Survival of the Richest

Germany
In July 2016, the European Commission responded to the
Panama Papers scandal by proposing public registers of
beneficial owners of companies and some trusts. 427 The
German government’s current position is unclear, as it has
only stated it will ‘analyse’ the proposal. 428 It is too soon to
say what role the German government will play.
The 2015 Financial Secrecy Index, published by the TJN
at the end of 2015, ranks Germany as the eighth biggest
enabler of financial secrecy in the world (second highest out
of all the 18 countries included in this report). 429 According
to the report, Germany has shown negligent enforcement of
anti-money laundering rules, and it offers a worrisome set
of secrecy facilities and instruments, such as bearer shares,
which allow the owner of the shares complete anonymity. 430
Taxation
Tax treaties
According to the government, German tax treaties with
developing countries include articles suggested by the
OECD Model, as well as those suggested by the UN Model,
those developed by Germany and articles developed by the
developing country. German tax treaties with developing
countries normally include clauses against treaty abuse.
There are no plans for a spillover analysis to assess the
impacts on developing countries. However, the Ministry of
Finance states that, when the legislative bodies (Bundestag
and Bunderat) discuss a new tax treaty, the accompanying
explanation will include remarks about the possible effects
of the treaty. 431
In total, Germany has 51 tax treaties with developing countries,
which is significantly above the average number (42 treaties)
among the countries covered in this report. The average
reduction of developing country tax rates within those treaties
– 3.8 percentage points – matches the average. 432
Additionally, research by ActionAid has shown that ten of
the tax treaties between Germany and developing countries
are so-called ‘very restrictive’ treaties, which include strong
limitations on the taxing rights of the developing countries
that are signatories. 433 For example, ActionAid estimates
that a tax treaty with Germany cost Bangladesh more than
US$450,000 due to lower tax income on dividends alone. 434
Harmful tax practices
Germany had 24 advance pricing agreements (or
‘sweetheart deals’) in force at the end of 2014 (compared
with 21 at the end of 2013). By the end of 2015, this number
had increased to 25, which makes Germany the country with
the tenth highest number of advance pricing agreements
in the EU. 436 In principle, Germany agrees only bilateral or
multilateral advance pricing agreements with its treaty
partners, while unilateral agreements are available only in
exceptional cases. 437 The government states that it ‘supports
public disclosure of general rulings but not of individual
rulings because the latter contain sensitive information
covered by tax secrecy’. 438
Global solutions
Germany does not support the establishment of an
intergovernmental body on tax. According to the
government, ‘the present UN Tax Committee works
quite effectively, [and] as decided [at the Financing for
Development summit] in Addis Ababa, the frequency of its
meetings will be increased as well as the engagement of the
[UN’s Economic and Social Council (ECOSOC)]’. 439
Conclusion
Germany has previously been a key blocker in the EU on
anti-money laundering and transparency efforts, and
furthermore offers high levels of financial secrecy in its own
country. However, a recent announcement by the Ministry
of Finance creates hope that a public register of beneficial
owners will be introduced in Germany.
Germany’s tax treaties with developing countries are also a
cause for concern. This is due to the content of the treaties,
which in many cases include strong restrictions on the
ability of developing countries to collect taxes, but it is also
due to the fact that Germany has a relatively high number of
treaties with developing countries.
On the issue of harmful tax practices, Germany is neither
among the worst or the best countries.
Last but not least, it is problematic that Germany does
not support the creation of an intergovernmental UN tax
body, which would give developing countries the chance to
participate on a truly equal footing in the setting of global
tax standards.
A study on aggressive tax planning structures shows
Germany has eight indicators, compared to the 10.6 average
among EU countries. Germany does not have a patent box,
nor were other active indicators found in the study. 435
Survival of the Richest • 69