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Anti-avoidance framework
Regulation
What legislative and regulatory initiatives has the government taken to combat tax avoidance in your jurisdiction?
German tax law already included numerous provisions to combat tax avoidance schemes before the implementation of measures under the Base Erosion and Profit Shift (BEPS) Action Plan. In addition to the general anti-avoidance provision (Section 42 of the General Fiscal Code), there are a significant number of provisions addressing specific situations leading to tax avoidance (eg, anti-treaty shopping provisions, subject to tax provisions and provisions to avoid white income).
To what extent does your jurisdiction follow the OECD Action Plan on Base Erosion and Profit Shifting?
Germany has already implemented a significant number of measures under the BEPS Action Plan.
Is there a legal distinction between aggressive tax planning and tax avoidance?
The term ‘aggressive tax planning’ is not recognised in German law and therefore, only activities which are categorised as tax avoidance under the applicable anti-avoidance rules are covered by German tax law. However, there is an ongoing discussion to amend the law to stipulate under which circumstances tax planning must be disclosed to the tax authorities.
Penalties
What penalties are imposed for non-compliance with anti-avoidance provisions?
There are no specific penalties for any non-compliance with anti-avoidance provisions, but the general penalties, interest and surcharge apply with respect to taxes assessed which deviate from the tax declaration submitted by the taxpayer. Further fines and penalties apply in the case of tax evasion.
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