Steuerberatung und Wirtschaftsprüfung für den Mittelstand +49-69-25622760

Steuerberatung und Wirtschaftsprüfung für den Mittelstand +49-69-25622760

Self-disclosure – How does it work?

There is no form or formal requirement for voluntary disclosure. The written form is always preferable in order to preserve evidence. The taxpayer must declare all amounts that are not time-barred and have not yet been declared in full. Partial voluntary declarations (either not all years or not all tax types or not all) are invalid. If 5% or more of the income is not reported in the first declaration, the entire voluntary disclosure is null and void. The tax office must be in a position to issue tax assessments immediately on the basis of the voluntary disclosure that do not understate taxes. A voluntary disclosure is excluded if the tax office has already discovered the offense in whole or in part and the offender knew this or should have expected it. The voluntary disclosure is only exempt from prosecution if the evaded taxes, interest and any surcharges have been paid within the (short) deadline set by the tax office. Read here why black money is not worth it. If you would like to know how we can support you with your voluntary disclosure, click here.

Black money – high risk of discovery?

So-called tax havens are facing great political pressure. As a result, more and more of them are abandoning their banking secrecy or no longer accepting black money in the first place. Exchanging information with other financial administrations is now often a priority. Corrupt bank employees burn bank customers’ data onto data carriers and sell them to tax authorities. They buy the data and analyze it. This is followed by inspection notices and then letters or even house searches in which the tax evaders are confronted with their offenses. Once the officials are on the doorstep, it is too late to make a voluntary disclosure, as the tax office has already learned of the offense. Why is black money no longer “safe” in any tax haven in the world? The shortest possible answer: see the Panama Papers. The somewhat more detailed answer: all offers to conceal black money are dubious per se. Moreover, it is only a matter of time before even the most remote tax havens commit to exchanging information, restrict their banking secrecy or identify the names and data of bank clients and pass them on to foreign tax authorities on request. Some of these tax havens have foreign exchange restrictions, i.e. I cannot get my money back without restrictions – or taxes are withheld. The banks or their employees are often corrupt and charge horrendous fees that eat up the tax advantage. This might also interest you: Self-disclosure – How does it work? Self-disclosure – What changes came into force in 2015? Do you need help in this area? Click here to find out how we can support you.

Legal Form Selection

The choice of legal form is much more than a formality when setting up a company. There are many legal and tax opportunities, but also risks to assess. We advise you on choosing the right legal form. Factors that are decisive in the legal form selection The form and manner in which a company is founded in Germany should be carefully considered, as many factors depend on it, which in the worst case can lead to costly mistakes that can no longer be reversed. The following factors in particular must be taken into account: Minimum capital Foundation costs Current taxation and on cessation of business/sale Liability for obligations by the company and the shareholders Ongoing administrative costs (office rent and equipment, personnel costs, bookkeeping, annual financial statements, tax returns, notarizations, commercial register costs) Business aspects, e.g. the scope and duration of activities in Germany Legal form: Selection of legal form and taxation Contact us Sensible scope for structuring the choice of legal form How many owners should the company to be founded have? There are many options here. If only one person is to be the owner, for example, a sole proprietorship, a one-person GmbH & Co. KG or a corporation can be considered. If several people are to be partners, a civil law partnership (GbR), commercial partnerships or corporations are possible options. A civil law partnership does not operate a commercial business. For tax purposes, its result is allocated to the partners according to their shareholding. The biggest problem is that each partner is fully liable for all liabilities of the GbR with all of their private assets, i.e. not just up to the amount of their contribution or only proportionately with their share quota. No written partnership agreement is required to establish a GbR. A verbal agreement or mere joint action may be sufficient. You should therefore check exactly who you are entering into a partnership with. In addition, the GbR is only represented externally by all partners jointly, which is very cumbersome in practice. OHG, KG, GmbH & Co. KG – it is good to take a close look at everything. If a GbR operates a commercial business, it is a commercial partnership and must be entered in the commercial register. Depending on its structure, an OHG (all partners are fully liable), as a KG (some partners, known as limited partners, are only liable up to the amount of the contribution made) or as a hybrid form with a corporation (e.g. GmbH & Co. KG). In the case of mixed forms, all fully liable partners are corporations. This ensures that no private individual is liable as a shareholder with their entire private assets. Nevertheless, the company is regarded as a partnership for tax purposes, for example. For the purposes of accounting, valuation and disclosure, however, the regulations for corporations apply to the greatest possible extent. UG haftungsbeschränkt – why it is not recommended! The UG haftungsbeschränkt, the GmbH, the AG and the S.E. The UG is not recommended because its reputation is so poor due to its low equity capital and many bankruptcies that only a few business partners are interested in doing business with it. Due to the many formal requirements and high minimum capital requirements, the AG and SE are only interesting for companies that plan frequent changes of shareholders, want to operate in many countries with branches, refinance themselves on the capital market or have their shares listed on a stock exchange. They are therefore hardly an option for normal investors. The most popular legal form is therefore the GmbH (limited liability company). The limited liability company GmbHs can be founded by one or more persons. They must subscribe a minimum share capital of €25,000, at least half of which must be paid in immediately at the beginning. In the event of problems, the GmbH is only liable with its assets. The managing directors of the GmbH are only liable in exceptional cases (e.g. delaying insolvency, deliberately causing damage). The majority of German SMEs operate in the legal form of a GmbH. This is why it enjoys a very good reputation in business transactions. GmbH or branch office – which is recommended for you?

Branch office vs. company

We are often asked which is better: a branch office or a limited company. Two facts are usually misjudged: Many believe that the effort and costs involved in setting up and managing a branch office are much lower than for a subsidiary. Others believe that they can do business or make extensive preparations in Germany without becoming liable for tax here. The form and manner in which a company is founded in Germany should be carefully considered, as many factors depend on it, which in the worst case can lead to expensive mistakes that cannot be reversed. The following factors in particular must be taken into account: Costs for the foundation Current taxation Liability for obligations by the company and the shareholders Costs for ongoing administration Business aspects, e.g. the handling and duration of activities in Germany. For foreign companies that want to become active in Germany, there are three main options: The rep office, the branch office and the subsidiary. Branch office or limited company? Which is better? Permanent establishment / branch office A branch is a legally dependent unit of a company. It bears the name of the parent company with the addition “branch office”. Entry in the commercial register is mandatory. A permanent establishment is a term coined for tax purposes and arises independently of entry in the commercial register if certain conditions are met. Prerequisite for a permanent establishment: A permanent establishment from which business is conducted. Only exists for a certain period of time. Entrepreneur can freely dispose of them (key power). Even a warehouse or a construction site that lasts more than six months can be a permanent establishment. If a branch is entered in the commercial register, it is always a permanent establishment. The rep office or representative office commonly used abroad does not legally exist in this form in Germany. The least common form of business activity in Germany by foreign entrepreneurs, apart from commercial agents, is when employees of the foreign company work in Germany without meeting the above-mentioned criteria for a permanent establishment. Here, too, it should be noted that the employees may have to be registered in Germany for social security and tax purposes. Even preparatory sales activities can lead to the creation of a permanent establishment. German VAT law may also be applicable in some cases when it comes to invoicing. This is often overlooked, especially in online trade / e-commerce. Find out more about VAT here. Ltd. A GmbH is a separate legal entity. It is legally independent of the shareholders or the parent company. It is represented externally by its managing director(s). Its name can include the name of the parent company or have a different name. The involvement of a notary and entry in the commercial register are mandatory. The GmbH comes into existence with the notarial establishment This requires a partnership agreement. You can have this individually drafted by a lawyer according to your wishes within a certain legal framework. This can be very helpful in the event of disputes between the shareholders in the future. Until entry in the commercial register, the founding partners have unlimited personal liability. Thereafter, the shareholders are only liable up to the amount of their contribution. Once this has been paid in full, the shareholders are no longer liable and the GmbH itself is only liable up to the amount of its assets. This is a major advantage of the GmbH. If this liability is to be limited, regular profit distributions should be made. The share capital for a GmbH is at least € 25,000 At least half of this must be paid in before entry in the commercial register. The share capital must initially be at the free disposal of the managing directors. After registration and receipt of a tax number, however, it may also be used within certain limits, e.g. for the purchase of fixed assets for ongoing business activities. If the GmbH is to be terminated, it can be liquidated. The blocking year must be observed. If the company is insolvent or over-indebted under insolvency law, the managing directors must file an application for the opening of insolvency proceedings with the competent local court without undue delay, but within 3 weeks at the latest. Failure to do so may constitute a criminal offense by the managing directors and may result in personal liability for the managing directors. The managing directors should therefore always keep an eye on the financial development of the GmbH in their own interest. The GmbH must register for tax purposes and submit regular tax returns. These include advance VAT returns, which must be submitted monthly, quarterly or annually, and annual tax returns for corporation tax, trade tax and VAT. If the GmbH employs staff, it must fulfill employer obligations. These include the calculation and payment of wage tax and contributions to social security institutions. The GmbH must prepare annual financial statements The content and components of the annual financial statements are based on size criteria defined in the HGB. The same applies to the disclosure or filing of financial data. If the shareholders wish to deposit or withdraw funds, this is generally only possible via contributions to equity or via distributions or loans. In the case of distributions, a shareholder resolution must be passed beforehand. In addition, a capital gains tax return must be prepared and submitted to the tax office. Up to 25% capital gains tax and 5.5% solidarity surcharge may have to be withheld so that the receiving shareholder does not receive the full amount of the distribution. We are happy to take on these and other tax and accounting tasks for you and will be happy to answer any questions you may have. Advantages and disadvantages In favor of the GmbH is the limitation of liability to its assets and its good reputation in business transactions in Germany. Arguments against the GmbH are the minimum share capital and the fact that a notarized articles of association are

Annual audits

Audits of annual financial statements The audit of the annual financial statements is required by law for companies with a certain balance sheet total or number of employees. In accordance with Section 267 (1) in conjunction with Section 316 (1) HGB, companies that exceed two of the three criteria listed below on two consecutive balance sheet dates are required to have their annual financial statements audited: Balance sheet total of EUR 7.5 million after deduction of a deficit recognized on the assets side (Section 268 (3)) Sales of EUR 15 million in the twelve months prior to the reporting date Annual average of 50 employees Voluntary audits of annual financial statements are also considered, e.g. at the request of shareholders, lenders or group auditors. Are you interested? We now concentrate on preparing your annual financial statements and providing tax advice and no longer carry out audits ourselves. However, we will be happy to support you in your search for a suitable auditor. Please contact us.

Holding companies

The holding company as a tax-saving model? Holding companies hold investments in other companies. The bookkeeping and annual financial statements are generally very straightforward due to the low level of business activity. According to Section 8b of the German Corporation Tax Act, profit distributions from other corporations to the holding company are tax-free if the holding amounts to at least 10% of the share capital or nominal capital and if the flat-rate prohibition on deducting business expenses of 5% of dividends is disregarded. Taxation only occurs when the profit is distributed to a natural person. As a rule, the final withholding tax of 25% + solidarity surcharge then applies. However, the partial income method or the lower individual tax rate of the natural person may also apply. This makes the holding company suitable for distributing profits from profitable operating companies and legally shifting the high tax burden that would normally be incurred to the future. Is the holding company entitled to deduct input tax? Whether a holding company is entitled to deduct input tax depends on the tasks it performs. A purely financial holding company, whose purpose is the acquisition and holding of investments, does not carry out any economic activity of its own and is therefore not entitled to deduct input VAT. A pure management holding company, on the other hand, which intervenes in the management of subsidiaries in return for payment, carries out its own economic activity and is therefore entitled to deduct input tax. The situation is more difficult for a mixed holding company, which provides services to some subsidiaries in return for payment and concentrates on merely holding investments in others. A limited input tax deduction is possible here. This also applies if the holding company makes partially tax-free transactions.

GGI Global Alliance AG

GGI is a public limited company under Swiss law with its administrative headquarters in Baar. More than 600 member companies are present in over 120 countries. The more than 30,000 employees of the member companies generate a cumulative turnover of over 6 billion US dollars. GGI regularly performs well in international rankings of Alliances and Associations and is positioned at number 1 or 2 in the rankings. In any case, it is the largest multidisciplinary association of independent auditing, tax advisory, law, consulting and fiduciary firms in the world. GGI is a member of EGIAN, the European Group of International Accounting Network and Associations, and of AILFIN, the Association of International Law Firm Networks. GGI is a referral alliance and not a network according to §319b HGB. As a referral allicance, GGI does not practise the profession of auditor, tax advisor, lawyer, management consultant or trustee. GGI also does not provide consulting services to third parties. GGI is also not a joint venture or partnership of the participating firms. As the firms in the referral alliance are independent, GGI is not responsible for the services or the quality of the services provided by the participating firms. Similarly, Benefitax GmbH is not responsible for the services or the quality of the services provided by other GGI members. Further information on our worldwide contacts can be found here.

Specialist advisors for international tax law

There are only a few experts among tax consultants and lawyers in the field of international tax law. The title “Specialist advisors for international tax law” is protected and also requires some additional work for tax consultants. For example, you must have been appointed as a tax consultant for at least 3 years. In addition, it was necessary to attend 120 hours of precisely defined lectures on international tax law and to demonstrate the knowledge acquired in three written and one oral examination. Only those who can prove that they have independently worked on at least 30 practical cases in international tax law are admitted to the examination, which is randomly checked in the oral examination. Anyone who is appointed as a specialist advisor for international tax law must provide evidence of at least 10 hours of special training in this area every year in order not to lose the title. We usually achieve a multiple of this and are also active as authors and lecturers in international tax law. We also regularly exchange information with other specialist consultants. Would you like to find out more about our services in the area of international tax law for companies? Please click here. What distinguishes auditors from pure tax consultants?

Inheritance tax rates in Germany

Tax value up to and including Tax bracket I II III 75,000 euros 7 % 15 % 30 % 300,000 euros 11 % 20 % 30 % 600,000 euros 15 % 25 % 30 % 6,000,000 euros 19 % 30 % 30 % 13,000,000 euros 23 % 35 % 50 % 26,000,000 euros 27 % 40 % 50 % over 26,000,000 euros 30 % 43 % 50 % All information without guarantee! Source of the table: Inheritance Tax and Gift Tax Act (ErbStG), Section 19 Tax rates Is this topic relevant for you? Find out what we can do for you here. Click here for the personal allowances for inheritance and gift tax.

Inheritance and gift tax: Personal allowances

Tax-free amount (§ 16 ErbStG) Tax bracket (§ 15 ErbStG) for spouses and life partners 500.000 € I for children and grandchildren whose parents are deceased, as well as for stepchildren and adopted children 400.000 € I for grandchildren 200.000 € I for parents and grandparents on acquisition by inheritance 100.000 € I for parents and grandparents in the case of acquisition by gift, for siblings, children of siblings, step-parents, children-in-law, parents-in-law, divorced spouses and partners in a dissolved civil partnership 20.000 € II for all other recipients of a gift or inheritance 20.000 € III Source of the chart: Inheritance Tax and Gift Tax Act (ErbStG), § 16 Allowances Find out here how we can support you in the area of inheritance and gift tax. Click here for the inheritance tax rates.