Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

December 17, 2019
2019-6598

German Government postpones adoption of draft ATAD implementation law

On 10 December 2019, the first draft of the German “Law implementing the EU Anti-Tax Avoidance-Directive” (“Draft Law”; Council Directives 2016/1164 of 12 July 2016, and 2017/952 of 29 May 2017, “ATAD”) was released for public consultation. The further legislative process was expected to take place very quickly; Government (Bundeskabinett) approval of the bill was already expected on 18 December.

The 10 December Draft Law includes significant changes to the German taxation of cross-border transactions. It included not only an implementation of the anti-hybrid rules of the ATAD Directive, but also, inter alia, a comprehensive reform of German transfer pricing rules, in particular those relating to cross-border intercompany financing, and a reform of the German controlled foreign corporation (CFC) rules, which both to a great extent tightened significantly the currently applicable rules in these areas. For further details, see EY Global Tax Alert, Germany publishes draft ATAD implementation law, dated 12 December 2019.

There is currently no official information available concerning the reasons for the postponement. A major point of contention seems to be the absence of a proposal to lower the current high tax kickout exception rate (25%) on CFC income of a German taxpayer. Since the ATAD Directive mandates implementation of the standards set by the directive into German law as of 31 December 2019, it is expected that the German Ministry of Finance will push to restart the legislative proceedings with the introduction of a revised draft as soon as possible in January 2020. A revised draft could become available as early as mid-January 2020.

We will continue to report on the progress of this legislative development.

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (United States), German Tax Desk, New York

Ernst & Young LLP (United States), EMEIA Transfer Pricing Desk, New York

Ernst & Young GmbH, Munich

Ernst & Young GmbH, Freiburg

Ernst & Young GmbH, Berlin

Ernst & Young GmbH, Duesseldorf

Ernst & Young GmbH, Stuttgart

ATTACHMENT

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more