Germany Rejects Proposed Tax Break For Foreign Executives

by Ulrika Lomas, Tax-News.com, Brussels

03 March 2005

The German government has rejected a proposal by the state of Hesse to offer tax breaks to highly paid executives in the finance industry, such as investment bankers and traders, if they relocate to Germany.

Under the scheme proposed by Hesse, which includes the city of Frankfurt - Germany’s financial centre - within its boundaries, the top rate of tax for foreign workers would be limited to 30%, compared to the current top rate of 42%.

However, according to Reuters, the proposal, dubbed the ‘Lex Ackerman’ in reference to the Swiss chief of Deutsche bank, Josef Ackerman, is unlikely to become reality, after a source close to Finance Minister Hans Eichel stated that there will be no “tax favours for the super rich”.

Defending the idea, Hesse's Finance Minister, Karlheinz Weimar noted in a statement that Germany would merely be falling into line with many other European countries by introducing such a tax break.

"I prefer to have a 30% tax and workers in Germany rather than a top rate of German tax that nobody pays, because less and less people work here," he argued.

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