European Tax Harmonization Top Goal For German Finance Minister
Our partner Dr. Oliver von Schweinitz was quoted in Bloomberg’s BNA International Tax Monitor on German government’s tax and financial proposals for the next legislative period broadly laid out by the newly appointed German Minister of Finance Olaf Scholz in his first address to Parliament.
For all Social Democrat Scholz’s talk of dynamism and change, however attorneys told Bloomberg Tax that such policies signal a continuation of the fiscal ethos of his predecessor, Christian Democrat Wolfgang Schäuble, known for his strict adherence to a balanced budget, conservative tax treatments, and low-cost government spending measures.
But Scholz’s more congenial tone in supporting German-Franco-led European tax harmonization measures, and calls to bolster German investments in the European Union, are an indication that Germany is moving away from unilateral action in favor of European-wide tax policy to keep it competitive, attorneys said. This comes amid pushes in countries like the U.S. and China to offer the most pro-business tax regimes.
Domestic treatments more the same
Beginning with domestic tax treatments, Scholz stressed the new government’s plans to gradually dismantle the country’s decades-old solidary surcharge – a 5.5 percent levy on income tax, capital gains and corporate tax – to the benefit of middle and low-income earners. The tax was instituted after German reunification and brought in 17.45 billion euros in 2017, according to the German Ministry of Finance.
While pegged as a cost saving measure to consumers and industry, Oliver von Schweinitz, a partner with GGV law firm in Hamburg, told Bloomberg Tax March 22 that the gradual phase out is a way to still benefit from the groundswell of money from wealthy citizens and businesses for as long as possible – essentially continuing the status quo.
“With the gradual phase out, they have the chance to phase it out for consumers first and businesses going last,” he said. “It creates a strange phenomenon that wealthy people and businesses may eventually face a much higher tax rate just by falling into the bracket subject to the surcharge – eventually there’s a cliff.”
- countries feeling pressure after U.S. cut corporate tax to 21 percent from 35 percent
- practitioners doubt comments signal sea change
To read the complete article see attached PDF.
Dr. Oliver von Schweinitz berät Unternehmer und Unternehmen an den Standorten Hamburg und Frankfurt im nationalen und internationalen Steuerrecht sowie im Wirtschafts- und Immobilienrecht.
Spezialgebiete Bankaufsichtsrecht (Trennbankengesetzgebung, Dodd-Frank-Act), Besteuerung von offenen und geschlossenen Fonds, Immobilien- und Immobiliensteuerrecht, Private Equity, Recht des Informationsaustausches (QI, FATCA, CRS), Wirtschafts- und Steuerrecht – auch im Kontext mit US-Recht.
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