Germany

Corporate - Significant developments

Last reviewed - 10 January 2020

In December 2019 the German Ministry of Finance released a draft bill for the transposition of the EU Anti-Tax Avoidance Directive (EU-ATAD - (EU) 2016/1164 and ATAD II - (EU) 2017/952) into German law. The draft bill provides for changes in several areas, including the German CFC rules and rules on hybrid mismatches. Beyond the implementation of the EU Directive various statutory regulations regarding transfer pricing will also be amended or implemented.

In May 2018, an EU-Directive on the mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (DAC 6 -(EU) 2018/822) was introduced. Although no reporting procedures have yet been implemented, taxpayers and intermediaries have been required to monitor cross-border arrangements since 25 June 2018 and to prepare to report such arrangements to the finance authorities. In December 2019 the legislative procedure for transposing DAC 6 into German law was concluded, thereby implementing a reporting obligation for intermediaries and taxpayers applicable from 1 July 2020 onwards for reportable cross-border arrangements where the first step in the implementation of he reportable cross-border arrangement was made after 24 June 2018.

In the context of the discussions in respect of the taxation of the digital economy, the German Federal Ministry of Finance together with the French Ministère de l’Economie et des Finances have presented plans for a Global Anti Base Erosion (GloBe) Project, which are intended to be discussed on an international level. In essence, it proposes the introduction of a world-wide minimum taxation (level playing field).

Furthermore, in May 2019, the Federal Ministry of Finance published a draft bill containing, inter alia, a tightening of the rules for levying Real Estate Transfer Tax (RETT) in connection with share transfers. The legislative procedure is expected to be concluded in the first half of 2020.

In addition, the legislative procedure for a new law for a research and development (R&D) subsidy as well as new laws for a reform of local property tax were concluded in 2019.

According to another bill enacted in December 2019, from 2021 onwards the exempted amounts for the solidarity surcharge will be increased so that many individuals will not have to pay the solidarity surcharge anymore. This does not apply to corporate taxpayers, which will still have to pay the solidarity surcharge on corporation tax.

Various amendments to the Value Added Tax Act came into force in December 2019 and on 1 January 2020; these relate to, in particular, the implementation of EU Directive (EU) 2018/1910 (so-called "Quick Fixes") into German law.