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![]() ![]() On, the BMF issued the government draft for the implementation of the Multilateral Convention to Implement Tax Treaty Related Measures to prevent Base Erosion and Profit Shifting (BEPS) - the so-called MLI in Germany. Implementation of the Multilateral Instrument (MLI) The final ratification by the German government was delayed due to the impact of the pandemic but is expected to occur within this year. The draft law is still subject to discussion and further adjustments. Otherwise, there have not been any significant changes in comparison to the first draft. The application of the newly introduced transfer pricing rules starting from 2021 is delayed by one year. Regarding the application period of the rules for reverse hybrid mismatches, this has been delayed to 31 December 2021. In addition to the issued draft bill dated 10 December 2019 introducing the non-deductibility of hybrid mismatches, the new draft contains an extension on the already existing approach, including new rules of applications for continuous obligations. However, the regulations are to be comprehensively revised in detail, especially regarding change of control criterions, adjustments of the motive test in the form of a notification requirement instead of return requirement for cases of proof of substance (‘Cadbury Schweppes Test), and the elimination of the concept of lower-tier intermediary companies. The basic concept of the CFC rules shall be retained as well as the primacy of the provisions laid down in the Investment Tax Act. This applied generally as from 2021 but is delayed by one year. ![]() Newly introduced, in comparison to the draft bill of 10 December 2019, is the reform of the controlled foreign corporation (CFC) rules to prevent tax-induced shifting of passive income to low-taxed jurisdictions. On 24 March 2020, the Federal Ministry of Finance (BMF) presented a new and revised draft bill to implement the EU ATAD into national law.
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