Rudiger, lives and works in Hamburg and has over 19 year’s practical experience as tax and corporate finance expert in various positions. He has published several articles foremost in German tax gazettes. Rudiger holds a Bachelor in Finance and Tax (Diplom-Finanzwirt FH) from Schleswig-Holstein College for Public Affairs and a Master of International Taxation from the University Hamburg. He is a Certified German Tax Advisor (Steuerberater) at the Chamber of Certified Tax Advisors (Steuerberaterkammer) in Hamburg. You are invited for comments under: croesurbahns@aol.com or phone +49 (0)152 270 980 60

2

TABLE OF CONTENTS

PREFACE   4

I.  EINFÜHRUNG.  5

I.  INTRODUCTION  5

II.  ERTRAGSTEUERRECHT.  6

II.  TAX ON PROFITS  6

III.  EINSCHRÄNKENDE DBA REGELUNGEN.  8

III.  RESTRICTING DOUBLE TAX CONVENTIONS.  8

IV.  GEWERBESTEUER  9

IV.  TRADE TAX.  9

V.  GEWINNZURECHNUNG  10

V.  TRANSFER PRICING.  10

VI.  BUCHFÜHRUNGSPFLICHT UND SONSTIGE PRAKTISCHE  HINWEISE12

VI.  ACCOUNTING AND OTHER PRACTICAL ISSUES  12

VII.  LOHNSTEUER  13

VII.  SALARY TAX  13

VIII.  UMSATZSTEUER.  13

VIII.  VALUE ADDED TAX  13

IX.  FAZIT  15

IX.  CONCLUSION  15

3

Preface

Being into the international tax business for a couple of years, I always found it difficult to deal with cross border cases without having an opinion of the tax consequences in other foreign jurisdictions.

Often it was not just to know the foreign tax law - sometimes difficult enough to understandbut to find tax information into the right language and the right format.

The intention of this short script is to provide international acting enterprises respectively their tax advisors with a first familiarization with the tax impact when hiring co-workers with home office in Germany. For this purpose a few of the most important aspects are analysed shortly in the following sections.

Hamburg/Germany, January 2010

Rudiger Urbahns

Important Notice: Laws, regulations, administrative instructions, tax treaties and court decisions could deviate from each other and are subject to permanent changes. The judgement of a case depends on individual facts and circumstances so that it is strongly recommended to contact a tax advisor before making a decision that affects one's tax situation.

4

¹ Zu erwarten wären jedoch zumindest unilaterale Maßnahmen zur Vermeidung einer Doppelbesteuerung etwa durch eine Freistellung der ausländischen Einkünfte oder durch Anrechnung der ausländischen Steuern auf die Steuern des Stammhausstaates.

5