STOP

64 • Fifty Shades of Tax Dodging
EU solutions
Together with the governments of France and Italy,
the German government sent a letter to the European
Commission at the end of 2014, urging it to prioritise the
fight against tax dodging and to come up with a legislative
proposal to counter the erosion of tax bases across
Europe. 575
In Council discussions, the German government has
reportedly been very supportive of a speedy implementation
of the automatic exchange of tax rulings in the EU, and has
also stressed the need for a reform of the Code of Conduct
on Business Taxation. 576 As noted, the government has also
played a strong role in trying to stem the negative effects of
patent boxes in the EU.
Despite these positive efforts, Germany has often played
a less constructive role when it comes to corporate
transparency measures at the EU level. As noted, Germany
reportedly did not play a progressive role during the
negotiations of the EU AMLD. Similarly with regard to
country by country reporting, the German government has
previously hindered EU action in the negotiations for stricter
reporting requirements for companies in the extractive
industries. 577 It was (unsuccessful) against the reporting
for banks, and in discussions seems reluctant to extend the
reporting to all sectors such as through the Shareholders
Rights Directive.
The German government’s position on the introduction of
an EU-wide Common Consolidated Corporate Tax Base
(CCCTB) is not easy to assess. While it openly rejected this
proposal some years ago, 578 the government now might be
more open to the concept and have at least committed to the
“Common Tax Base” as a first step in the coalition treaty. 579
However, in talks with the government, reservations about
the consolidation have been expressed (e.g. regarding
depreciation of pensions) and particularly on the formula
apportionment, arguing that it is very difficult to reach
agreement on.
Global solutions
In a response to the European Commission, the government
states that the fight against illicit financial flows is one
of its three priorities in relation to Policy Coherence for
Development. The government further states that, in order to
be successful in the fight against these flows, there is need
for “a close cooperation between different governmental
departments as well as between developing, emerging
and developed countries.” 580 Despite this, Germany clearly
believes that standard setting or regulation of international
tax matters should remain at EU and OECD levels.
Consequently, Germany has been opposing the upgrade of
the Committee of Experts on International Cooperation in Tax
Matters – which it has been supporting financially beyond its
assessed contributions to the regular budget of the UN – to
an intergovernmental body for some years, 581 including during
the Financing for Development negotiations in July 2015.
Conclusion
Germany is publicly committed to fighting tax fraud and
avoidance. As a strong supporter of EU coordination against
what it perceives as harmful tax practices, Germany has
been quite active relative to other EU Member States.
However, on further transparency and some initiatives to
fight tax dodging at the EU level, the government has played
a less constructive role. Germany also upholds secrecy
practices such as the trust structure (Treuhand funds).
As developments in 2015 once again revealed, the fight
against tax dodging in Germany is intrinsically linked to
its large financial sector, which the government seems
reluctant to regulate properly. On the positive side, 2015
seems to have brought increased pressure on the banks
from regulators, which have initiated new investigations and
have had an important victory on a long-running case on
tax dodging. Overall, the government seems more engaged
in terms of tackling the tax avoidance of companies after
the Luxembourg Leaks (LuxLeaks). However, judging by
its reluctance to support an inclusive global process for
international tax reform and its embracing of solutions that
exclude developing countries such as in its move towards
the OECD BEPS recommendations on country by country
reporting and non-public registers of beneficial owners,
the German government seems to ignore the interests of
developing countries.