Germany


Germany Tackles Missing Trader Fraud

Posted on September 17th, by Global Tax Weekly in Sales Tax. No Comments

In Germany, plans were announced in the draft Annual Tax Act 2020 to impose the VAT reverse charge mechanism on supplies of certain telecommunication services by resellers, following an increase in missing trader fraud related to the provision of voice over IP (VOIP) services.

According to the Annual Tax Act 2020, the fraud involving VOIP services typically centers on sales made by a German company to another Germany company that then resells the services to a foreign business. In the fraud scheme, the reseller does not remit the VAT collected to German authorities from the onward supply, while a refund may be sought by the first company in the supply chain.

Under the proposed change, from January 1, 2021, the recipient of the supply must account for the VAT due on the supply through its VAT return, instead of paying VAT to … Read More »


Germany And Bulgaria Announce VAT Reductions

Posted on June 19th, by Global Tax Weekly in Sales Tax. No Comments

In Germany, the much discussed fiscal stimulus package has been approved by the Federal Cabinet, paving the way for a reduction in the standard rate of value-added tax from 19 to 16 percent from July 1 to December 31, 2020, with the reduced seven percent rate also cut, to five percent, during the same period.

Bulgaria has followed Germany’s – previously unveiled – VAT reduction for the catering sector, with the Bulgarian Parliament had approved legislation temporarily reducing the rate of value-added tax in this area.

Under the measures, food served in catering outlets will be taxed at the nine percent reduced rate of VAT. However, alcoholic beverages served in restaurants will continue to be taxed at the 20 percent standard rate. This temporary regime will apply from July 1, 2020, until December 31, 2021.

For more information on this, and other topical … Read More »


German VAT Reduction For Catering Industry

Posted on May 7th, by Global Tax Weekly in Sales Tax. No Comments

In an update on the COVID-19-related tax relief measures available to businesses, the German Finance Ministry announced that a regulation is being prepared to temporarily reduce the rate of value-added tax in order to assist the catering sector, and hopefully permit it to remain afloat in the new socially distanced era of eating out.

Under the proposal, food supplied in restaurants, cafes, and similar outlets will be taxed at the seven percent reduced rate.

Currently, food supplied for consumption on catering premises is subject to VAT at the 19 percent standard rate, while supplies of takeaway food are taxed at the seven percent reduced rate. The measure is expected to apply from July 1, 2020, until June 30, 2021.

For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look


German Elections Result In Uncertainty

Posted on October 3rd, by Global Tax Weekly in Elections. No Comments

While these are exciting times for political commentators, they are something of a nightmare for taxpayers. Governments with clear majorities tend to have clear plans, even if most of the time the plans end up being executed only partially. But unholy alliances between parties of different stripes are often the source of policy paralysis, as the various participants seeks to reconcile what can sometimes be vastly differing positions on various issues, including taxation.

Germany is an interesting one in this respect. The CDU-led Government has stubbornly refused to loosen the fiscal reins in order to build up a budgetary buffer, in spite of successive pleas by economists to show a little mercy to long-suffering taxpayers. But the CDU is about to get into bed with a party calling for an aggressive tax-cutting policy in the form of the FDP. And joining … Read More »


Germany To Phase Out Solidarity Tax

Posted on July 18th, by Global Tax Weekly in Corporation Tax. No Comments

They say that there’s no such thing as a temporary tax hike. If so, the corollary to this maxim should be that there’s no such thing as a permanent tax cut.

The reality is that life isn’t quite as simple as that, and governments aren’t always as mean to taxpayers as is often made out (including by this commentator!).

We’ve had two examples of countries not living up to this rule of thumb in recent days and weeks.

In one of potential significance, Germany’s Christian Democrat Union (CDU) has proposed phasing out the far-from-beloved solidarity tax, which was introduced as a fiscal buffer when the East Germany’s basket case of an economy began to merge with the West more than 25 years ago.

Looking in from the outside, it would be hard to disagree with those who say that the solidarity tax has served its purpose. … Read More »


Germany Sees Record Budget Surplus

Posted on March 8th, by Global Tax Weekly in Budgets. No Comments

The German Government deserves much credit for the prudent management of its budget, and of its economic affairs in general, which has resulted in a record post-reunification budget surplus of EUR24bn (USD25.3bn). But I could also mark the country down for its extreme reluctance to share the surplus in the form of tax cuts. And there’s plenty of scope for those. According to Paying Taxes, an average-size company in Germany hands over just under 50 percent of its profits in income, labor, and other taxes. What’s more, individuals face a top rate of 45 percent, plus the solidarity surcharge and social contributions. The counter argument is that some of the best public services in the world must be paid for somehow, and that somehow is inevitably through taxation – a bargain accepted in northern Europe much more than it is anywhere else … Read More »


Germany To Maintain Policy Of Fiscal Stability

Posted on September 12th, by Global Tax Weekly in Budgets. No Comments

To Germany now. And what’s this? A proposal by the Finance Minister to cut taxes? There must be an election coming up! And indeed there is. Elections to the Bundestag, the lower house of parliament, are due to take place no later than October 2017, and the seemingly unflappable, rock-like Angela Merkel is perhaps facing the first ratings crisis of her long stint in power.

Germany has a budget surplus and is therefore well-placed to afford tax cuts. But while the EUR15bn (USD16.9bn) figure mentioned by Finance Minister Schäuble looks impressive, tax cuts worth that would be equal to just 0.4 percent of Germany’s USD3.5 trillion gross domestic product – they’re small fry, in other words.

It’d be unwise to expect a reversal of Germany’s policy of fiscal responsibility and restraint. The migrant crisis has pushed up expenditure, and Germany remains ever-conscious of … Read More »


Google Faces Tax Grab In France

Posted on May 31st, by Global Tax Weekly in Compliance, Corporation Tax, Government, International Taxation, Tax Avoidance. No Comments

Bashing big business is de rigueur these days – an appropriate use of a French phrase considering the recent early morning raid by (reportedly) around 100 investigators and five magistrates on Google’s offices in Paris. Accusations of aggravated financial fraud and money laundering abound, linked to Google’s headquarters in Ireland. That is quite a joint accusation against one the globe’s biggest businesses.

But it is no secret that France – with Germany – has long held a grudge against Ireland and its competitive business tax and streamlined regulatory environment. That grudge became most apparent when the Celtic tiger lost its teeth during the financial crash, and refused to budge on calls led by those two countries to increase its low (for EU standards) 12.5 percent corporate tax rate as a condition for a bailout.

For more information on this, and other … Read More »


Germany Goes Against The Grain

It was encouraging to see German Finance Minister Wolfgang Schäuble rebelling against European Commission proposals for public country-by-country reporting at the latest meeting of EU finance ministers, given the weight of Germany’s voice in the EU. It’s going against the grain these days to question the call for greater corporate transparency. And perhaps there’s an argument that multinational firms could benefit from being more open about their activities from a public relations point of view, in much the same way as offshore jurisdictions like Guernsey have. Yet, as Schäuble suggested, there has to be a balance between “transparency and practicality.”

As Schäuble pointed out to his counterparts in Brussels recently, publishing sensitive company information in the public domain could lead to all sorts of unintended consequences, such as “lining someone up to be pilloried publicly.”

For more information on this, … Read More »


Legal Lunacy

Posted on November 9th, by Global Tax Weekly in Carbon Taxes. No Comments

“The law is an ass” we say in English when the strictly correct application of legal principles by a court leads to a result that any normal right-thinking person would think is absurd; and the German Constitutional Court has just brayed very loudly in saying that the country’s air travel ticket tax does not offend against the constitutional rights of citizens or the airlines. Maybe so, but it and the Court offend against common sense. All taxes are an offence against citizens’ rights when the government that levies them spends the money it collects in a wasteful and unprincipled fashion by providing bread and circuses to voters in order to stay in power, and by that definition most of the money Germany collects is unconstitutional, as is the case in virtually all “advanced” democracies. Well, I won’t mount that particular … Read More »





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