. . Germany - the taxman cometh

[Edelweiss]

Is anyone else in a litigation process with the German Tax authorities, or the Steurberators, or agents?

Yeah, me.

If there are any Germans, Officials or not, that use this site I promise you this it not over.

How dare you blame us for your own twisted, sick corrupt business practices and exonerate your own people as if they knew nothing!!!

"Oh, come to work in the Fatherland and we'll give you a Tax break..."

Just because you can't win a real War you want an Economic one. Pah!

This is just the beginning.

You thought you could break me and destroy my future - you thought wrong!

[BlaueReitgerte]

The EU Court has already decided...

Search for "Cadbury Schweppes EU court" or visit this link:
http://eur-lex.europa.eu/LexUriServ/...4J0196:DE:HTML

The EU Court allready decided. Fact is that you are free to settle up your company where ever you are in Europe. What prevents you from paying tax for your UK Ltd in Germany is, that you settled your Ltd. NOT ONLY for tax saving reasons. If you settled you Ltd. in the UK cause you did business in the UK you havent. Please ask a attorney.

Just to correct one point.

At this time the exact same monies have been taxed in Germany and the UK. So it is double taxation. The penality and 6% interest are a seperate costs, for which we are sueing the steurberator.

There was no attempt to hide any money anywhere. The UK acounts show full disclosure. The steurberator was fiully knowledgable about the operation, It went on since 1999. The same operation was done by many larger UK companies.

The most annoying thing abou this, is there was actually more tax paid than if I had declared all the money as mine. The Germans are npt penalising me for not paying taxes, they are penalising me for allowing the UK to get the half the taxes, and ignoring the fact the the UK company is a seperate tax enity, (which I belive is illegal under EU Law, we will find out).

Look up the European Court cases, you will see German figures a greate deal. They do act illegally, they know they act illegaly, they dont care. I believe they see the EU as their property and not as a member of it.

I have asked the UK IR if I can adjust the profits and therefore taxation for the UK company has it now has had significant back dated costs, that is, more personal money for me, to which the Germans have taxed me. hence the double taxation of the same money.

I have been penalised for my steurberator getting wrong. She should have known that it was not allowed for a UK company to perform business in Germany. Although, since she initially defended our case by stateing it was perfectly legal, it would appear that tje German Tax laws are not easily understandable.



Incidently this is still very much going on with several large british companies, eg Thales, BAES etc, I very much doubt the German tax man will go after them, they can afford justice.

I will alos make the point to teh MPs, that Germany should not be considered for any more multi national projects, since British Tax payers money is beeing effectlvly transferred directly to the German Finazamt. Only if the EU comision or the EU patent office taxation system is used could we allow Germany to host multi national projects paid for by the tax payers of other countries.

If enough of us band together we could at least :
1. Highlight the issue to the UK parliment
2. Support a class action against the non recogniation of UK companies
3. Get support to ensure Germany is black listed from hosting multi national projects.

[Dominic]

Cadburys

The Cadbury court case was against the UK government for taxing profits arising in Ireland, as if they arose in the UK.

This is not the same as in our case, where the profits of our UK company are being determined to belong to ourselves and not a separate tax entity.

Indeed, it would appear that the UK IR accept that Germany has the right of taxation of the profits of a UK company arising from work done in Germany. Actually it would be less tax ( approx 19% as opposed to 21%) . However the German tax authority dismissed this approach, in favor of taxing me on all the income of my UK company, as mine.

Finding a lawyer who can even begin to fathom out the cross EU state complexities of tax seems very difficult and I fear , very expensive. It would appear that EU civil service has built a formidable wall of sheer complexity to hide behind.

[AlfredJPruffock]

Finding a lawyer who can even begin to fathom out the cross EU state complexities of tax seems very difficult and I fear , very expensive. It would appear that EU civil service has built a formidable wall of sheer complexity to hide behind.

... The hardest thing in the world to understand is the income tax.

Albert Einstein

still think, and hopefully will be proved correct, that the German Tax authorities have acted illegally. But it is better to argue this point from the UK than in a concentration camp.

Wasnt the concentration camp a British invention from the Boer War ?

[expat]

Finding a lawyer who can even begin to fathom out the cross EU state complexities of tax seems very difficult and I fear , very expensive. It would appear that EU civil service has built a formidable wall of sheer complexity to hide behind.

... The hardest thing in the world to understand is the income tax.

Albert Einstein

still think, and hopefully will be proved correct, that the German Tax authorities have acted illegally. But it is better to argue this point from the UK than in a concentration camp.

Wasnt the concentration camp a British invention from the Boer War ?

And Income Tax, from the Napoleonic Wars. Doesn't make them right.

[ASB]

Wasnt the concentration camp a British invention from the Boer War ?

Arguably not. US is possibly the earliest example in the 1830's for native americans. However our approach was a bit different. Kitcheners camps were allegedly humanitarian aid to help the Boer families who were more than a little affected by our scorched earth policy. Probably not our finest hour.

[BlasterBates]

This is the Double Taxation treaty:

(1) Income derived by a resident of one of the territories in respect of professional services or other independent activities of a similar character shall be subjected to tax only in that territory unless he has a fixed base regularly available to him in the other territory for the purpose of performing his activities. If he has such a fixed base, such part of that income as is attributable to that base may be taxed in that other territory.

and

1) The industrial or commercial profits of an enterprise of one of the territories shall be subjected to tax only in that territory unless the enterprise carries on a trade or business in the other territory through a permanent establishment situated therein. If it carries on a trade or business in that other territory through a permanent establishment situated therein, tax may be imposed on those profits in the other territory but only on so much of them as is attributable to that permanent establishment.

For it to be taxable in the UK and exempt from German tax, you need to demonstrate you preformed the activities in the UK, otherwise it is taxable in Germany. What the Germans are saying is you didn't, and that your company had a permanent establishment in Germany where the work was done. You have to prove the opposite and you win your case. If you work for less than 183 days that wouldn't count as permanent but once you go beyond that you effectively become a German employee and defacto your enterprise has a pemanent establishment.

I did a similar thing between Luxembourg and the UK, where I had two separate contracts. But I had to have proof that I physically returned to the UK to fulfill the UK taxed income.

It is much much easier to setup your company or operate as a sole trader in the country you are doing the work. Because they are always going to demand the tax. Effectively your Ltd had a German employee yourself and as such should have been registered in Germany. This was the advice I was given.

I would persue your Steuerberater, but look at how you can prove you did actually work in the UK.

[Dominic]

No work in the UK

"I would persue your Steuerberater, but look at how you can prove you did actually work in the UK."

Unfortunatly the work was clasified and by law had to be carried out in Germany.

However, I still think the Germans should have just demanded the UK government for "their" tax and not dismiss the UK Ltd company and lump it all as my personal income. They did this to maximise the taxes of course.

I would be inclined to warn all contractors away from Germany. It is no longer a country to do business with, as it is fundementally unsafe.

[TiroFijo]

"I would persue your Steuerberater, but look at how you can prove you did actually work in the UK."

Unfortunately the work was clasified and by law had to be carried out in Germany.

However, I still think the Germans should have just demanded the UK government for "their" tax and not dismiss the UK Ltd company and lump it all as my personal income. They did this to maximise the taxes of course.

I would be inclined to warn all contractors away from Germany. It is no longer a country to do business with, as it is fundementally unsafe.

Dominic, sorry I'm not quite up to date with what happened to you
Let me get this right, you went on a long term contract in Germany and used your UK Ltd company for the whole duration thus paying tax back in the UK? If that was the case then you didn't register anything in Germany so that you were never on their books? I haven't read the whole thread but how did you end up with your current situation (how did they catch you)?

You said (or someone else did) that you could approach the HMRC and explain the situation to see if they would give you your £ back? I don't see them doing that tho as you filed tax returns to the UK for every year that you were in Germany and I assume told hmrc that you were still UK resident when really you were not? You were really a resident of Germany for tax purposes and their tax bods are saying 'look you were tax resident here and not in the UK and we want our money and we don't care that you paid tax to the UK'. Correct me if I've got it wrong as it all seems complicated.

Another contractor where I worked in Europe used his Ldt company for the whole 3 years he was there paying all taxes back to the UK etc. The local tax authorities never knew he existed as he never registered for anything while he was there. Basically the UK was getting extra tax revenue for zero.

Looks like you were paying your taxes but just to the wrong government (UK)?

You are right about contracting in Germany tho, I've never contracted there and I would rather set my testicles in wet cement and then walk from John o Groats to Lands End than contract there. Ditto for Holland and Belgium.

Good luck anyway!

[Northerner]

Fiscal domicile of a company

In reply to Dominic's posts......

From: http://www.contractoruk.com/overseas...structure.html

a) Corporate tax residence

A company is generally deemed to be tax resident in the location where it's physical control and management is exercised. Since the control and management of the UK one-man company is generally retained by the controlling director, (i.e. the contractor himself), then it naturally follows that should the director be physically located in, say, Brussels, then the Belgian authorities would have a pretty good case if they decided to assess the UK company as though it were a Belgian company.

The implications of this for the contractor can be quite severe. For one thing, the contractor as an employee of the (so-called) Belgian tax resident entity would automatically be liable to Belgian taxes and social security at source on any payments made to him by the company. Also, any profits made by the company (including those paid as dividends to the contractor) would be liable to Belgian corporate taxes.

Needless to say, Belgian income and corporate taxes and social security are significantly higher than their UK equivalents. And since the contractor would almost certainly not have pre-declared his status to the Belgian authorities penalties and interest would probably be added to any assessment. Therefore this approach could prove very costly to the contractor.

As far as I know for Germany (and as Blasterbates has already pointed out) there's nothing wrong with using a UK Limited company in Germany (EU's 'freedom of establishment') but the German branch must be entered in the 'Handelsregister' (German commercial register) via the local court.
Then you pay German corporation tax but state on your UK corporation tax return that all taxes have been paid in Germany.

I have heard (but not sure if there are such cases or just speculation) if you have a UK office with computers and perhaps staff, or you have significant UK derived income then you maybe able to prove that the company should be considered 'fiscally domiciled' in the UK.