Oliver Biernat
“dying is easy it's living that scares me to death” is most telling moment in Annie Lennox’ song “Cold”. Applied to our clients this could mean “generating profits is easy, it’s compliance and excessive taxes that scare me to death”. ITPG members’ (members of the GGI International Taxation Practice Group) goal is to fulfil their clients’ compliance and/or to prevent them from paying excessive taxes. Sometimes excessive taxes occur by not knowing the legal ways to reduce the tax burden or by double taxation in cross-border cases. ITPG members can help to find legal ways to reduce such taxes.
Compliance is difficult if you do not know the rules. One of our clients had to learn the hard way what “knowing” in this sense means. Originated from the UK and now living in Malta, he thought the remittance principle is valid all over the world. By using the remittance basis of taxation, you pay UK tax on UK sourced income and gains but only pay UK tax on foreign income and gains if they are brought (remitted) to the UK. So, he paid his German workforce half of their salary in Germany and the other directly half to their families at home (mostly in India). So far, so good. The problem was that he did not declare the other 50% as income from employment in Germany to the German tax authorities.
When he knocked at our door and he wanted a second opinion on this we could only confirm that he had not complied with German rules. So, it was detected and he was accused of and sentenced for tax evasion. Reason for the court’s judgement: Not knowing the rules does not avoid penalties. The lawyers call it: Conditional intent (dolus eventualis) which means that the person causing the damage considers the damage to be possible and accepts it, but does not necessarily want to bring it about. He is therefore aware of the possible consequences of his actions (so-called approval theory), but does not act deliberately (with intent). This means: If you are a successful entrepreneur you are expected to know how to comply with the local rules or you have to ask experts. If you don’t ask and do something wrong, you are considered guilty.
In this edition of the ITPG FYI newsletter 14 tax experts from all over the world have done a great job in providing you with the latest information on tax issues so that you are aware of them and can comply with the rules. Alternatively, you have a feeling that there might be a problem and you now know who is the expert you can ask. Please note that this newsletter also contains the contact data of all authors.
Special thanks go to the sponsor of this edition Schipper Accountants B.V. in Rotterdam/The Netherlands. Last year in May at one of the dinners at the GGI European Conference I had the pleasure of sitting next to charming and knowledgeable Leonie de Vos, who is the author of this edition’s lead article on anit-abuse legislation in the Netherlands in connection with dividends.
Enjoy Reading.
Oliver BiernatResponsible Editor & Global Chair of the GGI ITPG
GGI member firmBenefitax GmbH Steuerberatungsgesellschaft WirtschaftsprüfungsgesellschaftFrankfurt am Main, GermanyT: +49 69 256 227 60
Advisory, Auditing & Accounting, Corporate Finance, Fiduciary & Estate Planning, Tax
Benefitax GmbH is a tax consultancy and public auditing company located in Frankfurt, which is widely recognised as the financial centre of Germany. Benefitax predominantly serves German entities of foreign multinational groups, mid-sized German companies with cross-border activities and wealthy private individuals.
Oliver Biernat is Founder and Managing Partner of Benefitax. He is a German Chartered Accountant, Certified Tax Advisor and Specialist Advisor for International Taxation with more than 30 years of experience. Since 2008, he has chaired GGI’s International Taxation Practice Group (ITPG), increasing its size to more than 570 experts from 90 countries in the process. Contact Oliver.
