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Immigration
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The desire for immigration: In view of the corona pandemic, quite a few companies are thinking about relocating production or mail order business from abroad back to Germany. Most countries do not have an exit tax, so there is rarely any risk of tax burdens abroad as a result of moving away.

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Immigration of a company

In Germany, the immigration or immigration of the company or individual operational functions is treated in the same way as exit taxation. The immigration step-up is anchored in German law and therefore does not require a separate application.

All future business opportunities associated with immigration are evaluated and all existing hidden reserves, including intangible goodwill, are uncovered in the process. The company can make tax-effective depreciation in Germany from the higher values ​​determined in this way.

Headquarters abroad - relocation of the management, e.g. to the home office

The first establishment of German taxation law for the company registered and resident abroad also occurs if the company retains its current headquarters abroad but moves the place of management to Germany. This can be the case if the managing director lives in Germany and runs the company from his home office.

It then remains the case that the company is assigned to the foreign state under commercial and corporate law. Only the taxation law changes to Germany. Permanent establishments continued abroad are excluded and taxed there in the same way as in the respective DTA.

Evaluation of the newly moved company

The newly arrived company is assessed during immigration, with the right to choose. In Germany, the taxpayer can choose to focus purely on past values ​​or carry out a future-oriented assessment. This naturally leads to very different values. The tax office is bound to the company's choice of method.

At least with future-oriented valuations, discussions with the tax authorities about the amount of the company's value are inevitable. Before immigration, it is therefore worthwhile to present the forecast values ​​and the capitalization interest rate in a timely manner in a business plan certified by a tax advisor or auditor. German tax law contains a favorable requirement in that the risk premium is recognized at an interest rate of 4,5% above the ECB's base interest rate. This regularly leads to very high company values ​​and therefore to high future depreciation.

The determined company value is initially distributed among the market values ​​of the tangible assets. These are then written off for tax purposes in a relatively short period of time. The excess value is also included in the German tax balance sheet as so-called goodwill or goodwill and amortized over 15 years.

Company immigration and trade balance

The company's trade balance remains largely unaffected by immigration. If the company pays less taxes in the future, this will also have a positive effect on the trade balance. Before a transaction, however, not only the taxation of the company in all countries involved should be checked. The taxation of shareholders will also be a criterion in the decision. As in all cases of international taxation, the overall perspective is important.

Jürgen Bächle
Jurgen Bachle

has been working as an independent tax consultant and expert in international tax law since 1989 and has been a member of the board of the German Association of Tax Consultants Baden-Württemberg, DSTVBW, for over 20 years.

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