Tax policy changes underway in Germany
Changes to German tax policy during 2015 will continue to be debated into 2016, with discussion dominated by inheritance tax reform. The changes may not be in force until the end of June 2016, so succession planning is still possible under the existing regulations, which are generally considered to be more advantageous.
The Tax Amendment Act 2015 contains important changes for businesses. Among them, contributions of shares to companies can only have a tax-neutral effect if other consideration provided in addition to new shares does not exceed legal limits.
Valuation for real property transfer tax purposes has changed. In situations where no consideration was agreed (for instance, in the case of a contribution of shares or a transformation), previous property values were used as the tax base. Now, the values that are relevant for inheritance tax purposes, which tend to be higher than the previous property values, must be used — retroactively back to 2009.
Concerning VAT, construction contractors still need to follow the legal regulations closely because lawmakers continue to refrain from reacting to fiscally undesirable legislation.
Germany will also bring the Base Erosion and Profit Shifting initiative into national law as early as 2016. Multinational corporations can expect regulations on hybrid instruments and country-by-country reporting.
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