Law includes measures to protect taxpayers from disadvantageous consequences resulting from Brexit.
On 21 February 2019, Germany’s lower house of parliament (Bundestag) voted to approve a law (Brexit Tax Implementation Act) that will introduce tax measures to protect German taxpayers from potential negative consequences of the UK leaving the EU.
The UK is scheduled to withdraw from the EU on 29 March 2019. This withdrawal date can be extended only by unanimous approval of the EU member states. A draft withdrawal agreement that includes a transition period, and further details regarding the relationship between the UK and the EU during the transition period and following withdrawal, has been approved by the EU member states, but still awaits approval by the UK. Whether the UK will approve this agreement is unclear, and it is possible that the withdrawal period may be extended beyond the original 29 March 2019 deadline.
Assuming that the UK leaves the EU without a transition period or a withdrawal agreement (“hard Brexit”), the UK will be treated as a country outside of the EU and no longer will be able to benefit from certain German tax measures that are available only to EU-resident taxpayers. Withdrawal also could have the consequence that certain tax-neutral reorganizations/transfers that take place before Brexit and that require the involvement of EU resident companies or permanent establishments (PEs) following the reorganization/transfer would become taxable on a retroactive basis. To mitigate the most disadvantageous tax consequences resulting from Brexit, the law clarifies that Brexit itself will not constitute a “harmful event” for purposes of certain German tax law provisions. (Harmful events may result in immediate taxation or other unfavorable tax consequences.)
The measures included in the final version of the law approved by the lower house generally are identical to the measures included in the first draft of the law that was published by the Ministry of Finance (MOF) on 9 October 2018 (see GTLN dated 11 October 2018) and approved by the upper house of parliament on 15 February 2019:
In addition to the measures included in the first draft of the law published by Germany’s MOF, the final law includes the following measures:
The law will become effective on 29 March 2019, after it is signed by the president and published in the federal gazette.
Contact
Andreas Maywald
Client Service Executive | ICE - German Tax Desk
www.deloitte-tax-news.de | Diese Mandanteninformation enthält ausschließlich allgemeine Informationen, die nicht geeignet sind, den besonderen Umständen eines Einzelfalles gerecht zu werden. Sie hat nicht den Sinn, Grundlage für wirtschaftliche oder sonstige Entscheidungen jedweder Art zu sein. Sie stellt keine Beratung, Auskunft oder ein rechtsverbindliches Angebot dar und ist auch nicht geeignet, eine persönliche Beratung zu ersetzen. Sollte jemand Entscheidungen jedweder Art auf Inhalte dieser Mandanteninformation oder Teile davon stützen, handelt dieser ausschließlich auf eigenes Risiko. Deloitte GmbH übernimmt keinerlei Garantie oder Gewährleistung noch haftet sie in irgendeiner anderen Weise für den Inhalt dieser Mandanteninformation. Aus diesem Grunde empfehlen wir stets, eine persönliche Beratung einzuholen.
This client information exclusively contains general information not suitable for addressing the particular circumstances of any individual case. Its purpose is not to be used as a basis for commercial decisions or decisions of any other kind. This client information does neither constitute any advice nor any legally binding information or offer and shall not be deemed suitable for substituting personal advice under any circumstances. Should you base decisions of any kind on the contents of this client information or extracts therefrom, you act solely at your own risk. Deloitte GmbH will not assume any guarantee nor warranty and will not be liable in any other form for the content of this client information. Therefore, we always recommend to obtain personal advice. |