When it comes to corporate tax planning in Germany, the focus of multinationals has clearly shifted from offensive (or even aggressive) tax structuring to more robust structures and the reduction of risks and exposures (good corporate tax citizenship). The international tax initiatives against harmful tax planning, such as the BEPS project, and in its wake the EU anti-tax avoidance directives, have certainly contributed to this development, but it is also owing to domestic tax authorities becoming increasingly inclined to commence criminal tax proceedings in regular tax audits. Last but not least, the idea of tax planning as harmful caught full public attention through LuxLeaks and Panama Papers. As a result, multinationals must increasingly consider the reputational implications of their tax structures.

This chapter initially describes the general principles of corporate taxation and corporate tax planning in Germany (see Section II). The next section outlines some of the most important tax-planning developments in the German domestic market, such as the repatriation of German-sourced profits and the taxation of corporations holding German real estate (see Section III). Section IV deals with the status of German answers to international tax developments such as the denial of interest deductions in case of hybrid mismatches, changes to the CFC rule, the taxation of the digital economy and reporting obligations for cross-border tax planning. The chapter concludes with an outlook on what will likely be forthcoming hot topics.


Corporate tax planning in Germany must necessarily take into account German corporate income taxation, and to an increasing extent German trade taxes as well, since after the reduction of the corporate income tax rate to 15 per cent in 2008, the overall tax burden is usually (depending on the local trade tax multiplier) almost equally split between corporate income and trade taxes. In structures involving German-situs real property, the German real estate transfer tax also requires careful attention.

i German corporate income taxes

For German tax purposes, a corporation that has either its seat or its place of management in Germany is subject to unlimited liability to corporate income tax as provided for in the German Corporate Income Tax Act, which in principle applies to its worldwide income (subject to limitations that Germany may have agreed on with respect to certain types of non-German source income in an applicable double tax treaty). Germany has applied a 'classical' corporate income tax system, pursuant to which corporate income tax is levied at the level of the corporation in combination with a preferential tax treatment for dividends and capital gains from the disposition of shares in a corporation at shareholder level. The corporate income tax rate amounts to 15 per cent (plus 5.5 per cent solidarity surcharge, resulting in an aggregate rate of 15.825 per cent). This rate applies both to resident and non-resident corporations to the extent their income is subject to German tax by assessment; for instance, to income derived through a German permanent establishment of a non-resident corporation.

Dividends received from German and non-German corporations are generally exempt from corporate income tax in the hands of a German corporation or a non-German corporation that holds the relevant shares as part of the assets of a permanent establishment maintained in Germany. This requires, among other things, that at the beginning of the calendar year the shareholding amounted to at least 10 per cent in the share capital of the distributing corporation (special rules apply to participations of at least 10 per cent that are acquired in the course of a calendar year). However, 5 per cent of any dividends received are deemed to constitute a non-deductible expense so that, as a consequence, only 95 per cent of any dividends received are exempt from corporate income tax.

Similar to a dividend received, capital gains from the disposition of shares in a German or non-German corporation are exempt from German tax in the hands of a German corporation, or in the hands of a non-German corporation holding the relevant shares as part of the business property of a permanent establishment maintained in Germany. In this case too, 5 per cent of any such capital gains are deemed to constitute a non-deductible expense so that only 95 per cent of capital gains from the disposal of shares are exempt from corporate income tax. However, unlike the tax exemption applying to dividends received, the exemption from corporate income tax applying to capital gains from the disposal of shares does not hinge on the selling corporate shareholder holding a minimum participation in the equity of the corporation whose shares are sold. Capital losses from the disposition of shares are not deductible. Similarly, no deduction is allowed for a write-down on account of a depreciation in value of shares in corporations.

Dividends distributed are subject to a dividend withholding tax at a rate of 25 per cent (plus solidarity tax at 5.5 per cent thereon, resulting in a total withholding of 26.375 per cent). German-resident shareholders and non-residents who hold the relevant shares as part of the business property of a German trade or business are entitled to a refundable credit of this tax against their final tax liability determined by assessment. A non-resident corporation can request a refund of two-fifths of the taxes withheld under German domestic rules. In addition, non-residents may further be entitled to a full or partial refund under an applicable double tax treaty or the EU Parent–Subsidiary Directive. All refunds are subject to rather strict substance requirements, which recently came under scrutiny in light of their compliance with the fundamental freedoms under the Treaty on the Functioning of the European Union (TFEU).

To limit the deductibility of interest and royalties, Germany applies broad and highly complex interest-stripping rules as well as royalty-deduction limitations. These interest-stripping rules apply to the deductibility of any interest payments made by a German-resident borrower to any related or unrelated recipient resident within or outside of Germany. Besides limiting the deduction of interest from the German interest payer's corporate income tax base, they may also affect the deductibility of debt interest from its trade tax base. Under the interest-stripping rules, deductions for interest payments are, in principle, subject to a cap at 30 per cent of the EBITDA (as adjusted for tax purposes) of the borrower. By way of exception, the interest-stripping rules do not apply if the net interest payment amount (interest paid minus interest received) remains below €3 million for the tax year (de minimis exception), if the German interest payer is a stand-alone company (i.e., it cannot be included in a consolidated financial statement prepared in accordance with IFRS principles (stand-alone exception)) and if the debt-financed entity can prove that its equity ratio as per the last balance sheet date was better or no worse than by 2 per cent compared to the equity ratio of the entire group (escape clause). Where none of the above exceptions apply, net interest paid in excess of the cap amount of 30 per cent of the borrower's EBITDA (as adjusted for tax purposes) is disallowed in the current year, but can be carried forward indefinitely to subsequent tax years (subject to restrictions that apply in the case of detrimental transfers of shares in which interest carry-forwards – as loss carry-forwards – fully or partially cease to exist). The same limitations apply in the carry-over year.

ii German trade taxes

A corporation with business activities in Germany is also subject to trade tax, a business tax whose revenue accrues to those local municipalities in Germany where the corporation maintains a permanent establishment. The tax is based on business income. The basis for the trade tax is the net income determined for corporate income tax purposes plus certain additions and minus certain deductions. This is intended to create steadier flows of trade taxes to the local municipalities, but actually makes the system rather complex and inconsistent. For instance, an add-back to the tax base would be required under the following circumstances. After applying the interest-stripping rules for corporate income tax purposes there will likely be amounts of interest that remain currently deductible. For the purposes of computing the corporation's trade tax base, that remaining amount will also generally qualify as deductible. However, 25 per cent of any such interest will have to be added back to the trade tax base (i.e., it will not be deductible for trade tax purposes). This constitutes a definitive disallowance. For trade tax purposes, the disallowed interest amount is also not eligible for a carry-forward to subsequent tax years. Similarly, the 95 per cent exclusion for dividends received would generally not be allowable for trade tax purposes and 95 per cent of the dividend amount received would, therefore, be added back to the trade tax base. Only where the corporation derives the dividends from a 15 per cent or greater stake in the dividend-paying corporation (which deviates in various instances from the relevant 10 per cent threshold for corporate income tax purposes), the add-back is reversed (participation exemption for trade tax purposes). In the case of dividends paid by an EU corporation, a 10 per cent or greater stake qualifies for the participation exemption.

The basic trade tax rates are set by federal statutes and the 'local multiplier' is determined by the municipality and applied to the basic rate. As it is up to the municipalities to determine the local multiplier, no uniform rates exist. Effective rates for trade tax range from approximately 7 per cent to 17 per cent. Trade tax cannot be deducted from its own tax base or for corporate income tax purposes.

iii German real estate transfer tax

German real estate transfer tax (RETT) is imposed on all transactions with the purpose or effect of transferring title to German real estate (the term includes land, buildings, and inheritable building rights). The rates range from 3.5 per cent to 6.5 per cent depending on which state is in charge of levying the tax. The tax is also assessed when 95 per cent or more of the shares in a German or foreign corporation owning German-situs real estate are transferred to one acquirer, or when a shareholder owning less than all of the shares of a corporation subsequently acquires enough shares to bring his or her participation to 95 per cent or more. There is proposed but still pending legislation to reduce this threshold to 90 per cent (for more details see Section III.ii). The tax is generally levied on the consideration for the transfer. Where there is no consideration, a consideration cannot be ascertained or there is a deemed transfer (which includes the transfer of 95 per cent of the shares to one person), the tax is levied on the tax value of the real estate, which, as a rule of thumb, is usually lower than the market value. Transferor and transferee are jointly and severally liable for the tax. However, in the case of the aggregation of 95 per cent or more of the shares in a corporation, only the person acquiring such shares is liable for the payment of the tax.


The tax-efficient repatriation of German-source profits should benefit from recent decisions by the European Court of Justice (ECJ) on German substance requirements. It is, however, yet unclear how German tax authorities and the German legislator will react. Recent changes to the taxation of non-domestic corporations holding German real estate should be taken into account but should ultimately not materially affect corporate tax planning.

i Tax-efficient repatriation of German-source profits

When it comes to inbound tax planning (i.e., investments by a non-German investor into Germany), one of the major tax-planning considerations is usually the tax-efficient repatriation of German-source earnings and profits. Often, such repatriation is structured through the disposal of shares in the German top holding company by the non-German investor, since such capital gains are tax-exempt under either German domestic rules (and not even subject to the 5 per cent claw-back taxation if the seller does not have a permanent establishment in Germany, as recently confirmed by the German Federal Fiscal Court) or an applicable double tax treaty. These capital gains are also not subject to withholding taxes in Germany. Besides the disposal of shares to a third person, this beneficial capital gains treatment can also be achieved by way of share buy-backs that may often economically substitute a dividend distribution.

Dividend distributions are often not the preferred route for the repatriation of earnings and profits from German inbound investments as these distributions are generally subject to German withholding taxes (WHT) amounting to 25 per cent, plus solidarity surcharge of 5.5 per cent thereof (i.e., effectively 26.375 per cent). WHT can be reduced to 15 per cent under domestic provisions, or lower or even to zero under an applicable double tax treaty or the EU Parent–Subsidiary Directive. To tackle abusive tax structuring on the basis of these reductions of WHT (treaty or directive shopping), the German legislator introduced quite harsh anti-abuse and substance requirements (Section 50d Paragraph 3 of the German Income Tax Act). The provision excludes the reductions from WHT if, among other things, the ultimate parent would not qualify for the treaty or directive benefits and the interposed recipient of the dividend distribution was either not established for sound economic reasons or does not engage in general economic activities with sufficient substance (the German substance requirements). While tackling abusive treaty or directive shopping is obviously legitimate, the German substance requirements were discussed in a highly controversial manner owing to their broad scope and vague requirements, and because they raise concerns under EU and treaty law as they necessarily apply in cross-border situations only, and there is no equivalent provision for distributions to a domestic recipient.

Recently, the ECJ held in two sensational (but, in light of the dispute outlined above, not necessarily surprising) decisions that the German substance requirements violate EU law.2 Both decisions concerned dividend recipients who were resident in an EU Member State and held a controlling stake. Consequently, the ECJ applied the freedom of establishment as guaranteed under Article 49 TFEU, which is the ECJ's freedom of first choice (over the free movement of capital) when it comes to a controlling participation (whatever that means) of an EU (or EEA) Member State shareholder in a corporation residing in another EU Member State. The freedom of establishment is, however, limited to EU cases only whereas the free movement of capital according to Article 63 TFEU includes investments by third-country investors as well.

Against this background, will the ECJ hold the German substance requirements in violation of EU law for a third country (i.e., non-EU or EEA) investor that would be tested under the free movement of capital? The answer should clearly be yes. The ECJ confirmed its previous jurisprudence, according to which generally both fundamental freedoms are applicable on the German substance requirements. The freedom of establishment blocks the application of free movement of capital (and hence excludes third-country cases from protection under EU law) only if the domestic provision that constitutes the unequal treatment or the limitation requires a controlling stake. The German substance requirements, however, do not impose these requirements. Benefits granted under the EU Parent–Subsidiary Directive or under an applicable double tax treaty may require a certain participation (e.g., 10 per cent), but this is clearly below what the ECJ considers as a controlling stake. Even if the ECJ's view on this is not entirely clear, control can hardly be established below 25 per cent and clearly not with a 10 per cent stake.

As a result, the German substance requirements should no longer be applicable to third-country investors so that the repatriation of profits by way of German-source dividends is less burdensome. However, the German tax authorities have so far taken, not surprisingly, a different, narrower view. In April 2018, the German Federal Ministry of Finance issued guidelines on the further application of the German substance requirements in light of the first decision of the ECJ (Deister/Juhler). It remains to be seen how tax authorities and the German legislator will react on the second ECJ decision. German tax courts must apply the jurisprudence of the ECJ and can do so based on the acte clair doctrine in third-country cases.

In the context of a tax-efficient repatriation of German dividends, it should also be noted that the German Federal Fiscal Court recently held3 that dividends that are received through a German partnership (which can even be a low-substance partnership with deemed trading activity) will be subject to tax assessment, which effectively means that WHT are refundable at the level of the partnership assessment. This refund by assessment would not be subject to German substance requirements (even if still applicable). While this obviously provides for tax-planning opportunities, the structures should be carefully planned and monitored as the refund by assessment requires that the shares in the distributing corporation can be attributed to the partnership, which might be challenged in case of a low-substance partnership.

ii German RETT Reform

German RETT rules apply to the transfer of title in German real estate. Furthermore, the change in 95 per cent of the partners' interest in a partnership with German-situs real estate within a five-year observation period is deemed to constitute a transfer of title in the real estate to a new partnership (the Partnership Rule). Hence, RETT is assessed as if title in the property had been transferred. With respect to shares in real estate holding corporations, RETT would only be triggered if one person acquires or unifies in its hands 95 per cent or more in the respective corporation (the Corporation Rule).

The current law is, however, viewed as being prone to circumvention. The Partnership Rule can be avoided by having the purchaser initially acquire a 94.9 per cent interest, while the selling partner remains in the partnership with its 5.1 per cent partnership interest until the expiry of the five-year observation period. The Corporation Rule can be evaded by simple co-investment structures in which an unrelated co-investor acquires 5.1 per cent.

Proposed legislation has now been issued which is intended to close or at least reduce these perceived loopholes by a variety of legislative measures. The relevant threshold of 95 per cent should be lowered to 90 per cent, the general observation period should be extended from five to 10 years and a new provision, modelled on the Partnership Rule, is introduced for corporations (the New Corporation Rule). Under the New Corporation Rule, a change in the shareholder base of property-owning corporations of at least 90 per cent of the company's capital within a period of 10 years will trigger RETT even if there is no single shareholder or group of related shareholders who eventually control the real estate owning company.

Not surprisingly, there has been a lot of discussion on this RETT proposal. The New Corporation Rule would be particularly detrimental for publicly listed corporations with a high percentage of free float and many subsidiaries holding real estate. As indirect share transfers are caught (a 90 per cent or more transfer of the shares in the parent is even deemed to constitute a 100 per cent transfer), RETT could be triggered by the regular stock-exchange turnover of the parent's stock. However, the subsidiary holding the real estate would owe this RETT and would be obliged to file the relevant notification. This gives rise to constitutional concerns. It is also unclear whether the new 10-year observation period under the New Corporation Rule will apply on a look-back basis. This question is anything but academic. Assuming that in previous years 89.9 per cent of the shares in a corporation owning real estate had been transferred, a transfer of as little as 0.1 per cent would trigger RETT under the New Corporation Rule from 2020 onwards. The relevant real estate portfolio would thus be locked in. Finally yet importantly, it will be difficult to monitor the New Corporation Rule or enforce it with respect to real estate owning subsidiaries of publicly listed companies whose shareholder base is subject to constant change. This is heavily criticised by practitioners.

The government initially planned to enact the draft bill as of 1 January 2020. Due to heavy criticism, the government postponed the bill until mid-2020 to allow for further discussion. Practitioners expect or at least hope that the new rules will not enter into force with retroactive effect. Whether they will enter into force at all is more open than ever given the covid-19 challenges.


As set forth in the EU Anti Tax Avoidance Directive (ATAD II), Germany is planning to implement new rules to target hybrid mismatches as well as changes to its CFC regime.

In mid-2020, mandatory reporting rules will enter into force, but any intermediary (i.e., any adviser) who helps taxpayers to set up cross-border arrangements must already be aware of the reporting requirements to at least be prepared and anticipate the new rules in terms of documentation and collection of information to be reported.

While there are not yet concrete proposals on what is referred to as the taxation of the digital economy, German tax authorities have increased, until priorities shifted to covid-19 challenges, their efforts on tax audits performed jointly with the tax authorities of other countries.

i Draft ATAD II Implementation Act

On 10 December 2019, the German Ministry of Finance published a first draft bill to implement Articles 5, 7, 8, 9 and 9b of ATAD II. Some of the proposals were modified in a second draft dated 24 March 2020. This Draft ATAD Implementation Act (the Draft AIA) therefore includes, inter alia, anti-hybrid provisions to cover hybrid mismatches.

Article 9 Paragraph 2 ATAD II applies to the deduction or non-inclusion of hybrid instruments like hybrid bonds or participation rights – where payments on hybrid instruments are deductible in the state of the payer (deduction) but the state of the recipient does not qualify the payments as taxable income (no inclusion). In this context, ATAD II recommends as a primary measure (response) denial of deduction at the level of the payer, and as a secondary measure (defensive rule) taxation of payments at the level of the recipient.

As of today, German tax law 'only' contains a defensive rule, which denies the tax exemption of (95 per cent of) dividends received as far as the payments were tax deductible at the level of the payer.

According to the Draft AIA, expenses on the use of capital are not deductible if the corresponding profits are not subject to a tax, which is comparable to German taxation. In these cases, the deduction is denied at the level of the payer (primary measure by way of denial of deduction). According to the explanatory notes to the Draft AIA, this will also apply to mismatches arising from cross-border compensation payments made in securities lending transactions or repo transactions. Furthermore, the new rules also apply to 'hybrid transfers' (i.e., to transactions in which the profit of capital assets is attributable to more than one person participating in the transaction).

The explanatory notes to the Draft AIA include the example of a cross-border repo transaction in which, under German law, the respective underlying is attributed to the German seller and, therefore, the payments under the repo were treated as (deductible) interest payments, whereas under the law of the state of the purchaser, the underlying is attributed to the purchaser and, therefore, the respective payments (dividends as well as profit from the repurchase) are tax exempt. In this case, the new law would, if enacted as proposed, deny the deduction of the payments in Germany at the level of the seller. The new rules would also apply in cases of cross-border securities lending transactions, where, in Germany, the underlying security is attributed to the German borrower but, in the foreign state, the underlying security is attributed to the foreign lender. In these cases, where a manufactured dividend payment would be deductible in Germany and tax-exempt (as a dividend) in the foreign state, the Draft AIA would deny the deduction of the payment in Germany.

The Draft AIA also applies to some other hybrid mismatch scenarios, in particular to another D/NI scenario – where 'reverse hybrid entities' are treated as transparent in their state of residency but are treated as opaque (and taxable entities) in the residency state of their shareholders, to double deduction scenarios – where expenses of the same taxpayer are deductible in two different states, and to imported hybrid mismatch scenarios. However, payments without a hybrid mismatch that benefit from low taxation or no taxation at the level of the recipient under the general tax regime of the state of the recipient should not be affected by the Draft AIA.

Last but not least the Draft AIA also contains a new, and, unfortunately pretty aggressive version of the long outdated German CFC rule. The new rule, if implemented, will have a wider scope. Not only the holders of shares but also the holders of certain equity capital instruments will qualify as related parties for CFC purposes. Non-tax resident shareholders can also be subject to the new CFC rule if they hold shares in a foreign corporation in a German PE. Under the new rule, interest income always constitutes passive income for CFC purposes, the taxpayer is no longer allowed to prove otherwise. In addition, dividend income constitutes passive income under certain conditions where, for domestic dividend payments, the German participation exemption rule would not apply. Most notably, dividends income constitutes passive income if the payments are tax deductible at the level of the payer or if the taxpayer does not own at least 10 per cent of the shares in the payer. However, the threshold of 25 per cent below which low taxation is assumed will not change (i.e., foreign passive income will be subject to the CFC rule if it is taxed at an effective tax rate below 25 per cent in the source state).

The Draft AIA has been criticised by commentators. It is, therefore, unclear when the final draft will be published and when and in which form (subject to covid-19) it will be passed by the legislator. Under the updated Draft AIA, only the new rules implementing ATAD II into German tax law, for example, the rules on hybrid mismatch arrangements, will come into force with retroactive effect as of 1 January 2020. The other new provisions will enter into force later, for example, the modified CFC rule will be applicable from the tax assessment period 2021 onwards. On 8 March 2020, the government agreed that the implementation should take place 'quickly' despite the implications of covid-19. The government is expected to pass the Draft AIA on 22 April 2020.

ii EU proposals for mandatory reporting of tax planning

On 5 June 2018, amendments to the Directive on Mutual Administrative Assistance 2011/16/EU were finally issued, according to which intermediaries, who help taxpayers to set up cross-border arrangements (which include in particular advisers on international corporate tax planning), are obliged to report these arrangements to their domestic tax authorities within a strict time frame. On 21 December 2019, the German legislator passed a bill implementing these changes into German domestic law. On 2 March 2020, the German tax administration published draft guidance on its interpretation of the new reporting obligations.

According to the new rules, an intermediary must report any cross-border tax arrangement that fulfils one of the 'hallmarks' either on a stand-alone basis (for certain hallmarks) or in connection with the main benefit test. The new provisions consider as an intermediary any person that designs, markets, organises or makes available for implementation or manages the implementation of a reportable cross-border arrangement. The German rules provide for a slightly narrower definition of the term 'intermediary' than the Directive.

The new law contains numerous so-called hallmarks, which describe all sorts of cross-border tax structures and their essential characteristics. Some of these hallmarks are particularly important for advisers. First, the use of a tax arrangement, which has a substantially standardised documentation or structure and is available to more than one relevant taxpayer without a need to be substantially customised for implementation, is mandatorily reportable. According to draft guidance, the German tax administration, however, takes the view that the sole use of standardised documentation for generic actions like the foundation of corporations, the issuance of loans and licences and the acquisition of financial instruments traded on stock markets do not constitute a reportable tax arrangement. Second, tax structures involving deductible cross-border payments between related parties are reportable in many cases. These structures must, inter alia, be reported if the payment is not subject to corporate taxation, for example, because the payment is tax exempt, it benefits from a preferential regime or the recipient-jurisdiction imposes for other reasons no taxes on it.

If the first step of the reportable cross-border tax arrangement has been implemented between 28 June 2018 and 30 June 2020, intermediaries must report the cross-border arrangement to the German tax administration until the end of August 2020. As of 1 July 2020, onwards, any reportable arrangement must be disclosed within the 30 days after the arrangement is made available for implementation, is ready for implementation or after the first step of the implementation has been made, whichever occurs first.

As of today, many aspects regarding the application of these new rules remain unclear. Furthermore, it is doubtful if the German tax administration will be able to deal with the reports forthcoming in August 2020, as there is no precedent for this reporting to tax authorities in Germany.

iii EU proposals on taxation of the digital economy

So far, the German Federal Ministry of Finance has not provided draft legislation to implement the European Commission's proposals on taxation of the digital economy. However, German commentators are already voicing concerns regarding the European proposals, focusing especially on a possible double taxation of income by the Digital Services Tax (DST) and value added tax, as well as by DST and corporate income tax. This double taxation can arise because the proposed directives themselves do not provide exemption or deduction rules. Calls for a taxation of digital businesses have recently become even more virulent, as due to covid-19 many local shops have to close whereas online shops are busier than ever.

iv Joint tax audits

The German tax authorities are increasing efforts to realise more and more joint tax audits (i.e., tax audits involving two jurisdictions carried out on the premises of multinational companies). So far, around 70 joint tax audits with German involvement have taken place. While such coordinated cross-border tax assessments can offer advantages to the taxpayers (such as avoidance of double taxation and certainty for future tax planning in general), many aspects still await clarification. Nevertheless, the growing number of (unsolved) mutual agreement procedures, especially pending in Germany, underlines the necessity for alternative dispute resolution approaches. Joint tax audits may offer such alternative ways to deal with international double taxation.


It should be expected that the requirements for a tax-efficient repatriation of profits from Germany into the investor's jurisdiction will remain in focus especially regarding repatriations into non-EU countries.

Share deals involving German-situs real property might become subject to tightened rules. The German legislator has been planning, for quite a long time, though, to expand the German RETT regime by lowering the threshold for harmful shareholdings in the company with the real estate from 95 per cent to 90 per cent, prolonging the holding periods from five to 10 years, and introducing a new provision regarding the transfer of shares in corporations that so far have not been subject to German RETT. Whether the German lawmakers will in fact implement the proposed tightening of the taxation of real estate transfers is unclear. If the amendments become effective as proposed, the impact on corporate tax planning involving German real estate would be substantial.

In respect of international tax developments, the mandatory reporting requirements for cross-border arrangements is probably still the hottest topic. It remains to be seen how the German tax administration will deal with the vast amount of reports taxpayers will submit as from August 2020 onwards. Another major topic in 2020 will very likely be the implementation of the ATAD into German law. The tax-planning community in Germany is excited to see how the German legislator will finally implement the anti-hybrid rules and the changes to the CFC rules into domestic law.

At the time of writing, any legislative developments are subject to measures tackling the covid-19 challenges. Hopefully, this will be off of the agenda when this chapter is updated next year.


1 Markus Ernst is a tax partner at Hengeler Mueller. The author would like to thank Tim Würstlin for his assistance.

2 See ECJ of 20 December 2017, C-504/16, C-613/16 – Deister/Juhler Holding; ECJ of 14 June 2018, C-440/17 – GS.

3 BFH of 29 November 2017, docket No. I R 58/15.