Germany: Law implementing MLI passed by lower house of Parliament, other tax developments

The lower house of Parliament (Bundestag) on May 16, 2024, passed the "Law on the Application of the Multilateral Convention of 24 November 2016 and Further Measures."

Due to the large number of options and reservations provided for in the Multilateral Convention of 24 November 2016 to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI), Germany reserved the right to make certain that the modifications to the German income tax treaties covered only take effect after the conclusion of domestic measures. The Act is intended to implement these domestic measures.

Once the legislative process has been completed, Germany can inform the OECD as MLI depositary and the other contracting states of the completion of the domestic measures.

Read a May 2024 report prepared by the KPMG member firm in Germany
 

Other recent tax developments in Germany include:

• The Germany-United States income tax treaty does not result in a switch-over from the exemption method to the credit method in Germany if U.S. domestic tax law provides for non-taxation only of a portion of the total profit share of a partner in a law partnership (i.e., “guaranteed payments”) (German Federal Tax Court (BFH), decision I R 42/20).