Tax loopholes

Germany moves against tax tricksters

closing tax loopholes germany
Show me the money. Source: dpa

Germany’s federal states want to take tougher actions against tax avoidance schemes. In recent years, major US companies such as Apple, Amazon and Google have minimized their tax payments thanks to complex tax models. But many wealthy German citizens have also used such complicated constructs. Often, this is entirely legal because the practices are designed to exploit loopholes in the state’s tax system.

That is why the 16 finance ministers of the German states are determined to close these loopholes. On Thursday, they will discuss a law which would make a disclosure of tax-saving models mandatory nationwide. Handelsblatt got an exclusive look at key points of the proposal, which was submitted by Rhineland-Palatinate and Schleswig-Holstein.

Social Democratic party politicians, whose party has become the junior partner in the just agreed coalition government, hope that the SPD politician Olaf Scholz will be their ally in this struggle as the new finance minister. “We must further intensify the fight against tax fraud and tax avoidance,” demanded Rhineland-Palatinate Finance Minister Doris Ahnen. “The primary objective of a tax reporting duty is to provide the tax legislator with a timely opportunity to react to significant and especially budgetary tax arrangements,” the finance ministers said in a statement.

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