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In all cross-national transactions, it is crucial to know the consequences these will have on your tax situation. All tax-related questions you may have we will answer in cooperation with our U.S. partners.
Whenever an organization is doing business with a foreign enterprise, two different taxation authorities come into play. This not only applies to the exchange of goods and services across the national borders, but also for foreign plant localities or participation in foreign subsidiaries. If both countries claim taxes on the same operations, double taxation may result. Double taxation distorts international competition, and therefore, may a hinder the development of the economies of the respective countries.
This is especially so when not only the exchange of goods and services is intended but also direct investments in a foreign country are being considered. Knowledge of the regulations intended to avoid or alleviate double taxation and the pertinent bilateral double taxation agreements (DTAs) is invaluable, and observing the specific regulations of the country in question is crucial. Substantial direct investments in particular require a thorough knowledge of the tax regulations of the respective country.
In case of investments or exchange of goods and services between an International and a German organization, special attention needs to be paid to the following:
- Both
German and international tax regulations regarding cross national transactions
- Regular German laws regulating general determination of taxable income which also apply to foreign organizations being liable for taxes in Germany. This includes the definition of the term "earnings" in German law, as well as estimation and valuation rules, taxation of amortization, etc.
- Unalleviated double taxation of profits distributed
by corporations
- Vague definitions in trade and tax law regarding
determination of taxable income
- The merely additive, i.e. not financial, form of
determination of profits, even for commercial organizations and corporations
- The liability for taxes from amortizations, also
from
private means
- The tax exempt increase of fiscal book value to current value in the case of inheritance
download: Double Taxation Agreement USA (pdf, 3,18 MB)
go to International Partners: U.S.A.
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