Tax Scenario

Corporate Tax

Strategic tax services for corporations: enhancing compliance and providing individual tax advice in a rapidly evolving digital landscape. Below you'll find some frequent scenarios, providing you with some first guidance.

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Managing Directors & Permanent Establishments

Management incentive programs, ESOP, § 19a EStG

Setting up German subsidiaries

Tax planning & structuring

I am the managing director of a foreign corporation (e.g. an Estonian OÜ - established under the e-residency program). Are there any tax implications in Germany?

If you're a German resident acting as a managing director of a foreign corporation, the corporation may be subject to limited tax liability in Germany on income sourced within Germany.
Further, it is very likely that a so-called management permanent establishment is at hand in Germany resulting in additional exposure of the foreign entity's to German corporate- and trade tax.

We want to incorporate a management incentive program. What should we know?

Participants in management incentive programs may face income tax on benefits received (i.e. payments in kind). The timing and valuation of these benefits can affect tax liability.
In Germany, such benefits are often treated as additional salary and taxed accordingly. There are certain structures that provide for a tax-free setup of such programs, e.g. under the newly introduced ESOP rules under section 19a of the German income tax code (§ 19a EStG).

We are a non-German corporation and want to set up a German subsidiary. What do we need to do?

A German subsidiary is fully liable for taxes in Germany on its worldwide income. This includes corporate income tax, trade tax, and VAT on its operations.
Detailed compliance with local tax and corporate law is essential for operating a subsidiary in Germany.
At first it should be reviewed what legal form is benefiting you business needs and strategy.
Secondly, a German attorney and notary must be engaged and the tax structure should be looked at (e.g. how you may tax efficiently repatriate profits to your holding entity).

I am looking for tax planning & tax structuring. Can you assist?

Having all the numbers at hand it is crucial for us to understand where your business is heading to.
While combining accounting and tax data with a company's strategy and taking into account tax implications we can be your sparring partner when it comes to tax-efficient structures.

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