Aucun titre de diapositive

1
Evolutions récentes de la fiscalité des
entreprises en Allemagne
Francois Hellio, Joachim Krämer, Angelika
Thies,Stephan Wachter
2
Overview

• Welcome and Introduction
• Principles of German Business Taxation for French
  Investors
• 10 Months German Interest Barrier Rules
  Structuring Alternatives
• Impact of Transfers of Shares on Losses

3
Principles of German Business Taxation for
French Investors Dr. Angelika Thies, CMS Hasche
Sigle, Munich
4
Agenda

• Basic aspects
• Alternative investments
• 2.1. Overview
• 2.2. German corporation
• 2.3. German partnership
• 2.4. German branch
• Summary

5
1. Basic aspects

• Income from trade or business is subject to
  federal tax (corporation tax/solidarity
  surcharge) and local tax (trade tax) in Germany.
  - Regarding solely rental/property income, a
  trade tax exemption may be achieved.
• If a foreign corporation generates income from
  trade or business in Germany, the following
  income tax rates apply Corporation tax
  (federal tax) 15.00 Solidarity
  surcharge (federal tax) 5.50 thereon
  15.83 Trade tax (local tax, depending on
  location) 717.15 non-deductible
  Average
  about 2333

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1. Basic aspects

• No withholding tax (WHT) on dividends, interest
  and royalties within the EU, provided "sufficient
  substance" of the foreign entity is available
  (between corporations, at least 15 shareholding,
  at least 12 months holding period).
• Germany has concluded double tax treaties on
  income taxation with about 90 countries,
  including e.g. France.
• Attractive holding taxation (German corporation)
  dividends and capital gains are 95 tax free
  (effective tax rate about 1.5), interest and
  other costs in connection with subsidiaries are
  generally deductible. However, regarding interest
  deduction, specific rules apply.

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1. Basic aspects

• No stamp duties, no taxes on equity
  contributions, no tax on a share transfer (only
  real estate transfer tax of 3.5 (Berlin 4.5)
  may apply on German real estate).
• Tax losses may generally be carried forward for
  an unlimited period of time. Furthermore, a one
  year loss carry back is available for corporation
  tax purposes. However, tax losses may be
  forfeited in case of a change of ownership. This
  applies for both corporations and partnerships in
  Germany, as well as to a branch of a German
  entity. Furthermore, EUR 1 Mio. of current profit
  may be fully set off against tax losses brought
  forward. Above this, 60 of the exceeding profit
  may be set off against tax losses brought
  forward.
• Transfer pricing rules and principles on the
  allocation of revenues and expenses to a German
  branch have do be observed (including
  documentation).

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2. Alternative investments2.1. Overview
French corporation
100
100
100
GP
German partnership (e.g. GmbH Co. KG)
German corporation(GmbH, AG, SE)
German branch
0
see 2.2
see 2.3.
see 2.4.
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2. Alternative investments2.2. German
corporation
German taxable income 100.0Trade tax,
e.g. (15.0)Corporation tax/solidarity surcharge
(15.825) (15.8)Income after German tax
69.2 WHT on dividend EU 0 (0.0) Treaty
often 5 (3.5) Net
dividend
69.2/65.7
French corporation
inter-companycontracts
Dividend
100
German corporation(GmbH, AG)
10
2. Alternative investments2.2. German
corporation

• The German corporation has to file tax returns in
  Germany.
• Tax advantages may be achieved if shareholder
  loans are granted, the interest barrier rules are
  fulfilled and the tax rate of the shareholder is
  lower than the German tax rate. However,
  regarding a French parent company, shareholder
  loans have lost their attraction due to decreased
  tax rates in Germany.
• There is no WHT on interest paid by a German
  corporation not being a bank.
• Agreements on services etc. are generally
  accepted between the German corporation and its
  French parent company if transfer pricing rules
  are observed (e.g. at arm's length compensation,
  documentation).
• According to the German/French double tax treaty,
  there is generally no German exit taxation in
  case of a share deal (as the taxation right is
  solely transferred to France).

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2. Alternative investments2.3. German partnership
French corporation
German taxable income 100.0Trade tax,
e.g. (15.0)Corporation tax/solidarity surcharge
(15.825) (15.8) Income after German tax 69.2
profit transfer
100
GeneralPartner
100
German partnership (e.g. GmbH Co. KG)
0
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2. Alternative investments2.3. German partnership

• The same tax rates apply for partnerships and
  corporations. However, in case of a partnership,
  there is no WHT on a profit transfer
• The French corporation (corporation tax), the
  German partnership (trade tax) and the General
  Partner (corporation and trade tax) have to file
  tax returns in Germany.
• If the German assets or of the shares in the
  German partnership are sold, German taxation
  applies (same tax rates as above).
• In case of shareholder loans, interest expenses
  are not effectively tax deductible, as payments
  of the German partnership to its French parent
  company regarding loans, services rendered etc.
  are ignored for German tax calculation purposes.
  However, this would be different if another
  related party (e.g. grand parent) provides loans
  or services to the German partnership.
• Interest barrier rules/interest deduction rules
  have to be considered.

13
2. Alternative investments2.3. German branch
French corporation
German taxable income 100.0Trade tax,
e.g. (15.0)Corporation tax/solidarity surcharge
(15.825) (15.8)Income after German tax 69.2
profit transfer
German branch
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2. Alternative investments2.4. German branch

• There is no specific tax rate for a branch of a
  foreign corporation in Germany compared to a
  German corporation.
• Expenses of the foreign corporation which can be
  clearly allocated to the German branch are
  generally tax deductible in Germany.
• The foreign corporation has to file tax returns
  in Germany.
• There is no WHT on a profit transfer.
• In case of an exit (i.e. sale of German assets),
  German taxation applies (same tax rates as
  above).

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3. Summary
16
3. Summary
17

• Dr. Angelika Thies, CMS Hasche Sigle
• angelika.thies_at_cms-hs.com
• 49 89 23807 162 (Munich, Germany)

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10 Months German Interest Barrier Rules
Structuring Alternatives
Dr. Joachim Krämer, CMS Hasche Sigle, Frankfurt
am Main
19
The Principles (1)

• Business taxpayers are allowed to deduct interest
  expenses only in an amount not exceeding 30
  percent of a given business years (tax) EBITDA
• Applies to all resident tax payers but also to
  German permanent establishments of non-resident
  taxpayers, partners of commercial partnerships
  and non-resident taxpayers with real estate
  investments in Germany
• Interest expenses not deducted in a given
  business year are carried forward

20
The Principles (2)

• The 30 percent limitation does not apply if
• total interest expenses do not exceed 1 million
  per year ( 1 million threshold) or
• the taxpayer is not part of a group of companies
  (group of companies clause) or
• the taxpayer is part of a group of companies but
  can prove that its debt-equity ratio is not more
  than 1 percent higher than the debt-equity ratio
  of the other group companies (escape clause)

21
The Principles (3)

• Escape clauses does not apply, if more than 10
  percent of the total annual interest expenses of
  anyone group company are paid to a major
  shareholder (i.e., a shareholder who holds more
  than 25 percent), a party related to such major
  shareholder or a third party that can take
  recourse against such shareholder or related
  party.
• This exception from the escape clause is only
  applicable with regard to interest payments made
  to persons outside the group. Pure intra-group
  interest is not considered in this regard.

22
Where We Stand

• Introduced in 2007 with effect from all financial
  years starting after May 27, 2007 onwards
• German tax authorities issued extensive guidance
  in July 2008
• Presumably no amendments to interest barrier
  rules provisions through Annual Tax Act 2009 (to
  be enacted in Nov. 2008)
• First experience from tax field audits in approx.
  1 to 2 years from now
• First Federal Tax Courts decisions not before 5
  years from now

23
Need for Action

• Take interest barrier rules into consideration
  when structuring any new debt financed
  engagements in Germany
• Review of existing structures (!)
• Existing structures are often not optimized with
  respect to interest barrier rules
• There is a significant risk that the interest
  barrier rules turn loss-making companies into
  taxpayers

24
Structuring Alternatives Atomization

• Atomize financing expenses to several
  subsidiaries that can use the 1 million
  threshold
• Assumption Total debt financing 100 million,
  30 percent equity, interest rate 7 percent
• total annual interest expenses 4.9 million
• If atomized into 5 subsidiaries all are below
  the 1 million threshold
• Implement atomization structure pre acquisition
  or for existing structures
• No tax consolidation between group companies

25
Structuring Alternatives Tax consolidation

• Tax consolidated groups are treated as one single
  entity for purposes of the interest barrier rules
• Tax consolidation can be used
• To achieve permissible debt-equity ratio at the
  level of the consolidated group
• (escape clause)
• To avoid that a group of companies classifies as
  a group of companies for interest barrier rule
  purposes

26
Structuring Alternatives Deconsolidation

• Ultimate consolidation entity must have
  sufficient unrelated shareholders as necessary to
  avoid consolidation
• Purposes
• Structure consolidated group to ensure that
  debt-equity ratio is met (escape clause) or
• Avoid applicability of interest barrier rules
  entirely (group of companies clause)
• Use hybrid financing instruments / orphan
  companies to achieve same economic results as 100
  percent ownership

27
Structuring Alternatives Escape Clause

• Meet requirements of escape clause (debt-equity
  ratio) through a combination of instruments
• Structure relevant group of companies through
  deconsolidation at some level
• Structure debt-equity ratio of German taxpayers
  through e.g. tax consolidation
• Interpose non-commercial partnerships in group
  structure because they are not taken into
  consideration in computing the debt-equity ratio

28
Structuring Alternatives Yen Loan

• Use a Yen loan for (acquisition) finance and swap
  it into a loan
• Only low interest expenses on Yen loan are
  subject to interest barrier rules whereas swap
  fees should not be considered interest

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Contacts
Dr. Joachim Krämer CMS Hasche Sigle, Frankfurt
am Main Telefon [phone] Telefax
49 (0)69/7 17 01-40518 Mobil 49 (0)172
74 26 244 E-Mail Joachim.Kraemer_at_cms-hs.com
Curriculum Vitae Born in Wuppertal-Elberfeld in
1972. Admitted to German bar in 2000. Appointed
tax advisor in 2006. Partner with CMS since 2007.
Specializations Mr. Krämer's practice focuses
on international and domestic taxation, as well
as related matters such as mergers and
acquisitions, reorganizations and foreign direct
investments in Germany.
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Impact of Transfers of Shares on Losses Dr.
Stephan Wachter, CMS Hasche Sigle, Munich
31
Agenda

• Comparison and Overview
• New Rules
• 2.1. Transfer of shares ("change of control" gt
  25)
• 2.2. Direct and indirect transfer of shares
• 2.3. Relevant person of acquisition
• 2.4. Effects on tax losses
• 2.5. Strategy considerations

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1. Comparison and Overview

• "New" tax regime
• direct/indirect transfer of shares
• 25 to 50 proportional forfeiture
• gt50 full forfeiture
• of tax loss (interest) carry forwards
  current tax losses
• Scope of Application
• any transfer as of 1 January 2008

• "Old" tax regime
• direct transfer of shares gt50
• plus
• injection of mainly new assets
• Scope of Application
• until 31 December 2012
• if relevant transfer of shares has started prior
  to 1 January 2008

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2. New Rules2.1. Transfer of shares
("change of control" gt25)

• transfer or pooling of voting rights or other
  membership rights
• reorganizations mergers, spin-offs
• contributions by way of increase of subscribed
  capital
• decrease of subscribed capital
• by way of a giftexcept
• transfer by way of succession to individual
  person (-)
• anticipated and final distribution of the estate,
  if fully without consideration (-)

34
2. New Rules2.2. Direct and indirect
transfer of shares
4
X
Y

• No group relief
• up-stream/down-stream merger ()
• side stream merger ()
• capital increase ()
• voting pooling agreement ()

A
2
B
E
3
C
1
D
2
Loss GmbH
35
2. New Rules2.3. Relevant person of
acquisition

• Relevant transfer of shares needs to occur to
• one specific individual person or entity or
  partnership
• or affiliated persons/entities
• or "group of acquirers who have similar
  interests"(i.e. in case of any coordination of
  the acquisition)

36
2. New Rules2.4. Effects on tax losses
37
2. New Rules2.5. Strategy considerations

• Transfer of shares lt 25
• Transfer of shares between 25 and 50
• first step transfer of 26 forfeiture of 26
• second step transfer of 24 no further impact
• note not within one fiscal year ("misuse")
• Prior use of losses
• realization of tax profits (i.e. sale-and-lease
  back)
• generating of reorganization gains (followed by a
  "step-up" of the acquiring entity)
• note minimum taxation (EUR 1 Mio. plus 60 of
  exceeding amount) to be considered

38
2. New Rules2.5. Strategy considerations

• Spin-off of operating business into
  sub-partnership
• Corporate tax tax neutral or by way of a step-up
  and use of losses within minimum taxation
• remaining losses stay with GmbH
• Transfer of 30 interest to B
• no forfeiture of corporate tax losses by GmbH
• proportional (example 70) use of trade tax
  losses

A
Loss GmbH
2
B
1
p-KG
30
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• Dr. Stephan Wachter, CMS Hasche Sigle
• stephan.wachter_at_cms-hs.com
• 49 89 23807 253 (Munich, Germany)