...a. Tax avoidance in Germany (Siddhart Medhi) A number of schemes exist in the tax system, which enables corporations to avoid taxes and some of these loopholes are perfectly legal. In 2009 the German newspaper, Der Spiegel, reported a scheme referred to as the Malta Loophole. It is quite simple and has been used by multinational corporations such as Lufthansa and Puma. It works by setting up a subsidiary in Malta and thus paying taxes to the Maltese state. The tax rate in Malta is 35% and is thus higher than in Germany, however, the shareholders can apply for a refund for most of the amount. The reason for this is that if profits are being distributed as dividends then the tax rate is only 5%. The scheme works in the following way: if the profit of the subsidiary is 100 million then 35 million is paid to the Maltese state where after the shareholders can get a refund of 30 million and return it to the German parent company. Returning the money from the shareholders is due to the German tax system 95% tax exempt. The effective tax rate is thus cut to merely 6.42% Another example of tax avoidance is when Volkswagen took full control of Porsche in 2012. Volkswagen at the time already owned 49,9% of the shares in Porsche and was interested in buying the remaining 51.1% in order to have full control and gain synergy effects worth €700 million a year (Bryant, 2012). The price of this was €4,5 billion, which would have to be taxed by €1,5 billion. However, they found a way around...
Words: 654 - Pages: 3
...When we say German GAAP, we refer to principles that are based on German Commercial Code (Nandelsgesetbuch, or HGB), and German Accounting Standards (GAS) that are set by German Accounting Standards Committee (GASC). GASC has similar function as Financial Accounting Standard Board (FASB) in United States – to develop and set accounting reporting standards, the process which includes publication of draft of standards, comments period, revision of draft period, public discussion, and finally, adoption of new standards. Germany has two entitles that serve as an enforcement mechanism of financial standards and as a mechanism that review and examine accounting standards in Germany – Financial Reporting Enforcement Panel (FREP) and Federal Financial Supervisory Authority (FFSA). In United States, enforcement mechanism of accounting principles is U.S. Securities and Exchange Committee (SEC). SEC’s mission is “to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation”, so the enforcement of accounting principals is only part of the SEC’s job (SEC, 2014). IFRS or German GAAP? Although Germany requires to use IFRS for publicly traded companies, German companies still have to use GAS for separate financial statements of publicly traded companies, and for any non-publicly traded company. That is because German taxation system is interconnected with GAS, and German tax law have not been renewed to reflect changes brought by IFRS. While modernization...
Words: 1035 - Pages: 5
...Accounting and Corporate Governance, Faculty of Business and Economics, Macquarie University, Sydney, NSW 2109, Australia a r t i c l e i n f o Keywords: Convergence German Commercial Code (Handelsgesetzbuch) International Financial Reporting Standards Act to Modernize Accounting Law (Bilanzrechtsmodernisierungsgesetz) Classification of accounting systems a b s t r a c t Classification techniques based on one or few dimensions are widely used in research studies and textbooks to explain and predict the development of accounting systems internationally. However, their usefulness in international accounting has been limited in today's globalized world. For example, in the context of the EU, IFRS are required for consolidated accounting, while national accounting systems continue to be the dominant system for unconsolidated accounting in many countries. Using Germany as a case study, the objective of this paper is to examine whether Germany can still be classified within the Continental European model of accounting following the Act to Modernize Accounting Law (Bilanzrechts-modernisierungsgesetz — BilMoG), which was promulgated on May 29, 2009. This Act introduced some major reforms to the German Commercial Code (Handelsgesetzbuch — HGB), such as removing the close connection to tax rules and introducing new recognition and valuation regulations, which changed traditional principles of orderly accounting (Grundsätze...
Words: 10868 - Pages: 44
...Global Business Cultural Analysis: Germany Shelly Lynch Liberty University BUSI 604: International Business December 12, 2014 Abstract This Global business cultural analysis of Germany emphasize on the German culture, on the business environment with in the country. In this analysis you will find that the elements and dimensions of Germans culture is observed, an assessment on Germany business verses U.S. businesses and why the U.S states like to do business with Germany. This analysis will also emphasize on Germany’s education system along with their financial system as well. Global Business Cultural Analysis: Germany When it comes to popular European countries Germany is one of the most popular. Germany has numerous small businesses throughout the country opposed to large corporate businesses. When it comes to doing business in Germany it comes easy to some and others find it harder to do business in Germany. The culture in Germany is very different than the culture in the United States. Germany is popular for its beer, foreign cars, and for discovering insulin. Germany’s Interesting Facts Germany became a country in 1871, they are one of the largest consumers of alcohol (beer) having over 1250 breweries, there are 414 zoos registered in Germany. Germans discovered many things and one of them being insulin. In 1916 during WW1 Germany implemented daylight savings time. Germany also has the tallest church in the world (Ulm Cathedral 530 feet high) General Description of...
Words: 3772 - Pages: 16
...Amid a challenging external environment, Germany’s current account surplus grew distinctly in 2012 to 7% of gross domestic product (GDP), which was only slightly below its previous record high in 2007. On the export side, this rise was attributable to the German economy’s ability to hold its own in markets outside Europe despite the significant slowdown in the pace of growth in 2012. This is partially due to the attractive product range offered by German exporters, although the euro’s lower external value also played a role during the period under review. Germany’s strong export performance vis-à-vis non-euro-area countries greatly outweighed the weak demand that its enterprises faced in the euro area. The import side, too, contributed considerably to widening the current account surplus. In particular, the uncertainties emanating from the crisis in the euro area prompted German firms to hold back on their domestic investment, which adversely affected imports. While noticeable progress has been made in terms of correcting the current account imbalances within Europe, the 2012 surplus underlines the fact that, owing to the greater uncertainty it has engendered, the crisis has also hampered efforts to reduce the overall German current account surplus. The increased desire for safe investments has played a role in this. Safe haven effects helped to boost the net inflow of investment income over and above the structural surplus which is generally generated thanks to Germany’s high...
Words: 7906 - Pages: 32
...occupied northern Germany since classical antiquity. Germany(Flag) A region named Germania was documented before 100 CE. During the Migration Period the Germanic tribes expanded southward. Beginning in the 10th century, German territories formed a central part of the Holy Roman Empire. During the 16th century, northern German regions became the centre of the Protestant Reformation. The rise of Pan-Germanys inside the German Confederation resulted in the states in 1871 into the Prussian-dominated German Empire. After World War I and the German Revolution of 1918–1919, the Empire was replaced by the parliamentary Weimar Republic. The establishment of the Third Reich in 1933 led to World War II and the Holocaust. After 1945, Germany split into two states, East Germany and West Germany. In 1990, the country was reunified. In the 21st century, Germany is a great power and has the world's fourth-largest economy by nominal GDP, as well as the fifth-largest by PPP. As a global leader in several industrial and technological sectors, it is both the world's third-largest exporter and importer of goods. Germany is a developed country with a very high standard of living sustained by a skilled and productive society. It upholds a social security and universal health care system, environmental protection and a tuition free university education. Germany was a founding...
Words: 6995 - Pages: 28
...Relocation for Growth Grayhat Inc. Expanding to Germany Prepared for Mr. Stephen P. Jones CEO of Grayhat Inc. Oklahoma City, Oklahoma, 73145 Prepared by Grayhat Inc San Antonio, TX 78245 October 04, 2013 Grayhat Inc. 1247 Industrial Drive San Antonio, TX 78245 October 04, 2013 Mr. Steven P. Jones, CEO Grayhat Inc. 10782 Skyline View Rd Oklahoma City, OK 73150 Dear Mr. Jones: In this document you will find the report you requested in August. I have provided the necessary information and made recommendations on a plan of action to expand Grayhat Inc. network security, software manufacturing, and distribution into Germany. My analysis of expansion into Germany covered several critical areas that will help you decide whether or not Grayhat Inc. should expand and build a manufacturing and distribution plant in Germany. To assist us in making that decision, I looked at the government, economy, culture, and competition. Germany is a technologically advanced country which has a stable economy. My research has led me to recommend expansion into Germany. I strongly believe that Grayhat Inc. can be profitable in the long term and become a successful business in Germany. Grayhat Inc. used several resources in forming my analysis. The Central Intelligence Agency's World Factbook, World Bank Group, and The Economist Newspaper were all helpful in answering my research questions. Thank you for allowing...
Words: 4743 - Pages: 19
...The purpose of a healthcare system is to preserve the life and well-being of the citizens of a country. In this paper I will be both comparing and contrasting the healthcare systems of the United States and Germany. I will be looking at cost to consumers, coverage of health care and personal choices about your own health care. The average cost of insurance for an American family is approximately $17,000 per year with health care insurance companies raising rates almost every year. Insurance offered through employers is usually at least partially paid by the employer. Health insurance is mandatory for all families and people face large tax fees if they are uninsured. Germany also has mandatory health insurance for all of it’s citizens. German...
Words: 952 - Pages: 4
...within regions in Germany and the cultural and social norms place a barrier to start-ups despite the government effort in financing and state promotion programs. TABLE OF CONTENTS 1. Introduction……………………………………………………………….3 2. Overview of Germany’s entrepreneurship and international comparison...4 3. Institution context………………………………………………………....6 The regulation of entry……………………………………………………6 Political context- government policies……………………………………8 Human Capital…………………………………………………………….9 Education…..……………………………………………………………10 Psychological and sociological context………………………………….12 Regional context…………………………………………………………15 4. Conclusion……………………………………………………………….18 5. Works cited……………………………………………………………...20 Introduction The German economy encountered a slow and sluggish growth for the past decade. With a high unemployment rate that has just slightly shifted upward by 0.1%, the economy’s growth is slow (Goldstein, 2007). However, the improvement is derived from and dependent on a strong global economy, especially in Asia. According to research from the Global Entrepreneurship Monitor, start-up and entrepreneurial activities...
Words: 4897 - Pages: 20
...selected target country for DIRECTV’s latest expansion. The German economy, political structure, regulatory, financial, cultural, and competitive landscape requires an objective analysis to determine the appropriate strategy and plan for market introduction. Other parts of the assessment include taxation, marketing mix, distribution options, supply chain, and environmental factors. Political, Legal, and Regulatory Exchange Germany as part of the European Union (EU) is a relatively low risk target for political considerations with Forbes citing the region has the most positive regional outlook with 47% of member countries exhibiting a decline in risk ratings (Rapoza, 2013). A.M. Best (2014) rated Germany as one of the best in nine areas with the only exception attached to labor flexibility. See Figure 1 below. Figure 1 from A.M.Best (2014) Repatriation of Funds Foreign direct investment is setting up a business or the purchasing of assets in a foreign location or across national borders. DIRECTV has decided to initiate business in Germany to allow customers access to entertainment choice and convenience at home. The risk of exchange and repatriation of funds are the penalties involved. Germany has been a country that is highly developed as well as having a high-cost economy. Companies face the risk of 35% taxation in the U.S. for bringing profits back home, which is primarily due to stringent tax laws and treaties between the two countries. As Dr. Endres (2012)...
Words: 2646 - Pages: 11
...Corporations deal with double taxation too, as a corporation pays taxes on its earnings only to have its shareholders taxed once more. Double tax treaties comprise of agreements between two countries, which, by eliminating international double taxation, promote exchange of goods, persons, services and investment of capital. These are bilateral economic agreements where the countries concerned evaluate the sacrifices and advantages which the treaty brings for each contracting state, including tax forgone and compensating economic advantages. Double taxation arises when an individual or business acquiring income in a foreign country is required to pay taxes on that income in both the foreign country as well as the country of origin. For example, an American company operating in a developing country, in the absence of a tax treaty between the two countries may have to pay a withholding tax to the government of the developing country, as well as corporation tax to the United States government. Double taxation is always considered to be one of the most important issues in international taxation. With the more and more business moving towards globalization and cross-border investment, double taxation is often cited as a major obstacle to liberate economic progress. There are basically three types of systems for double taxation relief, the exemption system,...
Words: 1643 - Pages: 7
...automobile manufactures produce 17% worldwide. The automobile industry is thriving in Germany and our company can participate in the thriving. They have the world’s most auto industry patents. Germany’s Gross domestic product in 2012 is predicted to be .7% and in 2013 it is predicted to be 1%. It is Europe's number one automotive market. At least 35% of all passenger cars manufactured and almost 30% of all new registrations come from Germany. Germany has the most OEM (original equipment manufacturer) plants in Europe. 30 of the OEM plants produce for major brands. In 2009, the German auto industry exported auto products worth over EUR 150 billion. Refer to Figure 3. Competition Our main competition in Germany would be Audi, BMW, Daimler, Iveco, Ford, Opel, MAN, Neoplan, Porsche, Volkswagen. It would be in our best interest to become partners with one of these companies if we enter into the German market. Foreign direct investments will be discussed in the “Recommendation” section of the paper. Refer to Figure 2 for the worldwide competition. Workforce and Labor Germany’s automobile workforce is around 723,000. That is a large number for one industry. If the industries were to go under it will be devastating for the country. Germany’s law gives employees their rights and make sure they are treated fairly. Companies with more than five employees must have a works council. They can be in a union and they help develop strategies to help the company stay competitive. Labor...
Words: 1356 - Pages: 6
...Mr. Benno Hoffmann Confirmed on: 23.07.2014 in Heidelberg TABLE OF CONTENT: |Sl no |Title |Page no | |1 |ABSTRACT |2 | |2 |INTRODUCTION |3 | |3 |VARIOUS MODELS PROPOSED BY GERMAN GOVERNMENT |3-4 | |4 | |4-5 | | |PROS AND CONS OF TOLL SYSTEM IN GERMANY | | |5 |CONCLUSION |6 | |6 |REFERENCES |7 | ABSTRACT Due to the financial crisis in constructing infrastructure and maintenance for autobahns,...
Words: 1669 - Pages: 7
...German & U.S. Healthcare Systems: A Comparison German & U.S. Healthcare Systems: A Comparison Mention European health care to an American, and it probably conjures up a negative stereotype — high taxes, long waiting lines, rationed care. It's not that way in Germany. Very little tax money goes into the system. The lion's share comes, as in America, from premiums paid by workers and employers to insurance companies. German health benefits are very generous. And there's usually little or no wait to get elective surgery or diagnostic tests, such as MRIs. It's one of the world's best health care systems, visible in little ways that most Germans take for granted (Knox, 2008, para. 1). The country's heath care system dates to 1883 — only a dozen years after Otto von Bismarck melded a disparate collection of kingdoms and duchies into the German Empire. The "Iron Chancellor," as Bismarck was known, persuaded the country's parliament to enact a national system of health insurance based on the guilds' sickness funds (Knox, 2008, para. 7). The 1883 health insurance law did not address the relationship between sickness funds and doctors. The funds had full authority to determine which doctors became participating doctors and to set the rules and conditions under which they did so. These rules and conditions were laid down in individual contracts. Doctors, who had grown increasingly dissatisfied with these contracts and their limited access to the practice of medicine with...
Words: 1777 - Pages: 8
...do something, you have to consider what you would be charged. The book Boomerang, to an extent, agrees the point without prior consultation. The American author Michael Lewis used a metaphor for Europe’s financial crisis. He points that several European countries’ crisis come from their non-standard financial operations. It is just like a bad boomerang player hurt by himself. Boomerang is written in the form of travel. However, this is not a normal travel: the author contacted with a variety of characters, including national dignitaries, currency traders, tax officials, monks involved in the event of fraud, real estate developers, firefighters affected by the financial cuts, etc. From a local all aspects of the system, culture, history, etc., the author tried to find the underlying causes of the financial bubble. Because he had worked on Wall Street before, Lewis is extremely familiar on the operation of the financial system. His humorous writing makes it interesting to read the story. At the same time, the story contains a lot of meaning. After reading this book, I have not only more intuitive understanding on European financial crisis, but also been more vigilant about how to participant financial operations. Iceland: banks hurt the country The author believed that the tragedy of Iceland depends badly on the culture. There are fishing and pirate career Icelandic men traditionally. It causes Icelanders have very adventurous character. They are not afraid of bad weather...
Words: 2394 - Pages: 10
