In order to improve the business location Germany, the
German Cabinet on 19 September 2012 has proposed an Act to change
and simplify the company taxation and the tax law regarding travel
expenses. The Act will primarily simplify the rules regarding the
fiscal unity for tax purposes.
The proposal contains the following changes:
The cap for losses carried back of currently 511,500 EUR resp.
1,023,000 EUR shall be raised to 1,000,000 EUR resp. 2,000,000
The draft law now officially allows that companies resident in
a member state of the European Union or a contract state of the EEA
Agreement may qualify as a controlled company for a tax group, if
their place of management is in Germany. With this change, the law
will be adjusted to the existing practice of tax authorities.
The most helpful amendment will allow fiscal unities to be
accepted for tax purposes, even if the profit transferred was not
computed correctly, if it was the profit resolved upon with the
annual accounts. This will require that the fault is not based on a
lack of diligence and that it is corrected with the next possible
annual financial statements.
Negative income of both the parent company and the controlled
company shall, in future, only be offsetable, if it has not been
considered for tax purposes outside of Germany. This could be
interpreted that the use of fiscal unities for entities held by an
American company where a check-the-box-election has been carried
out might not be available. Hopefully, this will be rectified
during the legislative process.
On the other hand, more red tape will, under the proposal, come
for tax groups where controlled companies do not qualify as joint
stock companies (German Aktiengesellschaft). Agreements in these
cases will have to contain a dynamic reference to Sec. 302 German
Stock Corporation Act (AktG) "in its current version".
Even existing contracts shall have to be adapted until the expiry
of 31 december 2014.
Apart from that, the proposal contains amendments to the law
regarding travel expenses and changes in procedural law.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Cyprus Tax Department recently issued Forms T.D 38, T.D 38Qa and T.D 38Qb applicable to individuals being Cyprus tax residents but non-Cyprus domiciled.
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