Tax evasion
The Steuerentstrickung is the process in the German income tax law , by the hidden reserves of an asset - without a Umsatzakt on the market - are revealed and taxed when the German tax be withdrawn.
In international tax law, a distinction is made between personal (so-called exit taxation , establishing a second place of residence abroad) and factual tax evasion (when transferring business assets abroad).
Transfer of fixed assets abroad
In the case of material tax evasion, an asset from the domestic parent company is transferred to a foreign permanent establishment. The question arises as to what happens to the hidden reserves that have arisen in the balance sheet of this asset.
The general prerequisite for the disclosure of hidden reserves is that Germany had the right to tax and that this right is either excluded or limited after the asset has been transferred to the foreign permanent establishment.
Final withdrawal theory
The theory of the final withdrawal states that an entrepreneur had to immediately discover and pay tax on the hidden reserves accumulated in this economic asset when transferring an asset from Germany to a foreign permanent establishment.
The Federal Fiscal Court (BFH) has with the judgment of 28 October 2009 IR 99/08 law relating to the so-called. "Theory of the final withdrawal" abandoned. With a new regulation, the BFH has denied a basis for immediate taxation.
If the asset later by the foreign permanent establishment is sold, the resulting "realized" hidden reserves, to the extent they have been earned in Germany, continue to be subject to taxation in Germany. This also applies if the profit from the goods transferred abroad is exempt from domestic taxation due to a double taxation agreement (DTA) and if the entrepreneur has also moved his place of residence abroad. According to the new legal regulation, however, there is always the risk of double taxation. In particular, if another DTA state also exercises the taxation right assigned to it in the agreement without restriction when the hidden reserves are later discovered.
This judgment concerned a company relocation in 1995. With Section 4 (1) sentence 3 of the Income Tax Act, a so-called “Entstrickungsparagraph” was introduced, which aims to create the previously missing legal basis for the “theory of final extraction”.
The "Entstrickungsparagraph" treats a transfer of the asset to a foreign permanent establishment like a removal or sale. As a result, the hidden reserves contained in the asset must be exposed. With the introduction of the "Entstrickungsparagraph" (Entstrickungsparagraph), the legislature wanted to improve Germany's attractiveness as a business location and to expand German taxation law.
Adjustment item method according to § 4g of the Income Tax Act
Creation of the balancing item in order to avoid immediate taxation of the development profit.
With Section 4g of the Income Tax Act, the German legislature grants taxpayers the option of forming the compensation item . As a result, an adjustment item in the amount of the hidden reserves to be disclosed can be created in accordance with Section 4 (1) sentence 4. The compensation item must according to Section 4g (2) sentence 1 EStG in the financial year and in the four following financial years. Thus, with the help of the balancing item, one avoids the immediate disclosure of a profit and consequently the immediate taxation. The adjustment item can only be made upon application and only in the case of the transfer of an economic asset within the European Union .
The compensation item can according to 4g EStG can only be created and dissolved for fixed assets, not for current assets .
Example:
The German tractor manufacturer Müller produces a tractor at manufacturing costs of € 100,000. The vehicle is transferred to a foreign permanent establishment in another EU country and then used there. The market price for the tractor is € 150,000. Müller represents Section 4g (1) sentence 1 of the Income Tax Act applies for a compensation item
I. Booking when transferring the tractor to the operating site (from the level of the headquarters):
Bank/Forderung 150.000 € an Anlagevermögen 100.000 €
Ertrag 50.000 €
II. Booking the adjustment item at the level of the parent company:
Ertrag 50.000 € an Ausgleichsposten 50.000 €
III. Booking at the level of the parent company in years 1 to 5:
Annual release of the compensation item is: € 50,000 / 5 years = € 10,000
Ausgleichsposten 10.000 € an Ertrag 10.000 €
Result: Without an application to apply the adjustment item, Mr. Müller would have to immediately tax € 50,000 as profit in the first year. When using the balancing item, he has the option to defer this € 50,000 and then tax € 10,000 annually. Ultimately, it is a distribution of the capital gain over the next five years.
literature
- Erdogan Atilgan: The system of tax evasion in German income tax law . Business taxation in research and practice, Verlag Dr. Kovac, 2010. ISBN 3830053843
Individual evidence
- ↑ See Grotherr, in: Grotherr / Herfort / Strunk: Internationales Steuerrecht, 3rd edition, Achim (2010), p. 74 ff.
- ↑ See BFH judgment of July 17, 2008.
- ↑ Cf. BMF letter of December 24, 1999, IV B 4 - 1300 - 111/99, Beck'sche text editions tax decrees, No. 800, § 12/1, so-called permanent establishment decree.
- ↑ See Gabler Wirtschaftslexikon.
- ↑ See § 4g of the Income Tax Act.
- ↑ Cf. Gernot Brähler, Internationales Steuerrecht, 8th edition, Springer Gabler (2011), p. 232.
- ↑ Cf. Gernot Brähler, Internationales Steuerrecht, 8th edition, Springer Gabler (2011), p. 227 ff.
