Sowana Reports – On April 31, 2021,** the Federal Cabinet of Ministers adopted the draft law **”On the Defense Against Tax Havens” (Steueroasen-Abwehrgesetz).
The new law will enable the German government to take further measures against tax evasion and unfair tax competition from tax havens.
This legislative document includes protections for individuals and companies from continuing or entering into new business relationships with non-cooperative jurisdictions.
The German tax haven law goes beyond the minimum standards set by the EU. The draft law includes the following provisions:
- A ban on the deduction of business and professional expenses;
- Stricter rules for controlled foreign corporations (CFCs);
- Measures to tighten withholding tax regulations;
- Indicators related to profit distribution and share sales;
- An obligation to submit expanded information to the registry about beneficial owners, including details of all their citizenships.
The draft law provides for appropriate combinations of measures, carefully tailored to different situations. In this way, the bill is designed to ensure the application of the most suitable protective measures in each individual case.
If approved by both houses of parliament, the law will come into force on **August 1, 2021**. The transition period will last until June 30, 2022.
