German Tax Uncertainty Alarming Investors

by Ulrika Lomas, Tax-News.com, Brussels

18 April 2002

Recent reports have suggested that foreign investors are giving Germany a wide berth due to tax policy uncertainty, preferring instead to invest in countries such as Belgium, the Netherlands, and Austria, which can provide more security and reassurance on the tax treatment of foreign interests.

According to a survey conducted by German newspaper, Handelsblatt, the country's domestic and international business and investment arena is likely to suffer a further blow if one of the main challengers for Chancellor Gerhard Schroder's position, conservative Edmund Stoiber, assumes the role following the general election later this year.

The conservative opposition Christian Democrats and Christian Social Union on Monday announced plans to roll back tax breaks on profit from sales of corporate stakeholdings if they are successful in September. However, this is unlikely to prove popular with investors and businesses, who had applauded the move as one of the most attractive elements of Finance Minister, Hans Eichel's tax reform programme.

According to analysts, the proposed rollback, coupled with the current Finance Minister's crackdown on 'creative accounting', is leading to a great deal of insecurity among potential investors.

'We're watching these developments with a great deal of apprehension,' Boris Meissner, an Ernst & Young auditor told Handelsblatt.

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