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German Tax Update


Germany's GDP grew by 1.4% in the first quarter of 2011. While still facing a structural deficit of around 3.5% of GDP in 2011, Germany's Federal Ministry of Finance expects considerably higher revenues. Some German politicians such as the new liberal leader R?sler of the FDP, the junior partner in Chancellor Merkel's coalition government and Bavaria's Minister of Finance are once again calling for tax reliefs. Taxand Germany provides an overview of the most recent tax developments in the country.

Increase In German Real Estate Transfer Tax Rates
Until 2006, all of the 16 federal states in Germany applied for a uniform real estate transfer tax rate of 3.5%. Since then, more and more federal states have increased their real estate transfer tax rate, lastly at the beginning of 2011. The actual real estate transfer taxes are listed in the newsletter.

German Tax Authorities Facilitate Intragroup Utilisation Of Tax Losses
The German Federal Ministry of Finance has issued a decree allowing a corporation incorporated in another EU/EEA state with its place of management in Germany, to allocate its profits or losses to its tax group parent to the extent this income is based on earnings subject to German tax. Please note that this is only the position of the German tax administration and that the law has not been amended (yet). Accordingly, regarding corporations which have been established under the laws of another EU/EEA state, it is no longer required that the subsidiary in such a tax group has its seat in Germany as long as the place of effective management is in Germany. All other requirements for the formation of a tax group must still be met.

Taxand's Take

It is advised that multinationals are aware of the latest tax developments and seek the necessary guidance.

Read more on German Tax Developments here

Your Taxand contact for further queries is:
Ulrich Siegemund
T. +49 6196 592 16364

Taxand's Take Author