german rules on corporate expatriations 16 april 2009 klaus sieker sieker/09031001.ppt
TRANSCRIPT
German Rules on Corporate Expatriations
16 April 2009
Klaus Sieker
Sieker/09031001.ppt
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German Rules on Corporate Expatriations
B. Consequences/potential disadvantages of German tax residency
C. Corporate expatriations from Germany
F. Direct/indirect expatriation within the EU/EEA
D. Objectives/benefits of corporate expatriation from Germany
E. German tax consequences of corporate expatriation
A. German rules on corporate tax residence
G. Direct/indirect expatriation outside the EU/EEA
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A. German rules on corporate tax residence
Whether organized under foreign or German law a corporation is tax resident in Germany if it either maintains its
Statutory seat or
Place of management in Germany
“Seat” refers to the statutory seat as per the articles
Place of management is defined as the place from where instructions in regard to the day to day–operations are issued
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B. Consequences/potential disadvantages of German tax residency
Worldwide income subject to German tax
Non-resident corporations subject to German tax only with certain German source income
Dividends paid subject to 26.375 % withholding tax
No (German) withholding tax on dividends paid by non-resident corporations
Resident corporation is subject to Germany‘s CFC Rules
Non-resident corporations are not
Sale of shares in German tax resident corporation is subject to 26.375 % capital gains tax
No German capital gains tax on non-resident sellers selling shares in a non-resident corporation
10 % or greater participations in resident corporations subject to German gift/inheritance tax regardless of residency of donor/donee/decedent/heir
Participations in non-resident corporations escape German gift/inheritance tax provided that donor/donee/decedent/heir are non-residents
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C. Corporate expatriations from Germany (1)
Expatriation = relinquishing German tax residency
No transfer of operations (other than top management)
Expatriation (in a strict sense) requires that the German corporation transfers both
Its statutory seat and
Its place of management
Transfer of statutory seat permissible (under corporate law) for a GmbH and a SE (within the EU) but not for an AG
Expatriation (in a wider sense) achievable by means of a corporate reorganization (share for share exchange, cross-border merger)
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C. Corporate expatriations from Germany (2)
Direct
Luxembourg Germany
Allianz SEBoard/Vorstand
Indirect
Luxembourg Germany
Neue Deutsche Bank SA
Deutsche Bank AG
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D. Objectives/benefits of corporate expatriation from Germany
Benefits for the expatriating corporation
Escape CFC taxation
Additional opportunities for implementing structures saving taxes in countries of operations
Benefits for the shareholders of the expatriating corporation
Escape capital gains tax
Escape gift/inheritance tax
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E. German tax consequences of corporate expatriation
Depends on
the method of expatriation (direct or indirect)
the destination (within the EU/EEA vs. outside the EU/EEA)
Corporate level
Exit charge
Losses carried forward
Real estate transfer tax
Shareholder level
Capital gains tax charge
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F. Direct expatriation within the EU/EEA (1)
Luxembourg Germany
Allianz SEBoard/Vorstand
Gain recognition required unless assets of the corporation remain attributable to German PE
Presumption that participations and intangibles are attributable to head office
Losses carried forward remain intact
No RETT
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F. Direct expatriation within the EU/EEA (2)
Luxembourg Germany
Allianz SEBoard/Vorstand
Shareholder level
No gain recognition in case of shares in a SE
In other cases gain recognition required unless Germany’s right to tax shareholder with capital gain is not affected
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F. Indirect expatriation within the EU/EEA (1)
Before After
Shareholders Shareholders
Corporate level
No gain recognition
Losses of Deutsche Bank AG and its German subsidiaries are extinguished if Neue Deutsche Bank SA acquires more than 50 % of Deutsche Bank AG
If Neue Deutsche Bank SA acquires 95 % or more of the shares in Deutsche Bank AG, RETT is triggered
Deutsche Bank AG,Germany
Neue Deutsche Bank SA,
Luxembourg
Deutsche BankAG, Germany
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F. Indirect expatriation within the EU/EEA (2)
Before After
Shareholders Shareholders
Shareholder level
Upon application gain recognition not required if Neue Deutsche Bank SA acquires more than 50 % of the shares in Deutsche Bank AG
Deutsche Bank AG,Germany
Neue Deutsche Bank SA,
Luxembourg
Deutsche BankAG, Germany
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G. Direct expatriation outside the EU/EEA
USA Germany
XYZ Inc.Board
Corporate level
XYZ Inc. organized under Delaware law having its place of management in Germany
Management moves to the USA
Gain recognition required (whether or not German PE is retained)
Losses?
No RETT
Shareholder level
Gain recognition required unless Germany’s right to tax shareholder with capital gain is not affected
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G. Indirect expatriation outside the EU/EEA
Before After
Shareholders Shareholders
Corporate level
Same rules as for expatriation within EU/EEA
Shareholder level
Mandatory gain recognitionDeutsche Bank AG,Germany
Neue Deutsche Bank AG,
Switzerland
Deutsche BankAG, Germany
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BONN
Johanna-Kinkel-Straße 2 - 453175 Bonntelephone: ++49(0) 2 28 / 95 94 - 0telefax:++49 (0) 2 28 / 95 94 - 100 E-Mail: [email protected]
BERLIN
Friedrichstraße 6910117 Berlin telephone:++49(0) 30 / 21 00 20 - 20 telefax:++49(0) 30 / 21 00 20 - 99E-Mail: [email protected]
FRANKFURT AM MAIN
Platz der Einheit 160327 Frankfurt/Maintelephone:++49(0) 69 / 71 703 - 0telefax:++49(0) 69 / 71 703 - 100 E-Mail: [email protected]
Contact:
Dr. Klaus SiekerE-Mail: [email protected]
MÜNCHEN
Brienner Straße 2980333 Münchentelephone:++49(0) 89 / 80 00 16 - 0telefax:++49(0) 89 / 80 00 16 - 99 E-Mail: [email protected]