Thursday, 3 November 2016

German Finance Committee proposes additional BEPS-related and other tax rules

The German Finance Committee (the Committee) of the Bundesrat (Federal Council) has presented its recommendations for suggested changes and additions to the draft bill concerning implementation of the EU Directive regarding the mandatory automatic exchange of information in the field of taxation and additional measurements to avoid base erosion and profit shifting (BEPS). The recommendations include several additional rules targeting BEPS and other OECD developments, including:

  • treating special business expenses’ of a partner of a German partnership as nondeductible to the extent they reduce the tax base in another jurisdiction, thereby preventing a so-called ‘double dip’, and
  • treating the disposition of shares of land-rich companies as German-source income, regardless of ownership percentage and company residence.

The Committee did not suggest changes or additions to the country-by-country reporting (CbCR) rules that the German Federal Ministry of Finance drafted and published on June 1, 2016.

If the draft bill includes all the changes that the Committee suggested, the additional rules may already apply for tax years ending after December 31, 2015.

Source & more info: PwC