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Fifty Shades of Tax Dodging • 63
In a recent revision of its treaty with the Philippines, the
maximum withholding tax rates in the source country on
outgoing interest and royalty payments were significantly
lowered. 556
As evident from a 2013 template for tax treaties released
by the Federal Ministry of Finance, Germany’s treaties
generally draw on the OECD model, although elements of
the UN model can be included. 557 According to the Ministry,
the template is used for negotiations with all countries, 558
regardless of whether they fall into the categories of
developed or developing nations, even though there can
be certain modifications with the latter. Notably, the 2013
template includes not only the objective of preventing double
taxation but also double non-taxation and tax avoidance.
It also includes various counter measures against tax
avoidance. The German government in 2014 reported that
it was not planning to carry out an impact assessment of
its tax policies to calculate the potential spillover effects on
developing countries. 559 There are no indications that this
position has changed.
Financial and corporate transparency
Due to its large financial and banking sector, Germany has
for some time been a key location for money-laundering. 560
Rough estimates put the scale of laundered money in
Germany within the range of €29 billion to €57 billion
annually. 561 News headlines related to German banks and
money laundering have been frequent, and 2015 has been
no exception. In February, Deutsche Bank was issued with a
fine from regulators in South Africa for not complying with
anti-money laundering laws. 562 In March just one German
bank, Commerzbank, was facing settlements of $1.45 billion
for violations of sanctions and various accusations of money
laundering. 563 In June, Deutsche Bank and authorities in
the UK and US started an investigation into possible money
laundering for Russian clients, which reportedly involved
looking into transfers of about $6 billion over more than a
four-year period. 564
Public reporting by multinational corporations
In mid-2015 the Government announced its intention to
implement country by country reporting along the lines
of the OECD’s Base Erosion and Profit Shifting (BEPS)
recommendations. 565 This would imply that the information
would not be made publicly available, and that only the very
largest companies with an annual consolidated turnover of
more than €750 million would be included. The government
further announced that it was its intention that a law should
pass parliamentary approval by the end of 2015, in order for
the reporting requirement to take effect from 2016. 566
Ownership transparency
In June 2014 the inter-governmental body the Financial
Action Task Force (FATF) reviewed Germany’s followup
on its recommendations from 2010, and found that
the government had not yet sufficiently addressed
shortcomings on documenting and storing beneficial
ownership information. 567 The report also criticised the lack
of transparency in relation to a type of trust allowed under
German law called “Treuhand funds”. 568
During negotiations at the EU level on the Anti-Money
Laundering Directive (AMLD) towards the end of 2014, it
was reported that Germany was against the creation of a
centralised register of beneficial owners due to a preference
for its existing system, where data on owners of bank
accounts are to be held by the banks (and can be accessed
by the authorities) but not stored centrally. 569 Luckily, the
German position did not prevail as civil society organisations
have pointed out that this system had shortcomings. 570 It
was also reported that Germany led a group of countries
that tried to restrict the information stored on beneficial
owners, 571 as well as being against making beneficial
ownership information available to the public. 572 With these
positions, the prospects for an ambitious implementation
of the AMLD that delivers fully public registers seem bleak,
but at the time of writing the government’s plans are not yet
confirmed on this matter.
Automatic exchange of information
Germany passed legislation in July 2015 to allow for
automatic exchange of information from 2017. 573 Germany’s
approach is consistent with the international agreement on
automatic exchange of information, to which it is a signatory.
However, the German government has taken additional
steps by reportedly developing plans to “deposit a special
privacy policy with the OECD, to ensure that all countries
that operate the automatic exchange of tax information in the
future on the basis of the agreement with Germany comply
with the strict German privacy standard for the transmission
of personal and company-related data.” 574 Whether this is
an indication that Germany will be more reluctant to share
information with developing countries is not yet known.