Fiscal plans of prospective German government on tax evasion and tax avoidance

After election to the German Parliament on 22 September 2013 the conservative (CDU/CSU) and social democrat (SPD) parties have strived to form a grand coalition. On 27 November 2013 the coalition agreement was published.

It includes explanations on the fiscal plans to contain tax evasion and tax avoidance such as:

  • Support of the OECD-BEPS initiative (Base Erosion and Profit Shifting). National measures if applicable in anticipation of international regulations and in case, that objectives of the BEPS -initiative have not been reached;
  • Limitation on the deduction of business expenses for license expenditure and for payments to letterbox companies;
  • Prevention of double non-taxation through relevant DTT-clauses and, where applicable, through national regulations;
  • Introduction of a “country by – country reporting” between tax administrations.

Furthermore the agreement of the grand coalition comprises amongst others the following subjects:

  • Introduction of a financial transaction tax;
  • Examination of the tax treatment of capital gains on portfolio investments;
  • Examination with regard to the reorganization tax law, how the ‘exchange of shares’ and reorganizations with financial rewards can be carried out in future without adverse effects;
  • Change of the legal and fiscal framework conditions for venture capital in an internationally competitive way to make Germany an attractive location for funds;
  • Examination of a profit retention provision for small and medium sized enterprises;
  • Modernization of real estate tax.