German Federal Court of Justice: Compliance Management System can lead to reduction of a fine

The German Federal Court of Justice (Bundesgerichtshof, BGH), in its landmark decision of 9 May 2017 (1 StR 265/16), recognised for the first time that where a company is held responsible for violations by its employees, the implementation of an effective and risk-adequate compliance management system ("CMS") to prevent misconduct or even criminal conduct by its employees can lead to a reduction of a fine against the company. Interestingly, not only can an existing CMS in place at the time of the misconduct constitute a mitigating factor when assessing the amount of the fine, the court can also take into account the company's subsequent efforts to identify deficiencies and gaps in its systems and to enhance its respective internal processes, provided that these efforts are deemed suitable to prevent similar violations in the future. The case demonstrates that companies and their management should continue working on their compliance processes and, even after an offence has been committed, fill gaps in their CMS, as this can lead to a reduction in fines.

Germany investigates banks for dividend stripping

Prosecutors and tax investigators are investigating 417 suspected cases of so-called (perfected or attempted) "dividend stripping" or "cum ex transactions" against domestic and foreign banks in Germany. Cum ex transactions are share transactions where banks can obtain multiple refunds of capital gains tax that had only been paid to the German fiscal authorities once. These transactions have resulted in an estimated €5.3 billion of unpaid taxes, the German finance ministry has confirmed. €2.4 billion euros are currently in the process of being reclaimed by the fiscal authorities.

German tax authorities target Chinese online retailers

German tax investigators have seized goods and accounts of approximately 100 Chinese online retailers selling products via online platforms in Germany and failing to pay sales taxes. A German taxpayers' union said in November that Germany could be losing out on €1 billion annually, as online retailers from China, or other non-EU states are failing to pay value added taxes (VAT) of 19 percent, knowingly or not.

Deutsche Telekom calls on government to counter tech threats

Companies such as Deutsche Telekom AG and Facebook have called on the German government to overhaul its technology policy and create a high-level "digital agency". The agency would shape policy in the rapidly evolving technology sector and help companies compete with bigger and more sophisticated US and Chinese rivals. While the country's engineering and automotive industries are fuelling economic growth, its technology sector has complained of difficulties in competing with rivals due to issues ranging from a lack of venture capital funds to tax hurdles.