The firm primarily provides legal and tax advice to large family-owned businesses and their owner families (and family foundations). The tax and legal advice is related to corporate tax (including tax in M&A situations), tax audits, tax optimisation planning, estate planning, estate taxation, personal taxation (including change of domicile situations), family governance, family corporate governance and corporate finance. The businesses generally realise combined turnover in excess of €750 million. As a speciality, we also represent clients in important cases at the European Court of Justice, the Federal Constitutional Court, the Federal Tax Court and other tax courts. Partners of the firm have caused the nuclear power tax to be held non-constitutional.

Under German Bar rules, details of our cases cannot be disclosed unless they are publicly known. A case where our involvement was reported in the press is the reorganisation of ALDI Nord, where we were reported to act as tax counsel.

I was admitted as a lawyer in 1985 and as a certified tax adviser in 1986. I had been a Partner at KPMG Peat Marwick, and opened the tax practice of Bruckhaus Düsseldorf in 1993 (which thereafter became Freshfields Bruckhaus Deringer). I read tax law at Düsseldorf Heinrich Heine University from 2001 and was granted the title of Professor in 2011. I have edited six editions of a book on closed-end funds, two editions on business taxation (“Unternehmenssteuerrecht”) and was rewarded with numerous accolades. I am listed as a leading practitioner in a variety of legal and tax guides.

We currently advise family business owners regarding their estate planning (setting up of family foundations in Germany and abroad), provide advice concerning transfer pricing structures within larger family businesses, are advising on re-domiciliation – both into Germany as well as from Germany to other jurisdictions – in addition to advising on the tax angles of M&A transactions. We currently represent major clients in new tax court cases against newly introduced taxes.

The German tax system is rather complicated. Experts estimate that more than one quarter of the world’s tax literature deals with the German tax system. Albeit it should be law-based (and the law should be based on, and be in line with, the Constitution), there is a wide application of published letter rulings and guidelines, as well as thousands of tax court decisions that are difficult to follow, and so elements of case law have found their way into the system.

The corporate tax system is based on the (national) corporate income tax at a rate of 15%, a surcharge (still stemming from the German re-unification) of 5.5% of the corporate income tax and a municipal trade tax that has a partially different tax base and amounts to around 8% to 20% – causing the overall tax burden to range mostly north of 30%. From an international perspective, Germany has a wide (but country-by-country-based) CFC legislation and applies strict income attribution rules. Moreover, Germany assumes that if certain cross-border transfers are made, these transfer packages shall be taxed, including future profit elements – a concept that is often not accepted by the country to which the transfer is made.

Currently, the refund of withholding tax is rather delayed, as is the receipt of confirmations that dividend withholding tax must not be levied, or must be levied at lower tax treaty rates.

Germany has a wide network of tax treaties, and was traditionally reluctant to accept taxation at source. Due to the economic substance that certain treaty applications require, it is relatively easy for international investors to use their presence in Germany to demonstrate that anti-abuse legislation should not apply. Furthermore, due to the 15% corporate tax rate, Germany is often a “blocker” against income attribution under the Pillar II concept.

Since Germany introduced anti-tax-haven legislation in 1972, there has been quite some experience regarding income attribution rules and the concept of deemed distributions that are taxed less favourably than open distributions, etc. Accordingly, the Panama Papers and the like were only relevant for criminal cases where income and capital had not been properly declared. In most of these “black money” cases, the fines are immense (generally resulting in a prison sentence if the tax amount exceeds €1 million).

As lawyers and tax advisers, the anti-money-laundering legislation (both EU and German law) is fully applicable to us. Accordingly, we may (in addition to confirmations by the client) request confirmations by banks or colleagues that are well known to us. If we do not have the proper clearance, we may refuse to accept the client.

Germany has introduced Pillar II and denies the deduction of cost as business expenses regarding payments to non-cooperative jurisdictions. Both concepts are relatively new and may need to be implemented in an appropriate form. It is difficult to explain to – for example – a tour operator why, for instance, the cost paid to a hotel on the Seychelles shall not be deductible, while the payment by the tourist to it is fully taxable.

In recent years, the focus has been very much on “bad cases”, which may have caused the tax authorities to forget about the correctness by which the vast majority of tax payers deal with their tax affairs. A more cooperative application of tax law is, therefore, required.