Draft bill to combat tax avoidance

Published: 09 November 2016


The German Ministry of Finance has published a draft bill (here) to tackle perceived tax avoidance. The draft legislation seems to be aimed at domestic taxpayers with interests in offshore companies and also extends taxpayers’ compliance requirements. The measures include: (i) the existing obligation to disclose an acquisition of a “qualified investment” in foreign entities will be extended to other business relationships such as partnerships or foreign funds (in addition to standardising the treatment of direct and indirect holdings); (ii) from 1 January 2018, taxpayers will be required to declare the purchase and sale of participations of at least 10%, or participations with a value of at least EUR 150,000, in foreign entities, associations and funds, and information about the activities of the relevant foreign entity must be provided to the tax authority; (iii) power for the tax authority, where there is clear indication of tax avoidance or tax abuse, to issue requests for information to third persons, even if the names of all taxpayers concerned are not known; and (iv) ending bank secrecy in tax matters, under which the tax authority has been obliged  to respect the confidential relationship between credit institutions and their customers. Reports suggest that the cabinet will give its approval to the draft bill on 21 December 2016. For further information, please contact Paul Hale or Enrique Clemente.