Your tax advisor for international tax law
Their success knows no limits:
Do you want to invest abroad, become active as a foreign company in Germany or work across borders? Whatever you intend to do, a large number of special tax regulations must be observed in international business transactions.
In a globalized world, almost every company has a connection to foreign countries. Very quickly, complex tax questions arise: What is the best way to expand my company abroad? What do I have to consider when making deliveries to foreign customers? What has to be considered when moving out of Germany? What has to be considered when sending employees abroad? How can double taxation be avoided?
Our firm has many years of experience in national and international tax law, bilateral agreements and international jurisdiction. After completing comprehensive training courses, we are already in the process of being examined and appointed by the Chamber of Tax Advisors as a specialist advisor for international tax law.
But private individuals also increasingly have a foreign connection. Even the purchase of a vacation home or the posting as an employee can trigger tax consequences. With us you are on the safe side in these matters. We offer active structuring advice and reduce your tax burden. We advise you on all double taxation agreements.
As tax advisors for international tax law, we serve numerous international clients and offer advice in German and English.
We have local cooperation partners in many countries. Together, we can thus guarantee you holistic advice and support for your tax case.
Professional advice for domestic residents
Private individuals often have a foreign connection. Even the purchase of a vacation home or the posting as an employee can trigger tax consequences. We offer active tax structuring advice on the following topics, among others:
- Avoidance of double taxation
- Taxation of real estate abroad
- Avoidance of departure tax in the event of a transfer of residence abroad or in the event of inheritance
- Tax on the transfer of profits in the case of participation in foreign companies
- Taxation and apportionment of wages in the case of secondment/foreign assignments
- Treatment and structuring of severance payments
- Taxation of foreign investment income
- Inheritance tax assessment of international inheritance cases and gifts
There are many tax pitfalls lurking in situations with a foreign connection. One example is the so-called exit taxation.
Expert advice for domestic entrepreneurs
In a globalized world, almost every limited liability company, every limited partnership, every sole proprietorship has a connection to foreign countries. Very quickly, complex tax questions arise for GmbHs, KGs and Co.: What is the best way to expand my company abroad? What do I have to consider when making deliveries to foreign customers? What has to be considered when moving out of Germany? What has to be considered when sending employees abroad? How can double taxation be avoided? We are here to help you with advice and support.
Employee secondment (often also referred to as employee posting) usually refers to the temporary posting of an employee to a foreign affiliated company (or from abroad to a domestic affiliated company). The following questions regularly arise in this context:
- Is the right of taxation with the so-called sending state or the state of activity (right of taxation according to the DTAs)?
- are individual income components to be taxed in Germany or abroad (apportionment of wages according to DTAs)?
- will the foreign income remain tax-free?
- is there a social security obligation at home or abroad?
- the direct and indirect expenses in connection with the posting are deductible as business expenses in the sending state (for the employer there) or the host state (for the host affiliated company) (transfer pricing deferral).
As tax advisors for international tax law, we know: The deferral of income plays a role for income tax purposes especially in cases that fall under the scope of a double taxation agreement (DTA), because the foreign permanent establishment is exempt from German taxation. Even if no DTA has been concluded with the permanent establishment state, a proper deferral of profits is necessary for trade tax (intercompany privilege).
The implementation of the Authorised OECD Approach (AOA) in German law and the enactment of a Permanent Establishment Profit Splitting Ordinance (BsGaV) has significantly changed the delimitation of income between the remaining company (previously: parent company) and the permanent establishment. In practice, however, the question of whether the foreign state involved also applies the principles of the AOA will lead to problems. It must be clarified whether the AOA has been implemented at the level of the respective DTA.
If a resident taxpayer establishes or acquires a legal entity abroad, he creates an independent taxable entity there. The income of this company only affects domestic taxation if it is distributed to the tax resident. The same applies to the sale of the participation. In the case of reinvestment, the German tax authorities are left empty-handed. The purpose of the addition taxation is to prevent unrestricted taxpayers from transferring their foreign income to a company with tax capacity which has its registered office in a low-tax country and is not subject to taxation in Germany, thereby achieving tax advantages.
Under certain conditions, the regulations on the taxation of income from foreign subsidiaries cover this deferral of taxation. This is done in that so-called passive income of the foreign company is directly attributable to the domestic shareholders, irrespective of the way in which the profits are appropriated. Such addition eliminates the shielding effect of the foreign company from German taxation, since the foreign income is subject to national taxation. The legislator cites the fight against tax abuse as justification for this addition. Four conditions must be fulfilled in order for the foreign income to be taxable for the domestic taxpayer:
- It must be a foreign company.
- It must be controlled by a shareholder with unlimited tax liability or jointly with related parties, if necessary also indirectly via a GmbH (limited liability company)
- The foreign company must generate income from passive acquisition.
- Passive income must be taxed at a low rate.
The facts of addition taxation also have an effect on participations in foreign partnerships or permanent establishments. However, the legal consequence of this is a change from the tax exemption actually provided for under DTAs to the tax imputation method.
As tax advisors for international tax law, we are familiar with all the details and structuring alternatives for the taxation of the addition of income.
Direct business, branch or subsidiary? We advise you on the optimal orientation of your foreign engagement.
Expert advice for foreign residents
Foreign private individuals may be subject to taxation in Germany. We arrange your case in such a way that double taxation is avoided. We take over the preparation of the German tax return for you. The advice we provide for international tax law includes the following areas:
- Tax advice on double taxation agreements DTAs
- Taxation of real estate in Germany
- Taxation of pensions and retirement benefits from Germany
- Taxation and apportionment of wages for employment in Germany
- Treatment and structuring of severance payments
- Taxation of managing directors and officers of German companies
- Reduction or avoidance of domestic withholding tax
- Inheritance Tax Assessment of Inheritance Cases with Reference to Germany
Expert advice to foreign entrepreneurs:
Complex issues require competence and a sense of design. We develop solutions together with you, for example on the following topics:
In terms of income tax, the deferral of income plays a role above all in cases that fall under the scope of a double taxation agreement (DTA), because a domestic permanent establishment is subject to German taxation. We provide you with competent advice, register your domestic permanent establishment with the tax office, take care of the ongoing financial and payroll accounting and prepare all necessary tax returns.
We advise you on all questions concerning your German subsidiary - from its foundation to its liquidation. Questions concerning the legal form, contract design, organization and equipment of the management play just as much a role as financing models, tax structuring and transfer pricing documentation. We take care of the ongoing financial accounting and payroll accounting for your employees.
Withholding taxes are taxes for which the state uses a special procedure, the so-called withholding procedure. In contrast to the assessment procedure, in which the tax is levied by means of a tax return, in this case the state uses a private person (credited entrepreneur) who levies (withholds) and pays the taxes on its behalf (= liable party). This does not change anything about the person liable to pay the tax; the withholding taxes remain direct taxes and to that extent have the character of advance payments by the person liable to pay the tax. The name withholding tax is due to the fact that the intermediary private person liable to pay the tax is at the same time the contracting party of the tax debtor and is thus closest to his source of income. Both persons, the tax debtor and the party liable to pay the tax, are combined into one liability group in order to make the procedure effective.
There are withholding taxes in three areas from the perspective of the foreign company:
- in payroll tax law
- for capital gains tax
- in international tax law, e.g. dividends or the supervisory board tax.
In many cases, a withholding tax deduction can be avoided or reduced by filing an application in time.
Our country-specific focus:
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