The German value-added tax system knows two rates of taxation:

• The regular tax rate of 19% and
• The reduced tax rate of 7%.

Amongst others this reduced tax rate includes the delivery of forest and agricultural products, comestible goods and print media, and thus mainly serves a social function. Constant changes of these categories have lead to an increasing complexity of the system.

Due to these increasing difficulties and redundancies, the Bundesrechnungshof (German Federal Court of Auditors) has proposed a complete overhaul of the VAT system. The Bundesrechnungshof propositions include a list of future organisational models for tax rebate in the form of a briefing. Any of the reduced tax rate cases should be investigated individually and receive critical review.

There have been numerous Bundesrechnungshof reviews on the range of application of reduced tax rates, which lead to the only possible conclusion that a number of these largely venerated privileges are no longer objectively justifiable.

The third topic Mr. Peter Dehnen dealt with during his participation in the ABA´s 10th Annual Tax Planning Strategies Conference in Copenhagen are the forms of cooperation for tax purposes in Germany.

Details can be found in the attached written paper.

Read the complete article.

Regarding the limits of information gathering within taxation proceedings, German Fiscal Courts regularly held that information, which the tax payer is not obliged to document, cannot be asked for by the tax authorities.

As a result German legislation became increasingly complex and extensively requires tax payers to document and provide proof, e.g. payment of interest, fees and commissions across borders. Regulations on data support in terms of transfer pricing can be regarded as climax of that tendency.

For more see the written paper on Mr. Peter Dehnen´s speech on Transfer Pricing at ABA´s 10th Annual Tax Planning Strategies Conference.

Read the complete article.

Mr. Peter H. Dehnen served on the “Governments and Information Gathering: Impact on MNE Planning” panel at the ABA sponsored 10th. Annual Tax Planning Strategies Conference in Copenhagen. His first issue to speak on was “Reporting by Corporations as part of German Compliance Requirements”.

Outlining the system of German reporting obligations for corporations, Mr. Dehnen emphasized aspects such as the Financial Reporting Enforcement Panel, which is also known as “Balance Sheet Police” as well as German governmental information gathering in terms of the tax assessment proceedings vs. “corporate privacy”.

For further details find attached the written paper on the matter.

Read the complete article.

The CEO and founder of Dehnen.Lawyers, Peter Dehnen, will be serving on the “Governments and Information Gathering: Impact on MNE Planning” panel at the ABA sponsored 10th. Annual Tax Planning Strategies Conference in Copenhagen. The issues, which we will cover on this newsletter in the future, include

• Reporting by Corporations as part of German Compliance Requirements
• Data in Support of Transfer Pricing – Quantification Requirements to Support Deductions in Germany
• Forms of Cooperation for Tax Purposes in Germany

Peter H. Dehnen is a corporate and international tax lawyer and partner of the law firm DEHNEN.Lawyers which provides legal and tax consulting to German and international businesses. Mr. Dehnen has developed extensive competence in areas such as corporate and individual tax and estate planning, international business transactions, Corporate Governance and Corporate Compliance. He is a qualified German tax attorney and also admitted to the Washington, D.C. Bar as a Special Legal Consultant. Mr. Dehnen advices German and international executives on legal, tax, legislative and policy issues impacting Germany.

You can look forward to these three very extensively covered topics in the new editions of our GermanTaxNews.

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