21 December 2016 Germany publishes draft bill to restrict deduction of royalties to affiliated foreign entities that benefit from IP regimes without substantial local R&D activities The German Ministry of Finance (MoF) published a first technical draft of an Act against Harmful Tax Practices with regard to Licensing of Rights on December 19. The purpose of the draft legislation is to introduce a new section in the German Income Tax Act (Sec. 4j ITA) restricting the tax deduction of royalties and similar payments made to related parties if such payments are subject to a non-Organisation for Economic Co-operation and Development (OECD) compliant preferential tax regime (IP Box) in the jurisdiction of the recipient, and are effectively taxed at a rate below 25%. A Tax Alert prepared by EY's Global Tax Desk Network, and attached below, provides additional details. Document ID: 2016-2186 |
