Germany

The German Tax Authorities have not issued guidance on the tax treatment of inbound re-domiciliations. 

From a corporate law perspective, especially in light of the new provisions implementing the Mobility Directive into national law, German legal literature considers that, in the case of an inbound re-domiciliation, the company retains its legal personality. 

So, the company should continue to exist as a tax subject, meaning that no RETT should be triggered. It is, however, advisable to request a binding ruling from the German Tax Authorities to confirm this point. 

German incorporated companies are prima facie German tax resident unless they fall to be treated as non-resident under an applicable double tax treaty.

So, unless the re-domiciling company had to be treated as resident in a different country under an applicable double tax treaty, it would automatically become German tax resident following the re-domiciliation.

In general, CIT laws treat a company as if, on establishment of a right to tax in Germany, there was a contribution at fair market value. So, there should be a step-up. But the taxpayer can also opt to use the (lower) value taken into account for the purposes of an exit tax charge (if any) in the departure jurisdiction. 

Holding periods should be calculated from the date when the company acquired the asset, not from the re-domiciliation date. This is based on the assumption that, from a corporate law perspective, the company retains its legal personality on re-domiciliation. 

N/A

No RETT should be triggered, assuming that, from a corporate law perspective, the company retains its legal personality on re-domiciliation.

We would expect that, on re-domiciliation, the company would normally cease to be German tax resident (since its registered office as well as place of effective management will no longer be in Germany) and become tax resident in the country to which it has re-domiciled, and the following comments are made on this basis. Different considerations would apply if, following the re-domiciliation, the re-domiciling company continued to have its place of effective management in Germany, and this situation is not discussed here.

For CIT purposes, the re-domiciliation would be treated as a deemed sale at fair market value except for assets which continue to be attributed to a PE in Germany. If the re-domiciliation is to another EU Member State or EEA State, the profit from such a deemed sale can be apportioned pro rata over the following five years and the company is therefore subject to CIT on these profits pro rata in these years. 

The re-domiciliation itself is not subject to withholding tax unless the shares in the re-domiciling company are kept in collective safe custody.

Going forward, dividends distributed by the re-domiciled company could, in certain circumstances, be subject to withholding tax, and in some cases, the company itself has to withhold.