German Tax & Corporate Insights

Flick Gocke Schaumburg German Tax & Corporate Insights — Issue #03 / March 2014 1

Contents Editorial

International tax Much has happened in German tax and corporate law since German Federal Fiscal Court voices doubts about the the last issue of our newsletter. So once again we have com- German constitutionality of tax treaty overrides ...... 2 piled a variety of legislative developments and court rulings which we think may be of particular interest to international International tax Tax & Corporate companies doing business in Germany. New German government intends to tackle cross-border In the first article, we take a look at a decision by the Federal profit-shifting by multinational enterprises (MNEs) . . . . 3 Insights Fiscal Court that has expressed substantial doubts whether Updates on recent business trends, International tax treaty overrides contravene fundamental principles of Ger- legislation and case law in Germany German exit taxation rules assumed to be man constitutional law. The new German government has in line with European law ...... 4 unveiled its proposed future tax policy; our second article sets out why foreign MNEs investing in Germany are well- Income tax advised to keep an eye on legislative developments in 2014. Matrix structures from a tax perspective ...... 5 Several rulings by the European Court of Justice have Indirect tax rejected exit taxation rules of individual Member States as New administrative principles regarding construction irreconcilable with EU law. We analyse a recent judgment in services received after 14 Feb . 2014...... 6 which the ECJ has declared a specific German exit taxation Bonn Berlin rule relating to reorganisations compatible with EU law. Johanna-Kinkel-Straße 2-4 Friedrichstraße 69 Employment law 53175 Bonn 10117 Berlin Matrix structures represent a key topic in this issue: we Matrix structures from an employment-law Phone +49 228/95 94-0 Phone +49 30/21 00 20-20 describe certain tax restrictions with regard to matrix struc- [email protected] [email protected] perspective ...... 8 tures and explain matrix structures from both an employ- Frankfurt Munich Corporate law ment-law and a corporate-law perspective. MesseTurm, Friedrich-Ebert-Anlage 49 Brienner Straße 29 60308 Frankfurt/Main 80333 Munich Matrix structures from a corporate-law perspective . . . . 9 We take a look at new administrative principles regarding Phone +49 69/717 03-0 Phone +49 89/80 00 16-0 construction services relevant to foreign project- and prop- Corporate law [email protected] [email protected] erty-development companies holding German real estate. Delisting of public stock corporations: no need for Representative offices Finally, we examine the Frosta decision by the German Fed- shareholders’ approval or cash compensation ...... 10 Vienna Zurich eral Court of Justice on the delisting of public stock corpo- Am Heumarkt 7 Bahnhofstraße 69a Competition law rations, which was welcomed by listed companies. 1030 Vienna 8001 Zurich Austria Switzerland Competition and the Internet — Mind the gap! ...... 11 Phone +43 1/713 08 14 Phone +41 44/225 70-10 We hope you will enjoy our latest newsletter. [email protected] [email protected] FGS seminar

Italy–Germany — Joint seminar on cross-border The FGS editorial team tax issues facing multinational groups ...... 13 German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 2

German Federal Fiscal Court for their activities undertaken on behalf of the partnership stricted right to tax the income in Germany by making (such as remuneration for management services, granting reference to sect. 50d (10) ITA. This provision explicitly voices doubts about the consti- of loans, or licensing of other assets). Income so derived by reclassifies Sondervergütungen as business profits for tutionality of tax treaty overrides the respective partners, e.g. salary, interest on loans, or roy- the purposes of treaty-law provisions allocating taxation alties, is — from a German tax perspective — always rights; conveniently, Germany is usually entitled to tax Over the past few years, the German tax legislator has treated as business profits of the partnership. such profits under art. 7 OECD MC. As a result, repeatedly used tax treaty overrides as an instrument to sect. 50d (10) ITA deliberately detaches from treaty provi- safeguard Germany’s right to tax. At the same time, there Such arrangements prove problematic whenever a partner- sions the qualification of income for tax purposes. has been longstanding controversy as to whether such ship maintains a permanent establishment in Germany treaty overrides contravene fundamental German consti- while a partner who holds an interest in it is resident not in As mentioned earlier, in the view of the Federal Fiscal tutional law principles. The Federal Fiscal Court has Germany but in a state that has entered into a double taxa- Court, sect. 50d (10) ITA contravenes the German constitu- recently voiced substantial doubts in this regard, and has tion treaty (›DTT‹) with Germany. The background is that if tion. Under that court’s established case law, the classifi- therefore submitted the matter to Germany’s Federal Con- partners resident abroad (i) grant loans, or make available cation of Sondervergütungen is based solely on the distri- stitutional Court for a decision of principle. other assets to, or (ii) perform managerial tasks for, their bution provisions contained in the applicable DTT; in the partnership in return for consideration, then the relevant case at hand, which involves loan interest payments, this The specific provision at stake in this case is sect. 50d (10) payments made out of Germany are usually taxable under approach leads to an applicability of art. 11 (1) DTT Italy – German Income Tax Act (›ITA‹). In its decision dated 11 Dec. treaty law pursuant to the special provisions of art. 11 (inter- Germany. Mirroring art. 11 (1) OECD MC, said DTT article 2013 (case I R 4/13, published on 12 Feb. 2014), the Federal est), art. 12 (royalties) or art. 15 (income from employment) attributes the right to tax interest income to the recipient’s Fiscal Court referred to the Federal Constitutional Court the of the OECD Model Convention (›OECD MC‹). As a result, in state of residence — in this case, to Italy, not to Germany. question whether a treaty override as with the above statu- principle, the right to tax such income lies with that part- tory provision breaches Germany’s constitution. This action ner’s state of residence. In other words, since — under the Applying sect. 50d (10) ITA inevitably entails a certain dis- by the Federal Fiscal Court is in keeping with its earlier view OECD MC and DTTs modelled after it — Sondervergütungen regard for treaty provisions and is ultimately tantamount in its landmark decision dated 10 Jan. 2012 (case I R 66/09). are not classified as business profits (art. 7 OECD MC) of the to advocating a breach of an international treaty — in that In that case the court had, for the first time, expressed con- partnership but as income falling within the scope of spe- the German legislature unilaterally seeks to override a stitutional-law misgivings regarding treaty overrides, and cific other OECD MC articles, Germany loses its otherwise legal classification agreed under international law. In this had referred the matter to the Federal Constitutional Court — existing unlimited right to tax such income. This is the very connection, the Federal Fiscal Court argues in particular albeit in respect of a different provision of the German ITA. scenario at the heart of the most recent case now pending that a unilateral revision of treaty provisions — as with before the Federal Constitutional Court, which involves a sect. 50d (10) ITA — runs contrary to the system of objec- The current case is about the classification of Sonder- partner in a German partnership who was resident in Italy tive values set forth in art. 25 of the German constitution, vergütungen (special business income) under treaty law. and had granted a loan to his partnership. Invoking art. 11 (1) which explicitly stipulates that the general rules of interna- This is an issue of great practical relevance as it involves a DTT Italy – Germany, that partner maintained that the inter- tional law take priority over purely domestic legal provisions. prominent feature of German income-tax law concerning est accrued was subject solely to Italian taxation. the taxation of partnerships. Put simply, these Sonder- Beyond sect. 50d (10) ITA, the German legislature has vergütungen are payments by a partnership to its partners The German tax authorities, however, asserted their unre- been using the treaty-override »technique« in a number of German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 3 other provisions. Accordingly, the issue remains of funda- After the Sept. 2013 general elections in Germany, the legislative action against tax avoidance effected via mental importance well beyond the present case. This is Christian-Democratic Union (CDU), Christian-Social offshore financial centres. true all the more given that, in an (unofficial) press release, Union (CSU) and Social-Democratic Party (SPD) entered (2) The government plans to push legislation aimed at the Federal Fiscal Court stated that henceforth any legal into a coalition agreement and formed a ›grand-coali- increasing tax transparency ultimately among tax provision with a similar profile that comes before the courts tion‹ government. While the agreement does not set out authorities globally. For instance, the German govern- will be measured against the constitution as well (in the any specific legislative measures aimed at amending ment intends to support country-by-country reporting past, the courts including the Federal Constitutional Court existing German international-tax provisions, it does con- in the banking and commodity-trade sectors covering had not taken issue with the legislative seeking to override tain a commitment to promoting an investment-friendly income earned, losses incurred and taxes paid. More- international law). By way of conclusion, taxpayers should tax climate as well as legal certainty for taxpayers in Ger- over, according to the government, automatic exchange file an administrative appeal against their tax assessment many. At the same time, however, the government has of information should become international standard notices — to the extent that these are based on sect. 50d (10) announced its intention to curb perceived cross-border practice. Accordingly, it supports a revision of the ITA or comparable norms as applied by the German tax profit-shifting by MNEs and to reduce what it views as OECD’s model in this respect. More immediately, the authorities — and apply for a suspension of proceedings until harmful tax competition between countries. Therefore, government intends to continue negotiating bilateral the Federal Constitutional Court has ruled on this issue. the government will focus on preventing both double and multilateral tax treaties which include automatic non-taxation of income and double deduction of exchange clauses. In addition, it advocates a public reg- Contact expenses. ister for all business parties involved in trust structures. Dr. Carsten Quilitzsch, LL.M. Phone +49 228/95 94-0 [email protected] In order to achieve these tax-policy goals, the German More broadly, CDU, CSU and SPD have expressed their (Bonn office) government has expressed its active support of the OECD support for harmonisation of company taxation within the base-erosion and profit-shifting (BEPS) initiative expected EU. The starting point for such harmonisation could be to be completed by 2015. However, pending completion of the introduction of a common corporate-tax base. New German government the BEPS initiative and possible measures the OECD may eventually recommend, CDU, CSU and SPD have agreed to Finally, the government announced that work will continue intends to tackle cross-border push ahead unilaterally with legislative measures which on Germany’s model for tax-treaty negotiations. The pur- profit-shifting by multinational include the following: pose of German tax treaties, as emphasized in the coalition enterprises (MNEs) agreement, is not only to avoid double taxation but also (1) Limitations to the tax deductibility of payments made to prevent double non-taxation. Thus, in the government’s The new German government has recently unveiled its to »letter-box« companies, i.e. entities lacking the view, there is a need for appropriate treaty clauses pre- proposed future tax policy. While being rather unspecific required substance and business activity. In addition, venting double non-taxation to be agreed and backed up on concrete legislative changes concerning international- the government is keen to ensure that German tax by national legislation in the countries involved. tax issues, the government plans to tackle perceived deductions for license expenses match the proper tax- cross-border profit-shifting. Accordingly, foreign MNEs ation of the corresponding payments by the recipient’s Potential changes to German tax legislation indicated investing in Germany are well-advised to keep an eye on country. At the national, European and international by the government to date notably affect foreign MNEs German legislative developments in 2014. level, the German government also seeks to pursue investing in Germany. Hence, it is highly advisable for German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 4

MNEs to closely monitor German legislative developments by German courts to the ECJ for a preliminary ruling (e.g. such PE, thereby excluding or limiting the right to tax of the in 2014. Given the fact that German tax measures address- Düsseldorf fiscal court, 5 Dec. 2013, case 8 K 3664/11 F – Federal Republic of Germany (e.g. sect. 4g German Income ing cross-border profit-shifting are commonly enacted pending before the ECJ, case C-657/13). In its judgment Tax Act [›ITA‹] or sect. 12 German Corporate Tax Act with retroactive effect, it is essential for investors to dated 23 Jan. 2014 (case C-164/12), the ECJ has ruled on [›CTA‹]). The clear objective of the exit taxation rules con- ensure that any necessary structural modifications are a specific German exit taxation rule relating to reorgani- sists in safeguarding the German right to tax with regard to identified and tackled in a timely manner. sations, declaring it compatible with European law. Fol- the hidden reserves that have accumulated in the respec- lowing this ruling it seems fair to assume that the exist- tive asset. Contact ing German exit rules are also compatible with European Dr. Xaver Ditz law. In the case of a transfer to a PE in other EU countries, in Phone +49 228/95 94-226 [email protected] order to avoid a discrimination that contravenes European (Bonn office) ECJ judgment law, there is the possibility — subject to certain prerequi- In its judgment dated 23 Jan. 2014, the ECJ has ruled on sites — of spreading the taxation over a maximum period Dr. Sven-Eric Bärsch, LL.B. Phone +49 228/95 94-0 a German exit taxation rule for the first time. The provi- of 5 years (cf. sect. 4g ITA, sect. 12 CTA). In order to [email protected] sion of sect. 20 German Reorganisation Tax Act 1995 achieve this in practice, the company is obliged to create, (Bonn office) (›ReorgTA 1995‹) — which has since been abolished — in the year of the transfer, an adjustment item for each contained the possibility of avoiding immediate taxation asset, which must be released in the fiscal year of its crea- of hidden reserves by way of the taxpayer filing an appli- tion as well as in the four subsequent years, increasing cation for permission to pay any taxes due on the profits profits in the process. These rules, however, solely apply to German exit taxation rules over a 5-year period. This was possible without any inter- persons subject to unlimited tax liability. In Dec. 2013, the assumed to be in line with est arising or any security having to be provided. In con- Düsseldorf fiscal court submitted to the ECJ the question European law trast to the national rule on which the decision in National whether the exit taxation provision of sect. 4g ITA was Grid Indus was based, the ECJ found the German rule to compatible with European law (Düsseldorf fiscal court, Over the past few years, the European Court of Justice be compatible with European law. The court held that 5 Dec. 2013). Alongside that provision, there is another (›ECJ‹) has increasingly ruled on exit taxation rules of such a rule was justified in order to preserve the authority exit taxation rule for cases in which the taxpayer ceases to individual Member States. These were rejected as being of each jurisdiction to tax. Unlike under the relevant Dutch operate a business (Aufgabe eines Betriebes, cf. irreconcilable with European law (cf. the fundamental rule, under the German provisions the taxpayer had an sects. 16 (3a), 36 (5) ITA). These norms, too, are aimed at decision in National Grid Indus, ECJ, 29 Nov. 2011, case actual choice between settling the tax immediately and reducing the burden on the taxpayer by enabling him to C-371/10; ECJ, 25 April 2013, case C-64/11; ECJ, 18 July spreading the tax burden over a 5-year period. settle the tax due over a 5-year period. 2013, case C-261/11). Likewise, compatibility of the Ger- man provisions with European law has been repeatedly Overview over the German exit taxation rules Conclusions from the ECJ judgment called into question. For instance, in 2012 (file ref. As a rule, German tax law currently provides for immediate The exit taxation rules currently applicable under German 2011/4043) and 2013 (file ref. 2012/4183), treaty infringe- taxation of hidden reserves notably in cases where an asset tax law essentially correspond to the previous provision of ment proceedings were initiated against Germany by the is transferred by a company in Germany to a permanent sect. 20 ReorgTA 1995 on which the ECJ had to rule in its EU Commission. In addition, cases have been submitted establishment (›PE‹) abroad or is otherwise attributed to aforementioned judgment. The German legislator will German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 5 therefore view this decision as a confirmation that the exit with European law. It is likely that the pending case Hidden profit distributions taxation rules in force are compatible with European law. C-657/13 will provide further clarification. From an income-tax perspective, the primary focus with Although there is no postponement of the taxation of the matrix structures is on preventing hidden profit distribu- hidden reserves until their actual disposal, the possibility Contact tions by the participating subsidiaries to their parent com- of avoiding an immediate taxation of the hidden reserves Dr. Jochen Bahns pany (sect. 8 (3) German Corporation Tax Act). There is a Phone +49 228/95 94-208 is in fact available to the taxpayer who is subject to unlim- [email protected] risk of such hidden profit distributions whenever, in such a ited tax liability. In addition, the German rules do not con- (Bonn office) constellation, a company is not charged a reasonable price tain any limitation of that right to choose, for instance by Morten Dibbert for any goods or services it receives. way of interest payments, requirements to provide secu- Phone +49 228/95 94-0 rity, or extensive documentation obligations. It therefore [email protected] German tax law defines hidden profit distributions as (i) a (Bonn office) seems fair to assume that the treaty infringement pro- decrease or a prevented increase in corporate assets that ceedings and the pending referral procedure initiated by (ii) is caused by the shareholder relationship, (iii) has an the Düsseldorf fiscal court (see above) will similarly be impact on business profits, and (iv) is not based on a reg- decided in favour of the German treasury. What could be ular profit distribution (arm’s-length principle). Such a of interest to the ECJ with respect to the question referred Matrix structures from a tax hidden profit distribution may also occur for the benefit of to it by the Düsseldorf fiscal court is the current exclusion perspective a related party, such as a subsidiary, for instance within a (in the German rules) of companies subject to limited tax matrix structure (so-called verdeckte Gewinnausschüttung liability, because in that regard a discrimination would not This article describes certain tax restrictions with regard im Dreiecksverhältnis or ›hidden profit distribution within appear to be excluded. Moreover, to date, cross-border to matrix structures, focusing on problems that arise once a triangular relationship‹). Essentially the same general reorganisations (e.g. mergers) or cross-border relocations the structure has been put in place. principles apply in a multinational setting (sect. 1 (1) Ger- of company seats do not benefit from a deferral of taxa- man Foreign Tax Act). tion. According to the prevailing opinion, preferential Matrix structures are about horizontal cooperation of sub- treatment is not available in this respect. sidiaries within a corporate group. Accordingly, it is not The tax consequences of a hidden profit distribution are necessary to establish new legal entities in order to imple- twofold: Conclusion ment such a structure. The goal of organising a corporate In light of the ECJ decision, there is a sound basis for group via a matrix structure is to create centres of compe- (1) The income of the relevant subsidiary is adjusted — assuming that in principle the existing German exit taxa- tence at the level of the subsidiaries, which then perform notionally — so as to bring it in line with the arm’s- tion rules are compatible with European law. What might their respective tasks for the benefit of the entire corporate length principle. More specifically, its taxable business be critical, however, is the fact that, to date, foreign tax- group (e.g. research and development, purchase of eco- profits are increased and taxed (at an aggregate tax payers are not eligible for the tax deferral options. In addi- nomic goods, provision of administrative services). This kind rate of approx. 30 % for corporations). tion, it would seem appropriate to extend the tax deferral of matrix structure is also known as ›competence model‹. also to cases of cross-border reorganisations and reloca- (2) The parent company is deemed to have received a div- tions of company seats. It is our view that regarding the Once a company has implemented a matrix structure, idend, which is taxable at the level of that company above situations, there continues to be an incompatibility certain tax restrictions need to be borne in mind. (generally at a tax rate of 1.5 % for corporations). German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 6

Generally no offsetting of benefits against expenses A pool agreement is a legal contract between a number of only partakes in such a pool agreement if its expenses are With a matrix structure, the fundamental question regard- companies that render services to each other in a com- matched by the benefits it derives from it. ing hidden profit distributions is whether the benefits of mon interest and over an extended time period. In the the services received may be offset against the expenses view of the German tax authorities, such a pool agreement VAT implications caused by services rendered. It is a characteristic feature constitutes an Innengesellschaft or undisclosed partnership Companies linked through a pool agreement will often of matrix structures that each company within it both from a tax perspective (only, i.e. not a commercial partner- constitute a single entity for VAT purposes owing to the receives and renders services. Therefore, any legally ship as well). However, in order to be recognised by the respective subsidiary’s financial, organisational and eco- admissible offsetting would decrease the assessment base tax authorities, a pool agreement has to meet certain nomic integration into the enterprise of its parent com- for calculating the hidden profit distribution (Vorteils- criteria. In particular, it may only cover auxiliary functions, pany. As a result, services exchanged among companies ausgleich or ›benefit sharing‹). and the parties involved must observe strict documenta- that are parties to a pool agreement are not subject to VAT. tion obligations. Such an offsetting of benefits exists but is subject to strict Contact conditions. To start with, in the view of the German tax Under a pool agreement it is possible for expenses Prof. Dr. Matthias Rogall Phone +49 228/95 94-637 authorities, certain formal prerequisites have to be met. incurred by individual companies to be allocated among [email protected] Moreover, the arm’s-length principle applies. In practical all companies forming the pool by comparing their (Bonn office) terms, the problem is that the services exchanged between respective expenses with the benefits expected for each Dr. Thomas Curdt, LL.M. the companies are rarely of equal value. Accordingly, more company from the pool agreement (benefits as allocation Phone +49 228/95 94-0 often than not the tax authorities seek to deny any set-off. key). In most cases, in the absence of better criteria, [email protected] (Bonn office) these benefits are determined by considering each com- The alternative is to prevent hidden profit distributions pany’s turnover. from the outset by agreeing reasonable commercial terms. Two methods can be used in order to determine what If a company’s expenses exceed its benefits, then it is would represent a reasonable charge in any given setting: for the other parties to the pool agreement to make an New administrative principles (1) a separate determination for every single service adjustment payment. Such adjustment payments as well regarding construction services (direct method); (2) a determination by way of cost allo- as the regular expenses to be borne by each company cation (indirect method). The same principles are used to under the pool agreement are deductible as business received after 14 Feb . 2014 allocate income in the case of multinational companies expenses for income-tax purposes. (transfer pricing). As of 14 Feb. 2014, foreign project- and property-devel- In summary, a pool agreement can tackle the problem of opment companies holding German real estate have to Implementing a pool agreement services exchanged between (notably related) companies observe new administrative principles with regard to Generally, the direct method takes precedence; in most not being of equal value. More specifically, a pool agree- construction services received in Germany. cases, however, using the direct method is not feasible. ment serves to mitigate the general risk of hidden profit Within the framework of the competence model, the more distributions because of its demonstrable arm’s-length Pursuant to sect. 13b (2) no. 4 and (5) sent. 2 German VAT practical approach would be to establish a pool agreement. character: just as any third party would, a group company Act [›VATA‹], any VAT on Werklieferungen (»work supplies«, German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 7 i.e. provision of labour and materials) or miscellaneous decided that sect. 13b (2) no. 4 VATA is to be interpreted to all construction services that have not been completed services for the purposes of construction, restoration, restrictively in that the service recipient is the person liable as of 15 Feb. 2014. maintenance, modification or removal of buildings (here- to pay the tax only if he uses the construction services inafter collectively referred to as »construction services«) is rendered to him to in turn render such services himself. It The new principles are only relevant for construction serv- owed by the service recipient if he is an entrepreneur who is thus no longer relevant whether the service recipient ices rendered by an entrepreneur resident in Germany. himself renders such construction services. This rule (e.g. the project/property developer) renders construction That is because if an entrepreneur resident abroad renders applies to service recipients even where they are resident services anywhere; rather, the decisive factor is whether miscellaneous services in Germany — such as e.g. con- abroad. he uses the very construction services received to render struction services —, sect. 13b VATA is already applicable construction services of his own. under the general principles of sect. 13b (1) and (2) no. 1, Previously, the view of the German tax authorities was (5) VATA, irrespective of how the service recipient uses that the (foreign) service recipient rendered construction The German Federal Ministry of Finance has now reacted the specific construction services. services within the meaning of sect. 13b (5) sent. 2 VATA and amended the VATAD by decree dated 5 Feb. 2014 (ref. himself if, in the course of the calendar year preceding no. IV D 3 – S 7279/11/10002, 2014/0120973). With effect Conclusion: Construction services completed after 14 Feb. receipt of the relevant services, more than 10% of his »glo- from 15 Feb. 2014, the new principles are applicable under 2014 are subject to the new administrative principles. bal turnover« consisted of construction services which the threshold of ›10 % of global turnover‹ is no Henceforth, project-development companies and property (sect. 13b.3 (2) VAT Application Decree [›VATAD‹], previ- longer relevant (sect. 13b.3 (1) VATAD as amended). Like- developers therefore have to differentiate whether ous version). In order to prove that he himself renders wise, the presentation of an exemption certificate shall (a) they use the construction services received in order to construction services, he could alternatively present to the henceforth be merely indicative but no longer be accorded render letting services, or (b) they intend to dispose of the entrepreneur rendering the service an exemption certifi- evidentiary effect (sect. 13b.3 (2) VATAD as amended). building once it has been fully completed (in which case cate (Freistellungsbescheinigung) pursuant to sect. 48b there is no reverse charge), or (c) by receiving services, German Income Tax Act [›ITA‹] (sect. 13b.3 (3) VATAD). In Note that the simplification rule in sect. 13b.8 VATAD is no they in turn render construction services to a third party, these cases, the service recipient had to declare VAT on longer applicable either to construction services rendered e.g. as general contractor (in which case there is reverse such construction services pursuant to sect. 13b VATA after 14 Feb. 2014. According to the tax authorities, it was charge). Going forward, neither exceeding the 10 % under the reverse-charge procedure. Simultaneously, he permissible under said simplification if both the person threshold nor possessing an exemption certificate pursu- could claim input VAT deduction in that same amount, rendering the service and the service recipient initially ant to sect. 48b ITA will be decisive any longer. The simpli- provided he intended to use the real property in a manner assumed the existence of a turnover for the purposes of fication rule that has been frequently applied to date — that would be subject to VAT. The advantage of the sect. 13b VATA, even where it later transpired that this was under which an incorrect application of sect. 13b VATA is reverse-charge procedure is therefore that the service not the case. In practice, this simplification rule is inter- innocuous under certain circumstances — is no longer recipient does not need to advance the input VAT to the preted very broadly and is often relied upon with regard applicable to construction services. entrepreneur rendering the services, so that the VAT does to project- and property-developing companies. Effective not result in a cash-flow disadvantage for him. immediately, however, this is no longer possible for con- Contact struction services. As a rule, construction services are Dr. Barbara Fleckenstein-Weiland, LL.M. Phone +49 69/717 03-0 In its judgment dated 22 Aug. 2013 (Federal Tax Gazette, carried out, from a VAT perspective, once they have been [email protected] vol. II 2014, p. 128), the German Federal Fiscal Court fully completed, so that the new principles are applicable (Frankfurt office) German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 8

Matrix structures from an accordance with its own needs and objectives in its busi- relocation of an instructed employee. A relocation can employment-law perspective ness to advance its business purposes. In order to avoid arise especially where there are changes to (i) the respon- a hiring-out, care should be taken that the instructed sibilities, (ii) the actual activities carried out or (iii) the From an employment-law perspective, both individual- employees are not integrated into the business of the work organisation in which the activities are to be carried law and collective-law aspects need to be observed in instructing party and that the contractual employer con- out. Likewise, removing or extending staff responsibilities connection with the introduction of matrix structures. tinues to pursue its own business purposes. can trigger a change of activity and thus a relocation. Whether — and if so, which — legal aspects must insofar be taken into account in any given case significantly Participation of the economic committee Impact on operational structures depends on the specific design of the model envisaged; The employer must inform the economic committee about Depending on the intensity of the cooperation between accordingly, in practice, there is a considerable amount of the company’s economic affairs in a timely and compre- the contractual employer and the party issuing instruc- structural leeway in this respect. hensive manner, submitting the necessary documents, tions, there can be a risk of a joint establishment arising and must discuss these with the committee. Depending between the two parties. This would have substantial Individual-law aspects on the scope of the functional control, this will especially consequences in particular for terminations on opera- The right to issue subject-specific instructions can, in princi- be the case where a relevant number of employees (in tional grounds because — e.g. in the compulsory process ple, be delegated to an external third party without the qualitative and quantitative terms) are to be controlled. of selection on social grounds — all employees belonging employee’s consent. This third party can then exercise this to a joint establishment would have to be taken into right, as the superior, against his subordinate employees. Involvement of the works council account. One of the prerequisites for a joint establish- However, where the functional control is not limited to dele- The employer must inform the works council in a timely ment is the existence of a uniform management struc- gation of the right to issue instructions, but the work perfor- and comprehensive manner about proposed operational ture, especially for staff and social matters. Therefore, a mance is also (at least in part) for the benefit of someone changes which could lead to significant disadvantages for joint establishment can normally not be presumed to other than the contractual employer, a consent requirement the workforce (or considerable parts thereof), and must exist if, in the framework of the matrix structure, solely arises from sect. 613 sent. 2 German Civil Code. Therefore, discuss the planned operational changes with the works the right to issue subject-specific instructions is dele- what is decisive is whether the third party assumes control council. Moreover, the employer has a duty to attempt a gated, while the contractual employer retains the main under the matrix structure as an »employee of the respec- reconciliation of interests with the works council regarding disciplinary powers. tive company« and the employee continues to work exclu- the operational changes as well as to agree a social plan, sively for his contractual employer or whether the employee where necessary. Depending on its specific design, a In practice, the divergence between operational structure (also) pursues cross-company (group) purposes. matrix structure can constitute such an operational and management competences frequently raises the change, e.g. if the existing (departmental) structures question of group-wide harmonisation of the works-council Hiring-out of personnel (Arbeitnehmerüberlassung) within the business are completely transformed into a structures. An adjustment of the statutory works-council The matrix structure should be designed such that it does business-unit structure, or if existing hierarchy levels are structures is possible, for instance, where the group‘s not result in a hiring-out of personnel (›hiring-out‹) requir- removed as part of the matrix structure. organisation is product- or project-related. A deviating ing consent. A hiring-out occurs when, based on an works-council structure can also be agreed if, given the agreement, a (contractual) employer provides employees It is also necessary to involve the works council if an group’s organisation, this is more conducive to an effective employed by it to a third party, who then deploys them in implementation of the matrix structure results in the and expedient representation of the employees’ interests. German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 9

Protection of employee data the group. Companies which can be integrated into matrix control agreement can be substituted by the (majority) The central collection and administration of staff data, structures include German AGs (Aktiengesellschaften shareholder’s instruction right conferred by sect. 37 which often accompanies the implementation of matrix or stock corporations) and GmbHs (Gesellschaften mit GmbHG (Gesetz betreffend die Gesellschaften mit structures, requires a legal basis. Since there is no statu- beschränkter Haftung or limited liability companies), even beschränkter Haftung or German Limited Liability Compa- tory provision for an intra-group exemption, the group- where the group is a foreign one. The question of how nies Act) as the instrument of legal control. By contrast, wide collection, processing and use of personal data is matrix structures can be implemented from a legal per- where a German AG is involved, there are, as a rule, no only legitimate if permitted by statute or by any other spective and which corporate-law provisions and limita- instruction rights without a control agreement. Here — and legal provision, or if the person concerned has consented. tions must be observed when designing such structures also as an alternative in the above cases — the controlling The latter is hardly practicable owing to the strict consent depends primarily on the legal form of the group company unit may be granted authorisation to exercise the functional requirements and the fact that consent is freely revocable and on the manner in which it is integrated into the group. right, vested in the Company to be Controlled, to issue at any time. Frequently, sects. 32 and 28 Federal Data instructions to its employees (cf. the item »Matrix structures Protection Act (which permit the collection and adminis- Legal ways into the matrix structure from an employment-law perspective« in this newsletter). tration of staff data, subject to certain conditions) do not If the company whose operative unit is to be functionally Depending on the extent to which the instruction right has facilitate matters either. Therefore, in practice, a corre- managed by another body within the group has been been delegated, the legal relationship — between the dele- sponding group works agreement for the group-wide integrated into the group on the basis of a control agree- gating Company to be Controlled and the controlling unit — exchange of data is concluded. ment, then the legal means to exercise functional control underlying the authorisation may have to be qualified as an is often the controlling company’s right under the control echter (Teil-)Betriebsführungsvertrag (›genuine agreement Contact agreement to give instructions (sect. 308 German Stock on management of a business / business segment‹) or even Dr. Tobias Nießen Corporation Act [Aktiengesetz – AktG]). To this end, the as a (partial) control agreement, whose legal prerequisites Phone +49 228/95 94-188 [email protected] controlling company authorises the group company which would then need to be observed. (Bonn office) is (or that group company’s employees who are) to assume the task-based control to exercise this right to Corporate-law limitations issue instructions (›instruction right‹). In principle, instruc- With regard to scenarios where the Company to be Con- tions issued on the basis of a control agreement must be trolled has been integrated into the group via a control Matrix structures from a issued to the management body (Vorstand/Geschäfts- agreement, it is not yet fully clear from a legal perspective corporate-law perspective führung) of the company to be controlled (the ›Company to which extent the management body of the Company to to be Controlled‹). In order to enable the issuing of be Controlled must remain involved in the implementation Groups have increasingly been detaching group manage- instructions directly to the employees of the operative unit of instructions. It is still widely presumed that the management from the legal structures of corporate affiliations, to be controlled, these employees are authorised by the ment body must examine, under its own responsibility, the organising it in a function-oriented manner instead. In management body of the Company to be Controlled to legality of every instruction. However, there are better such matrix structures, management is task-based, tran- receive such instructions. arguments in favour of the possibility of delegating such scending the boundaries of individual group companies, duty to examine. Alternatively, the legal form of the Ger- and is carried out by those responsible for the respective In the case of a German GmbH, if there is no control agree- man GmbH with its right to give instructions (under matter, irrespective of where they are positioned within ment, then the instruction right normally conferred by the sect. 37 GmbHG) offers more flexibility. German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 10

Irrespective of this, there are certain management respon- Specific features in a de-facto group sibilities that the management body may not delegate to If a German AG (stock corporation) is merely part of a de- Delisting of public stock corpo- subordinated divisions or other bodies but must perform facto group (in that it has not been integrated into the rations: no need for shareholders’ itself. It has not yet been clarified to what extent this might group via a control agreement), then notably the provi- approval or cash compensation also apply under an existing control agreement. As to con- sions of sects. 311 and 312 AktG apply. Sect. 311 AktG stipu- tent, this concerns the duties assigned to the management lates that a controlling company may not use its influence In its decision dated 8 Oct. 2013 (case II ZB 26/12), body itself as well as (among other things) the responsibil- over the AG to cause the AG (i) to carry out a legal trans- Germany’s Federal Court of Justice held that a German ity for ensuring compliance within its company. The man- action prejudicial to it, or (ii) to take, or omit to take, AG (Aktiengesellschaft or stock corporation) can go agement body is also liable for carefully selecting, training measures in a way detrimental to the AG, unless the disad- private without an approving vote of its shareholders’ and monitoring the persons to whom it entrusts responsi- vantages are compensated for. In this context, »cause to meeting. Moreover, minority shareholders are no longer bility within the matrix structure. For this reason, in order carry out« means any kind of exerting influence, irrespec- afforded any appraisal rights. With this decision, the to ensure proper monitoring, it is necessary to provide — tive of whether by way of advice, suggestion or expecta- court abandoned a legal concept it had shaped in an parallel to the reporting channels in the matrix structures tion, or expressly by way of instruction. This also includes earlier decision, and which had been complicating — reporting channels to the members of the management influencing subordinate staff. In this respect, the manage- delistings in Germany for more than a decade. bodies of every group company concerned. From an ment board (Vorstand) must take organisational measures organisational perspective, it needs to be ensured that they to ensure that each such influencing complies with the The 2002 Macrotron decision are involved in the relevant decisions. That is why matrix requirements of sect. 311 AktG. Moreover, if there is no With its decision dated 25 Nov. 2002 (case II ZR 133/01), structures may not be designed such that the managers of profit transfer agreement, then pursuant to sect. 312 AktG the Federal Court of Justice introduced into German cor- the individual companies are completely bypassed. every legal transaction or measure taken, following such porate law what would soon become known as the »Mac- influencing, by the reporting group company must be rotron« principle (named after the defendant company in Multi-level group included in its ›dependent-company report‹. By contrast, if that case). Under this principle, an AG listed in the regu- If the matrix structure extends over several levels in a the dependent (group) company is a German GmbH, then lated market of a public stock exchange and seeking to go group (for instance, direct functional control over the the prevailing opinion deems the provisions of sects. 311 private was obliged (i) to seek its shareholders’ approval employees of the sub-subsidiary exercised by employees and 312 AktG inapplicable. and (ii) to offer to buy back their shares in exchange for of the holding company), then it is important — with a adequate compensation (Abfindung). At the time, the view to the management duties which they themselves Contact court held that this principle followed directly from the must carry out and the monitoring of the persons respon- Dr. Sebastian Sandhaus, LL.M. shareholders’ property rights, guaranteed under art. 14 of Phone +49 228/95 94-187 sible — to ensure that the management bodies of the [email protected] the German Basic Law (constitution), arguing that their intermediary subsidiaries are also sufficiently involved. (Bonn office) shares’ inclusion in a regulated market and the correspond- Here, too, it is necessary to provide for corresponding ing liquidity constituted a significant value-enhancing factor. reporting channels and controls. Given the associated lia- With regard to the shareholders’ appraisal rights, the court bility risk for the managers, in practice members of the drew an analogy to other instances in which a corporation management bodies are frequently indemnified against undergoes a major restructuring and is obliged to buy out any such liability. minority shareholders (for example, after the conclusion of German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 11 a domination and profit-transfer agreement with a parent went on to say that, regardless of the above, the Court of minority shareholders could argue that the entire legal company or after a successful squeeze-out procedure). Justice would not exceed its competences under the con- concept on which such shareholders’ claims are based is This also meant that shareholders were able to formally stitution if the basis on which it upheld the »Macrotron« no longer valid. Indeed, it seems unlikely that, after Frosta, challenge a delisting-related compensation offer in a court principle was purely judge-made law and not written con- a court will rule on the adequate level of cash compensa- procedure specifically aimed at dealing with such valua- stitutional law. tion — even if the relevant case had been filed before 2013. tion issues — and typically dragging on for several years, To date, however, no court has had to deal with this issue. with an uncertain outcome for the company involved. Accordingly, when the Frosta case eventually came before it in 2012, the Court of Justice had the choice (a) to come Contact »Frosta« replaces »Macrotron« up with a new legal rationale for the »Macrotron« principle Cornelius Wilk, LL.M. Phone +49 69/717 03-0 In 2011, Frosta AG (a German food-producing company (potentially distinguishing, as had been suggested, [email protected] listed in the regulated market of the Berlin stock exchange) between delisting and downlisting) or (b) to abandon its (Frankfurt office) found itself in a situation very similar to that of Macrotron: 2002 case law altogether. The court, with a new presiding The company’s management resolved to leave the regu- judge in its company-law division, decided to do the latter lated market in Berlin while maintaining a listing in the pri- and dismissed the Frosta shareholders’ claims. Competition and the Internet — vately-regulated Entry Standard segment of the Frankfurt Mind the gap! stock exchange (»downlisting«). The company argued Implications of Frosta that, against this background, it was under no obligation The Frosta decision significantly simplifies delistings and The German competition authority (Bundeskartellamt, to submit a buyout offer to its minority shareholders. Not downlistings of German stock corporations. While the first ›Federal Cartel Office‹ [›FCO‹]) has recently stepped up surprisingly, several activist shareholders disagreed and requirement under Macrotron — to seek approval by the pressure on companies engaging in Internet business. As filed a lawsuit demanding adequate cash compensation shareholders’ meeting — had never been a major concern a result, general terms and conditions containing restric- for their shares. for companies harbouring delisting ambitions (since such tions on Internet-based retailing need to be reviewed. companies typically have a dominant majority shareholder In 2012 (while the Frosta case was pending), two pertinent who supports the delisting), the second requirement — The more e-commerce continues to grow, the more it cases came before the German Federal Constitutional relating to shareholders’ appraisal rights — is believed to comes under scrutiny from an antitrust perspective. The Court. In both cases, minority shareholders were battling have prevented a number of delistings between 2002 and FCO has been examining how companies engaged in with their companies over their respective buyout rights/ 2012. Particularly, it had proved a significant obstacle that online or offline retail-trading of goods or services use (or obligations; the Federal Constitutional Court took the some activist shareholders succeeded in embroiling com- do not use, as the case may be) the Internet. This article opportunity to opine on the constitutional-law aspects of panies in protracted legal disputes over the adequacy of discusses a number of cases that illustrate what compa- the 2002 »Macrotron« principle. Unlike the Court of Jus- their cash compensation — in some cases, for more than nies may do, or should refrain from doing, when it comes tice in 2002, the Constitutional Court rejected the notion ten years. to restrictive agreements relating to Internet trading. that listed companies seeking to delist or downlist their shares have an obligation under constitutional law to seek In addition, the Frosta ruling may impact on pending court Amazon’s price-parity clause to be abandoned their shareholders’ approval and to offer them adequate proceedings. For instance, delisted companies faced with In 2013, the FCO took issue with one of the core terms cash compensation. However, the Constitutional Court »Macrotron«-type cash-compensation claims brought by imposed by Amazon on third parties wishing to use German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 12

Amazon’s ›Marketplace‹ Internet platform. The price-par- that, from a hotel operator’s perspective, the various dis- Rebate policy discriminating against online vis-à-vis ity clause prohibited sellers who offer their products via tribution channels as well as the range of products such as offline distribution Amazon from doing so at lower prices through other sales round-trip packages or mere hotel stays were no mutual The FCO also investigated manufacturers of household channels. Given that, beyond providing such a platform, substitutes. Rather, the relevant market was found to be appliances and gardening products, and more specifically Amazon is one of the largest online retailers of consumer (a) that for online hotel-portal agency services, and their terms and conditions for online-retailing by their dis- goods in Germany and thus a direct competitor to many (b) Germany-wide in scope. HRS had advocated a much tributors. The Bosch Siemens case concerned a rebate of these sellers, the FCO considered the price-parity broader definition which would have comprised all inter- system allegedly disadvantaging dealers who sell house- clause as effectively fixing third parties’ selling prices. mediaries — including both online and offline travel centres, hold appliances both via brick-and-mortar shops and Moreover, the FCO held that the price-parity clause travel agencies, hotel websites and even general Internet online. Under the rebate scheme then in place, an affected competition on the market for B2C platform ser- search engines such as Google. More often than not the increased online turnover would have decreased the over- vices by (a) creating a market-entry barrier for newcom- outcome of such cases hinges on the approach to market all rebate level that a distributor could obtain from the ers and (b) preventing expansion of competing platform definition. The German precedent may thus prove relevant manufacturer. The FCO found the scheme to anti-compet- operators because platform fees would eventually for other similar portal-based markets as well. In the UK, itively cause dealers to scale back their online distribution become harmonised amongst all operators. In response to for instance, the business of online classified property list- activities. Meanwhile, the FCO has closed the case on con- Amazon’s undertaking to abandon its price-parity clause, ings was recently held to be a distinct market, which may dition that the manufacturer ensures equal treatment of the FCO closed its case. In the course of its investigation, result in the special obligations incumbent on dominant online and offline sales. In the Gardena case, the FCO the German FCO coordinated with the Office of Fair Trad- companies becoming applicable to the leading portal. equally objected to a dual-price system for online and ing (OFT), the FCO’s UK counterpart and fellow member offline retail. in the European Competition Network (ECN). In the wake On the merits of its HRS decision, the FCO held that the of its settlement with the German FCO, Amazon aban- ›best price‹ clause limited incentives for other online These cases illustrate that even where companies merely doned its price-parity clause throughout the EU. agency-service operators to expand their activities and/or seek to promote one sales channel over another, they have offer to charge hotels lower fees. The FCO reckoned that to be careful about the criteria on which they base their ›Best price‹ clause of hotel-booking portal to be HRS’ competitors would eventually refrain from offering sales policy. Any quality requirements or service obligations discontinued better terms because hotels would not be willing to accept imposed on their distributors will have to be structured in In Dec. 2013, the FCO ordered HRS, an online search and such terms and lower their room prices in turn, since these a way that will avoid discrimination of online retail vis-à- booking platform for hotels, to discontinue its ›best price‹ would eventually have to be granted to HRS as well. As a vis brick-and-mortar shops. clause (also known as »most-favoured customer clause« result, the FCO ordered HRS to delete its ›best price‹ clause or »MFN clause«) in relation to German hotel operators. from the service agreements in place with hotel operators. Joint distribution of media content Under the ›best price‹ clause, hoteliers were obliged to Other proceedings of a similar kind are still pending. Moreover, the FCO opposed two projects involving distri- offer their best deals — i.e., the lowest room price, maxi- bution of video-on-demand (›VOD‹) content via online mum room capacity and most favourable booking and HRS is a landmark case with respect to the use of MFN platforms. While the 2011 project was initiated by Germa- cancellation conditions — also via the HRS portal. Its mar- clauses in rather narrowly-defined markets. Businesses ny’s leading private broadcasters RTL and ProSiebenSat1, ket investigation prompted the FCO to take a very narrow enjoying a relevant market share will have to review their the 2013 project (dubbed »Germany’s Gold«) involved view with regard to the market definition. The FCO held terms and conditions accordingly. content of public broadcasters ARD and ZDF. Both German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 13 projects were submitted to the FCO for approval with Contact Italy« (by Marco Cerrato, Maisto). The speakers highlighted terms and conditions which, in the FCO’s view, amounted Dr. Florian C. Haus the most relevant audit issues and the impact of the base- Phone +49 228/95 94-0 to horizontal agreements on prices and other fundamen- [email protected] erosion and profit-shifting (BEPS) discussion on audits. tal parameters regarding online distribution of VOD, such (Bonn office) Maisto and FGS were delighted to welcome, as speakers, as availability of a given broadcast for a fixed time representatives of the tax authorities of both countries: period. Colonello Danilo Cardone (Guardia di Finanza) and Ministerialrat Ernst Czakert (German Federal Ministry of Regarding RTL/ProSiebenSat1, these FCO concerns Italy–Germany — Joint seminar Finance) gave a first-hand status report on the develop- regarding horizontal coordination of competitive parame- on cross-border tax issues facing ment of joint audits of Italian and German tax authorities, ters essential to VOD distribution were upheld by the multinational groups pointing out opportunities of such joint audits as well as Higher Regional Court Düsseldorf. The two public broad- difficulties faced in practice. casters are understood to have abandoned their project. Together with Maisto e Associati, Flick Gocke Schaum- burg co-hosted the seminar »Italy – Germany — Tax Next, Aurelio Massimiano (Maisto) and Michael Hendricks Thus, joint distribution of goods and services via online issues for multinational companies with cross-border (FGS) presented »Functioning of MAP [mutual agreement platforms commonly set up by competitors need to meet operations between the two countries« in January and procedures] and arbitration procedures between the two the same standards as »old-economy« commercial activi- February 2014. countries«. Based on a practical case study, they demon- ties. Hence, joint selling — or joint purchasing, for that strated the differences and practical pitfalls of these pro- matter — can only be justified (»exempted«) under certain The seminar consisted of two sessions: cedures. Marco Valdonio (Maisto) and Xaver Ditz (FGS) conditions requiring thorough review of the factual cir- continued the seminar with an overview of »Trends and cumstances of the individual case. • The first session, held on 30 January 2014 at the Four opportunities for unilateral and bilateral APA [advance Seasons Hotel in Milan, mainly addressed heads of tax pricing agreements]«. The presentation also covered, Additional investigations of online-sector restrictions departments of Italian groups with operations in Ger- from an Italian and German perspective, general transfer- looming many and tax managers of Italian subsidiaries of Ger- pricing issues faced by multinationals in both countries. Competition authorities keep investigating businesses and man groups. Finally, Riccardo Michelutti (Maisto) and Marcus Mick (FGS) terms and conditions specifically relating to Internet trade. • The second session, held on 26 February 2014 at the highlighted structuring pitfalls and opportunities when As a result, there is an increased awareness of restrictions MesseTurm in Frankfurt/Main, addressed notably heads applying the double tax treaty between Italy and Germany. to competition in the online world, both in vertical and of tax departments of German groups with operations in In addition, they discussed and analysed the Italian and horizontal scenarios. With its activities, the German FCO Italy and tax managers of German subsidiaries of Italian German tax consequences of different scenarios involv- sees itself at the forefront of the ECN. The FCO has made groups. ing partnerships and corporations. it clear it is ready to challenge »old habits in the new economy« and to spark similar investigations in other jurisdic- Chaired by Guglielmo Maisto (of Maisto) and Marcus Mick The breaks afforded the impressive number of attendees a tions where companies are using (or seeking to use) terms (of FGS), the seminar sessions each kicked off with an welcome opportunity to continue discussions with the and conditions that might impact on competition in the overview: in Milan, »Trends in tax audits in Germany« (by representatives of the tax authorities and of the hosting relevant sector. Torsten Engers, FGS); in Frankfurt, »Trends in tax audits in law firms. Following the extremely positive feedback we German Tax & Corporate Flick Gocke Schaumburg Insights German Tax & Corporate Insights — Issue #03 / March 2014 14 have been grateful to receive, FGS intends to organise Marc Schmidt add: »Our new relationship with Praxity similar binational seminars with regard to other countries now enables us to offer worldwide competitive audit ser- Flick Gocke Schaumburg Our firm in brief German Tax & (announcements of which will be made in due course in vices to clients operating on a global basis.« Corporate Insights Flick Gocke Schaumburg this newsletter). Lawyers Public Auditors Tax This newsletter is intended Consultants Partnership with Rick Anderson, chairman of Praxity, says: »We are for information purposes limited professional liability Contact delighted to count FGS Flick Gocke Schaumburg GmbH only. It should not be relied (Partnerschaft mbB), founded in 1972 Dr. Torsten Engers Wirtschaftsprüfungsgesellschaft as a new member — it upon as legal advice nor Phone +49 69/717 03-0 should it be used as a basis www.fgs.de [email protected] further bolsters our presence in one of the world’s for any action or final decision Offices (Frankfurt office) strongest economies and confirms our commitment to without specifically verifying the applicability and relevant Bonn, Berlin, ensuring that Praxity members and their clients have issues on their merits in each Frankfurt, Munich, individual case. representative offices in access to an unrivalled global resource and knowledge Vienna and Zurich FGS Flick Gocke Schaumburg pool.« Your email address is included in the FGS contact Advisors Wirtschaftsprüfungsgesellschaft database maintained by 99 partners, more than Flick Gocke Schaumburg. 200 associates joins global auditing alliance Praxity FGS wins competition and If you no longer wish to receive news from FGS, Expertise antitrust partner please feel free to unsub- German and international tax FGS’ auditing company FGS Flick Gocke Schaumburg scribe. law, corporate law/M&A, labor law, antitrust law, GmbH Wirtschaftsprüfungsgesellschaft has joined As of 1 Feb. 2014 competition law expert Dr. Florian C. You can subscribe/ accounting law, succession/ Praxity with effect from 1 Jan. 2014. Praxity is one of the Haus has joined Flick Gocke Schaumburg’s Bonn office as unsubscribe by email to: private wealth/foundations, [email protected] tax-exempt organizations, world’s largest alliances of independent accountancy an Associated Partner. tax offences/white-collar firms, present in 69 countries with 550 offices and over For any questions, please and regulatory matters, tax compliance as well as 30,000 employees. Florian C. Haus has expertise in all fields of German and contact: Jochen Bahns ([email protected]) auditing/business valuation European competition law. He specialises in the areas of or Torsten Engers FGS Flick Gocke Schaumburg GmbH Wirtschaftsprü- merger control and transaction-related legal advice. He ([email protected]). International Competence Flick Gocke Schaumburg has fungsgesellschaft provides audit and audit-related ser- also has extensive experience in representing clients in an alliance with law firm vices for national and international businesses and corpo- dominance cases and advises on horizontal and vertical LeitnerLeitner in Austria and Central and Eastern Europe. rate groups. »The more global the business of our clients, agreements. Finally, he defends clients in cartel cases Our firm maintains success- the greater the need to coordinate our advisory services in including competition litigation. »We are very pleased ful long-term relationships with leading independent auditing and business valuation on a worldwide scale«, to welcome an experienced competition lawyer to our law firms throughout Europe, explains Professor Thomas Rödder, Managing Partner of constantly growing corporate practice«, says Professor in the United States and in Canada as well as in all other Flick Gocke Schaumburg. »By joining Praxity, our audit Thomas Rödder, Managing Partner of Flick Gocke major jurisdictions. This basis firm has now found an ideal way to meet this requirement Schaumburg. enables Flick Gocke Schaum- burg to represent and advise for the benefit of its many clients that operate interna- clients worldwide. tionally.« Bonn-based FGS partners Dr. Torsten Kohl and