After many weeks of discussions the German cabinet has finally agreed draft legislation against tax evaders which was presented on 22 April 2009
The new draft legislation will require individuals and businesses which are above a certain size to keep detailed records, ready for immediate audit by the tax authorities, of all dealings in the so-called tax haven countries. The countries who have not yet submitted formally to OECD guidelines regarding the exchange of information for tax purposes are defined as tax havens. Failure to comply can lead to the immediate withdrawal of tax allowances with regard to those transactions. The allowances withdrawn could include capital gains tax exemptions as well as tax-deductible expenses or tax-exempt dividend payments.
The coalition government intends to require parliamentary consultations on the draft to be completed no later than the beginning of Parliament's summer break and, after consent of the Bundesrat, the new tax regulations will be issued.
