24. June 2016

Brexit – Tax implications

Britain votes to leave – The Brexit will impact cross border business between EU countries and the UK.

Many German tax rules in the cross-border context include specific exceptions or benefits for business relationships within the EU or the EEA. These rules are based on the EU freedoms such as the freedom of establishment. The Brexit therefore may impact these tax rules. The following situations should be scrutinized from companies with a UK Business nexus:

  • Cross border dividend payments benefited from the Parent-Subsidiary Directive within the EU/EEA
  • Cross border license and interest payments benefited from the Interest and Royalty Directive within the EU/EEA
  • Deferrals of taxes if a business asset was transferred from a German headquarter to a UK permanent establishment
  • The German Foreign Transaction Tax Act includes exceptions for business within the EU/EEA (CFC rules)
  • VAT on supplies within the EU
  • Mergers within the EU