks.
Criminal investigation and prosecution in German tax courts have also evolved. International mutual assistance of tax offices regarding taxpayer’s with crossborder tax liablility has increased, too. Income tax is on the second range regarding of the collected surplus: VAT is the main source for the investigators who fight turnover tax fraud (missing trader, VAT carousel) effectively.
The German Federal Court of Finance (BFH) has decided that VAT paid by the German football club “Borussia Moenchengladmach” to several football player’s agents cannot be deducted from the club’s tax liablity. As a consequence it may be expected that the German tax authorities will have a close look at every future prolongation of professional footballers’ contracts and also will review players’ transfers of the last years. Reimbursement of taxes may make this court decision an expensive issue, especially for the top football clubs.
The court decision is based on the finding that player’s agents usually work for the players themselves and not for the football club. The explicit content of the individual agent’s contracts is decisive for this supsumption of the court. Therefore, every contract now needs to be reviewed, regarding its potential tax risk. For Borussia, about 20 agent contracts are effected by the decision.
German taxpayers with higher income have to expect an increase of their personal tax burden in 2014: Real wages not only stagnate, but the more are devalued by the progressive German income tax.
A calculation example of the German Institute of Taxpayers makes the effect clear: A single taxpayer with a gross wage of 200 EUR per month and an annual wage increase of 3 percent will have to pay an additional 6,5 percent of taxes. Progression of income tax therefore causes a secret tax increase. For the example given, the surplus of taxes is 176 EUR – instead of 81 EUR that would result from an equal increase of wage and tax. A single tax payer with a gross wage of 4000 EUR is better off with a tax increase of 5.5%. The buck of the worst finally stops with a married couple, of whom one earns 2000 EUR and the other 1500 EUR gross: Tax increase of 7,5%, that’s almost 2.5 times the wage increase.
We, at DEHNEN., have been concerned about developments regarding taxpayers’ rights for a long time already – and now, the President of the German Federal Court of Finance, Rudolf Mellinghoff has also raised his voice according to our request: Stop criminalization of taxpayers! Continue →
Economic relations between Germany and Brazil will now be strengthened by the newly established honorary consulate in Düsseldorf (http://www.brasil-honorarkonsulat.de/). We therefore welcome Max Krieger, the new consul, in our office building!
Amongst Russia, India, China and South Africa, Brazil as one of the biggest emerging markets is an important strategic partner for Germany. Still, Brazilian economy struggles with the prejudice of corruption and has to improve its image to attract German business to “go Brazil” – where German technology and knowledge is very welcomed.
The absence of effective bilateral agreements complicates the economic relationships. The double taxation treaty of Germany and Brazil (as of 1975) was cancelled in 2005 because the German Federal Ministry of Finance did not see sufficient interest and cooperation from the Brazilian side as to renegotiate the treaty.
German export to Brazil easily exceeds the sum of German exports to Greece, Ireland and Portugal. Still, but politics rather spend energy on recovery of last-mentioned than to build up new bridges and to negotiate free trade agreements and double taxation treaties with the upcoming markets in Brazil.
Hopefully, the new consulate in Düsseldorf, state capital and important business location of North Rhine-Westphalia, will help to improve the situation!
Taxpayers with US nationality are facing several tax planning and compliance challenges these days. They are taxable in the USA with their worldwide income, regardless of their place of residence. And the Internal Revenue Service (IRS) lately focuses more and more on collection of taxes overseas and makes an effort to prevent tax evasion via foreign financial institutes. The Foreign Account Tax Compliance Act (FATCA) therefore shall serve these goals by several reporting requirements and thereby strives serious privacy concerns as well as data protection issues. Continue →
German VAT regulations are laid down in the Turnover Tax Act (UStG), the Turnover Tax Implementing Regulation (UStDV) and the Turnover Tax Guidelines (UStR). Since January 2012, a new provision of the Implementing Regulation (UStDV) has come into force which is accompanied by enormous problems for the business practice: The entry certificate was established. Continue →
German Tax Law is known worldwide for its complexity. And as every year, the legislative authority is now preparing the German Annual Tax Act, which is still at an early stage of the legislative process. In the following, we present you a selection of issues raised in the legislative procedure of the Annual Tax Act 2013: Continue →
Again, and only shortly after the last announcement of this kind in July, rumors have come up that the ministry of finance of North Rhine-Westphalia has bought even more CDs with valuable tax information from Switzerland. The federal state thereby contradicts the negotiated tax agreement, which was signed by the responsible authorities in September 2011 and was meant to become effective in 2013. Until now, the social democrats (SPD) and the green party (Grüne) are blocking the ratification of the agreement in the German Federal Council (Bundesrat) because they deem the agreement unfair to the broad mass of tax payers. Continue →
As of last Wednesday, August 1, 2012, the operational Porsche AG is a part of VW AG, as pronounced in the press in June 2012. Due to what is known to the public as a “tax deal”, this transaction was possible without a formal buy-out. Instead, the deal took the form of restructuring of the companies: VW gave one share to Porsche SE and therefore acquired the Porsche AG company on a purchase price of 4,46 billion Euros. The tax savings were estimated at about 1,5 billion Euros. Those taxes would have inured to the benefit of the federal state Baden-Württemberg, Porsche’s place of business. Continue →