German Amnesty Offers Clemency On A Variety Of Levies

by Ulrika Lomas, Tax-News.com, Brussels

09 February 2004

Amongst the changes to German tax legislation taking place in 2004 is the introduction of a widely-touted tax amnesty, which will allow taxpayers to wipe their tax slate clean on a number of different levies up to March 31 next year.

The amnesty, which came into force in January, will exempt from penalties undeclared tax on income received after December 31 1992 and before January 1 2003. It covers a multitude of taxes including income tax, corporation tax, turnover tax, wealth tax, trade tax, inheritance tax, gift tax and tax deduction relating to the Income Tax Act.

Under the scheme, investors face a tax rate of 25% on assets repatriated by the end of 2004, a deal the government argues is attractive compared to the 48% tax rate they would have ordinarily faced. However, this levy rises to 35% on income declared between then and March 31 2005.

"We figure on about €20 billion that will be transferred back to Germany. This would mean an additional tax revenue of €5 billion across the board in 2004,” Finance Minister Hans Eichel stated recently, although many analysts doubt that the government's amnesty targets will be met.

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