Information only in English
German legislation
- Tax Simplification Act 2011 (“Steuervereinfachungsgesetz“) – first draft law issued
Several measures that would simplify the income taxation of individuals have been announced, and, if approved, these would become effective on 1 January 2012. The draft law also provides for changes to the rules governing communications with the tax authorities, e.g. electronic rather than paper communications. Additionally, measures such as levying a fee for binding rulings only in material cases (tax impact of EUR 10,000 and above) are proposed.
The coalition parties have announced that the tax provisions concerning business taxation (mainly regarding the offsetting of losses and rules on group taxation) will be modified. First proposals are expected in September 2011.
- Real estate transfer tax rates
A number of German federal states have increased the real estate transfer tax rate as follows:
| Berlin | As from 1 January 2007 | 4.5 % |
| Brandenburg | As from 1 January 2011 | 5 % |
| Bremen | As from 1 January 2011 | 4.5 % |
| Hamburg | As from 1 Januar 2009 | 4.5 % |
| Niedersachsen (Lower Saxony) | As from 1 January 2011 | 4.5 % |
| Saarland | As from 1 January 2011 | 4 % |
| Sachsen-Anhalt | As from 2 March 2010 | 4.5 % |
| Schleswig-Holstein | As from 1 January 2012 | 5 % |
| All other federal states | 3.5 % |
Tax treaties
- 2010 treaty with U.K. in force
The Germany-U.K. income tax treaty (signed on 30 March 2010), which replaces the 1964 treaty, entered into effect in Germany on 1 January 2011. In the U.K., the treaty is effective as from 1 January 2011 for taxes withheld at source, from 1 April 2011 for corporation tax purposes and from 6 April 2011 for income tax and capital gains tax purposes. The main changes in the treaty include a reduction of the withholding tax rate on dividends to 5% for direct participations of at least 10%, a right to tax the sale of shares of certain real estate owning companies in the country where the real estate is located, changes to the calculation of the 183-day threshold for employees, as well as far-reaching anti-abuse provisions to prevent cases of double non-taxation.
- Exchange of information clause in Austria treaty amended
Germany and Austria signed a protocol to its existing treaty on 29 December 2010 that amends the exchange of information provision (article 26) and aims at implementing the OECD standards of transparency and effective exchange of information. The protocol will become effective for fiscal years starting on or after 1 January 2011 and will have practical relevance, in particular, with regard to the exchange of tax relevant bank information.
Tax authorities
- E-Tax Balance Sheet: trial period beginning 1 February 2011
Beginning 1 February 2011, the German Federal Ministry of Finance will hold a voluntary three-month E-Tax Balance Sheet trial period that will test readiness for the E-Tax Balance Sheet, which applies as from fiscal year 2012 (see article in this issue).
2011 changes with relevance for employers
- A formal objection is now possible against advanced wage tax rulings. An amendment or revocation of the advance ruling is only possible with effect for the future.
- Various threshold and exemption amounts in the wage tax as well as in the social security provisions have also changed with effect from 2011.
- The tax card 2010 remains valid for the year 2011. The elimination of the paper tax card is planned for 2012.
If you have any questions, please contact the authors of the article at gtln@deloitte.de or your regular Deloitte contact. Please also contact the authors of this newsletter if you would like to receive a detailed summary of the 2011 tax law changes relevant for employers in Germany.
