22

Jul

Die größte und bedeutendste Steuerkonferenz in Deutschland, die es je gegeben hat

“The biggest and most important tax conference ever held in Germany,” which will be in Berlin in October 2014 to sign, seal and deliver the new international agreement for the automatic exchange of tax data, after it is approved by the G20 finance ministers in September 2014.

67 countries and legal regions are on board; 40 want to implement the new O.E.C.D standard in 2017. Countries implementing the standard include Switzerland, Luxembourg, Liechtenstein, Singapore, the British Virgin Islands, the Bermuda Islands and the Caymans.

This achievement was accomplished by pressure from the U.S., whose “Fatca” law required banks outside the U.S. to provide tax information about customers who had to pay tax in the U.S. The U.S. negotiated this in bilateral agreements. Then five E.U. countries said if the U.S. could do it, the E.U. should as well.

“The task of automatically exchanging the many billion data that could be relevant for the financial authorities across borders is considered extremely complex. It has already been decided that all sorts of income will have to be reported, including interest, dividends, income from insurance contracts but also capital gains [from sales]. Banks will be involved but also brokers, investment funds and insurers. This will cover the accounts held by natural persons and by trusts and foundations and the natural persons who control them. Finally, guidelines on implementation and specific details on the safe transfer of data were worked out.” —Frankfurter Allgemeine Zeitung

(Dee   GRISS ta   oont   bed OY tend sta   SHTOY ah cone fah RENTS   inn   DEUTSCH lonned,   dee   ess   yay   geg GAY ben   hot.)

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09

Jul

Europäisches Unternehmensregister

European register of companies, to prevent letterbox companies from obscuring who’s behind an enterprise.

The E.U. law mandating a new European companies register is being worked out in Brussels. Sven Giegold (Green party) said the current draft would only allow officials to view the register. Süddeutsche Zeitung confirmed it did not explicitly say everyone will be allowed to see the information. “Insiders said this was because publicly naming companies’ and foundations’ economically authorized persons would violate privacy.”

Sven Giegold said you don’t have to publish their names and addresses, but the public has a right to know who’s behind things. To prevent abuse of the companies register, there could be a register documenting the people who want to view the companies register.

An activist from a group called One said Africa loses 44 billion euros each year that are diverted and laundered through anonymous trusts and letterbox companies.

(Oy roe PAY ish ess   oon ta NAE MON’S ray GISS ta.)

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02

Jul

Ameisenverkehr

Ant traffic.

Now that Swiss, Austrian and Liechtenstein banks are about to stop allowing anonymous accounts for foreign tax evaders, Bavarian police and customs officials have been catching more people trying to transport large amounts of cash. They are also suspicious of attempts to bring expensive boats into Germany across Lake Constance. Wristwatches can transport wealth out of Switzerland.

Police said they’re calling the Eurocity train between Munich and Zurich the “black money express.” Transporting large sums of cash in small quantities is “ant traffic.” They watch for wealthy-looking retirees who are behaving suspiciously.

(OM eye zen fair CARE.)

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10

May

Weißgeldstrategie

“White money strategy.”

Under-the-table money is called Schwarzgeld, black money. Before Switzerland got rid of banking secrecy this year by joining the O.E.C.D.’s common standard for automatically sharing account holders’ banking data with the tax authorities in the account holders’ home countries, Switzerland first adopted a so-called “white money strategy” for several months. The Süddeutsche Zeitung said the policy involved trying to only attract and manage legal money. In some cases, under this policy, Swiss banks pressured their clients to make things right with the tax authorities at home, or lose their Swiss bank account.

How Switzerland’s new rules will look remains unclear, said the Süddeutsche. It’s possible that it may be easy to get around them by using letterbox firms or “shell” companies. “The only thing that will help against that is transparent company registers.”

(VICE geld shtraw tegue eee.)

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07

Mar

Flotter

Nimbler.

Also, more agile, speedy, swift, brisk, deft, lissome, slippy, nippy and “fly.”

Non-bank-owned “mortgage servicing” companies have been buying up mortgage servicing rights from large banks in the U.S.A., controlling 3% of the mortgage servicing market in 2010 and 17% in 2014 said NYTimes.com. Homeowners in trouble seeking help with their mortgage found themselves being asked to supply the same documentation over and over as their mortgage servicing was sold on from group to group.

Initially, some U.S. regulators thought that moving banks’ mortgage management responsibilities from mortgage servicers the banks owned to private companies the banks didn’t own would benefit consumers because the private companies would be “nimbler.”

One of the largest of these companies, Ocwen, has now been found to have been cutting numerous corners. It was also affiliated with companies that profit from foreclosures. The chair of Ocwen was chair of a company that bought foreclosed properties and turned them into rentals, but Ocwen told regulators that it maintained an “arms-length relationship” from his foreclosure company.

Though it’s been said the private mortgage servicers are unregulated in the U.S., there may instead be a bit of a patchwork of too-light regulation because in December 2013 the U.S.’s Consumer Financial Protection Bureau and 49 state attorneys general negotiated a $2.1 billion settlement with Ocwen for “mortgage servicing violations.” The C.F.P.B. commented that Ocwen “took advantage of borrowers at every stage of the process.”

Cut corners attributed to the private mortgage servicers have included:

  • Robosigning fake paperwork
  • Other missing paperwork that wasn’t counterfeited
  • Demanding wrongful fees
  • Wrongful evictions
  • Not updating technology and procedures and not hiring sufficient employees to handle the huge influx of mortgages despite assurances to the contrary and despite the overloaded software’s apparently accidental triggering of wrongful foreclosures
  • Profit-motivated rushing of processing
  • Possible hosing of the housing-derivatives investors who bought mortgage-based financial securities

The head of the state of New York’s Department of Financial Services, Benjamin Lawsky, installed an independent monitor at Ocwen who reported on the inadequate bookkeeping, as a result of which Mr. Lawsky stopped Wells Fargo’s sale or transfer of mortgage servicing rights for 184,000 mortgages, worth $39 billion, to Ocwen in February 2014.

Ocwen was headquartered in Atlanta, with staffing centers in India and Uruguay, an affiliate incorporated in the tax haven of Luxembourg and an affiliate based in the tax haven of the Cayman Islands.

The structure of the companies and possibly of the hedge funds investing in them during their recent rapid growth begs the question of whether mutual stock price embetterment has been an objective and, if so, how that was done. It looks as if moving profits and losses around the world for tax benefit could also have been envisioned. You have to note the big banks’ balls in selling off their buggy business as “rights” rather than paying people to take it as a favor. The ways innovated to make money off such a venture might be instructive. They might include gaming of a U.S. system in which state regulators have to do the job of federal regulators while families lose their homes.

Ocwen itself said that servicing mortgages has a limited lifespan and it has been seeking to diversify. FT.com reported the company was planning to sell up to $1 billion in a new type of debt this year: mortgage-servicing-rights-backed bonds.

(FLAW tah.)

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26

Feb

Verrechnungspreismissbrauch

Transfer pricing tax evasion.

Under international finance rules that allowed corporations to assign profits earned by subsidiaries in countries with taxes to subsidiaries in countries without taxes, an online documentary explained, commodities companies could avoid taxes in source countries by having their extracting subsidiary sell the commodity to subsidiaries abroad at prices that did not reflect market prices, moving around on-paper profits and on-paper losses. The tactic is called transfer pricing. Rules supposed to prevent it required among other things that divisions of the same organization deal with each other “at arm’s length,” as if they were not part of the same organization.

Profits from this and other paper shuffles can apparently show up decades later and inflict serious fiscal damage on countries, even countries with the resources to give government auditors enough training to stand up to international corporations’ negotiators. In 2013 Rupert Murdoch’s giant News Corp. appears to have received the “largest cash payout from the Australian Tax Office ever,” a rebate of US$800 million for some on-paper loans to itself made in 1989. The money showed up in News Corp’s U.S. subsidiary’s Q4 2013 accounts as a US$800 million payment from “a foreign tax authority.” The original deduction was estimated by the Australian Financial Review at AU$600 million, but it was decided that News Corp was owed additional interest on it of almost AU$300 million.

The huge payment is being described as a substantial inconvenience or “blowout” to the current Australian federal budget. Last summer then-Australian prime minister Kevin Rudd accused News Corp companies in Australia of running a “ferocious” media campaign against his government, including accusing the Labour government of overspending. Kevin Rudd lost the Australian election to Tony Abbott on 07 Sep 2013.

This is how the tax deduction happened, according to an online 17 Feb 2014 article from the Australian Financial Review:

“In a 1989 meeting, four News Corp Australia executives exchanged cheques and share transfers between local and overseas subsidiaries that moved through several currencies.

“They were paper transactions; no funds actually moved. In 2000 and 2001 the loans were unwound. With the Australian dollar riding high, News Corp’s Australian subsidiaries recorded a $2 billion loss, while other subsidiaries in tax havens recorded a $2 billion gain.

“By last July that paper “loss”, booked against News Corp’s Australian newspaper operations, had become an [A]$882 million cash payout.

“Under a legal arrangement when the company was spun off last June, News was forced to pass all of the tax payout to Mr Murdoch’s 21st Century Fox.

“News Corp said it had retained $A81 million because it faced income tax charges on the interest payments by the Tax Office. However it seems unlikely to actually pay these funds: News Corp Australia carried another $1.5 billion in tax deductions from a separate paper shuffle that it made when News reincorporated in the US.”

(Fair ECHH noongs price mis BROW chh.)

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30

Jul

Im Quellenland Steuern zahlen

“Paying taxes in the source country.” The O.E.C.D. presented its post-Offshore Leaks report on 19 Jul 2013 and announced it wants to enact new rules forcing companies to pay taxes in the countries where the income is earned, disallowing the currently not-illegal practices that shift income to low-tax countries. The G20 countries supported this plan. A “golden era” of “tax arbitrage” may be ending.

Update on 06 Sep 2013: World leaders at the G20 summit in St. Petersburg agreed that in future corporate income will be taxed in the country where it is earned. It will no longer be possible to schubs income around the world, shopping for lower-tax jurisdictions.

(Imm   KVELL en lont   SHTOY ahn   TSOLL en.)

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05

May

Auf dem reichen Auge blind

“Blind in the rich eye,” a punning headline for a Zeit article about Bayern Munich soccer club president Uli Hoeneß that reminded readers Bavaria is the state with the least number of tax auditors per capita and the least number of audits per auditor (29 audits per 100,000 taxpayers in 2011). Taxes are still collected state-by-state in Germany, not by a central federal office like the USA’s IRS.

“Steep theses,” “sometimes tending toward polemics” this review said but also that the 2013 book Die Selbstbediener: Wie Bayerische Politiker sich den Staat zur Beute machen (“Serving themselves: How Bavarian politicians make the state their booty”) by Speyer professor Hans Herbert von Arnim started the recent discussion about the Bavarian CSU party (which has monopolized their state gubmint for fifty years and is also the only state party to join national-level ruling coalitions, such as Angela Merkel’s current government CDU/CSU + FDP). People are still shocked by the 500 million euros recently discovered in Uli Hoeneß’s Swiss bank accounts and by the number of Bavarian MP’s (17, no 30, no 79) subsequently discovered to have taken advantage of loopholes in a 2000 nepotism law to hire their relatives at government expense. Von Arnim says the nepotism is just the tip of the iceberg for upcoming Bavarian parliamentary scandals.

Other emerging facts that shocked this week included: that the Bavarian state parliament members (CSU monopoly) complained loudest about southern European countries takin’ all our money yet paid themselves the highest income of all the German state MP’s, at 10,200 euros/month before taxes. Von Arnim says this is possible because of a lack of transparency in Bavarian state budgeting which other German states have deliberately prevented by passing separate rules governing important financial issues such as legislator compensation. He criticizes insufficient transparency and controlling in Bavaria’s very large budget, which is the size of several other German states’ combined.

How can corruption like this happen? Recent angry op-eds said the newly discovered nepotistic politicians aren’t exactly Raffke (Berlin slang from ~1920 for a greedy grabber) but that after a party is in power for a long time its members’ mentality can shift. Politicians in the party no longer orient their moral sense on what’s right and wrong, but instead on what the other politicians are doing and, eventually, toward what’s possible. Politicians in other parties of the monopolized government begin to think the same way as well. So far the only party in the Bavarian parliament not discovered to have employed family members after 2000 is the FDP, which wasn’t in the state parliament because it lacked the votes.

(Ow! f   dame   REICH en   ow! ga    blinned.)

 

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22

Apr

Fantastillionen

“Lots of money,” an “unimaginable fortune,” but no one knows how much yet. The Münchener Abendzeitung reported reports, firmly denied, of account balances totalling several hundred million euros. Uli Hoeneß, the president of German soccer’s version of the NY Yankees, FC Bayern Munich, submitted a Selbstanzeige in January 2013 for unpaid taxes on funds in one or more Swiss bank accounts and has already paid an initial lump sum of about six million in unpaid taxes. He said he didn’t report himself before January 2013 because he was betting the tax agreement with Switzerland would be ratified that provided amnesty, anonymity and a low tax rate for “tax sinners.” Tagesschau.de reports that it’s still unclear where the untaxed monies came from, whether from his bratwurst factory or from other sources.

ZDF heute journal found footage of Hoeneß on talk shows such as the charming Günther Jauch’s in autumn 2012 recommending low taxes for rich Germans because otherwise, he said, they would move to Austria, Switzerland or “who knows where.”

CSU chair Horst Seehofer confirmed on Saturday, 20 Apr 2013, at a CSU meeting in a Munich Hofbräuhaus cellar, that the district attorney was looking into the matter. The CSU had been going to propose Hoeneß as a political candidate, and he probably would have been confirmed.

The Münchener Abendzeitung commented on 20 Apr 2013:

“The question remains whether Hoeneß can now hope for the same support from the Bavarian state government as Franz Beckenbauer, to whom Bavarian finance minister Ludwig Huber once gave tips about tax flight into Switzerland while Huber was still in office?”

Achtung: Focus Magazin’s publisher is on the board of FC Bayern Munich.

(FAHN tossed ill ee own en.)

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15

Apr

Die Oasen der Anderen

“The Oases of Others,” a playful film reference in post-leak financial news reporting averring that countries seem more concerned about lax tax rules abroad than they are about their own tax loopholes (i.e., the USA and the state of Delaware).

Der Spiegel reminds us that quality and variety are better bets for future growth than competing internationally in a race to the bottom. There will always be countries with lower wages, so you are better off investing in education for your people and diversifying your industries.

(Dee   oh OZ en   dare   OND er en.)

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12

Apr

Der Mann ohne Gesicht

“The man without a face,” East German spy chief Generaloberst Markus Wolf. Whose son Franz now runs a complex web (a Geflecht or “weaving,” meshwork) of offshore companies supposedly from his registered residence in Gibraltar. The SZ calls his network an empire, stretching from the Caribbean to Russia. Companies in the network are involved in dozens of industries, including surprisingly water utilities (Wasserversorger, water suppliers). Speaking of water, the chains of companies also once helped hide ownership of the oil tanker Prestige after it sank off the coast of Spain in 2002 and its oil spilled onto Spanish beaches. The SZ said the Neue Zürcher Zeitung wrote that ownership was eventually traced to a Franz Wolf company which quickly disappeared.

(Dare   MONN   oh neh   geh ZICHH t.)

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11

Apr

Schneeballsystem

“Snowball system,” the house-of-cards finance company operated from 2006 until its collapse in 2011 by a guy now awaiting trial in the USA which ate $117 million of one Venezuelan businessman’s money and the at least $500-million pension fund, for 25,000 workers, of the Venezuelan state oil company PdVSA. Reporting the story on 04 Apr 2013, the ICIJ wrote that the financier appeared to have started the pyramid scheme after suffering a $5 million loss in 2005.

A bankruptcy administrator (Konkursverwalter) or receiver appointed by a US federal court said inter alia that a very well-connected Caracas stockbroker apparently got fees as high as $10 million per transaction for diverting large amounts of money into the pyramid scheme to keep it going, and an investments and insurance manager at the oil company collected $37.5 million for sending PdVSA pension money to Connecticut. The receiver has recovered $230 million from a bank in the Netherlands and is still hunting for the rest, writes the ICIJ. When the SEC started investigating in 2010, they discovered “intricate financial transactions and virtually zero bookkeeping.”

(SHNAY boll zyss dem.)

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10

Apr

Generalsekretariat für Staatseinnahmen

“General Secretariat for Revenues,” a newly created department in the Greek government responsible for checking government income. Its head used to be in charge of the Greek General Secretariat for Information Systems (GSIS). In response to the “Offshore Leaks” data release last week, the Greek Revenues office will be investigating, among other things, a chain of offshore companies that have been providing military technology to Greece and the USA but whose actual ownership remains a mystery.

The Süddeutsche Zeitung reported: “Interoperability Systems International Hellas S.A. […] was co-awarded a 190-million euro order in 2003 for kitting out Greek F-16 fighter jets. The company also delivered hardware and software to the US Marines. In 2003, 33% of ISI belonged to Bounty Investments Ltd., which in turn owned part of another offshore company. Over that company there was a third veil as well. An attorney for ISI Hellas said Bounty Investments ‘fulfilled all requirements of the Greek tax authorities.’ Some experts think companies in the defense sector fundamentally ought not to be messing around in cloudy offshore waters.”

Update on 10 Apr 2013: This highly entertaining* SZ article about a British family that managed letterbox companies (Briefkastenfirmen) in New Zealand and includes Miami, Moscow, Pyongyang, Teheran and Vanuatu notes that it becomes impossible to trace ownership after only three to four “dummy companies” (Scheinfirmen). “After three, four dummy companies in a row the track gets lost in a thicket of commercial registers (Handelsregister, HRB).”

(Genn er OLL seck rett arr ee OTT   foor   SHTOTS eye nom men.)

 * highly entertaining until the deaths of two Russian reformers at the very end of the piece: Sergej Magnitskij (37) and Alexander Perepilitschnij (44).

 

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09

Apr

Pustekuchen!

Poppycock! In this video op-ed from the Süddeutsche Zeitung, a commentator says it might appear that the best way to reform the world’s tax oases would be to let each fix their own lax tax laws, one-by-one. But piffle! No! Those 40+ tax havens are in competition with one another. Max Planck Institute researchers said market pressures would mean the last holdouts would become too powerfully wealthy and resistant to change. The best way is the one that is most politically difficult: negotiating simultaneous agreements with all tax oases.

(POUSSE teh KOO chh en.)

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09

Apr

Bankgeheimnis

“Banking secrecy.” Luxemburg announced on 07 Apr 2013 that they intend to relax their banking code of silence, “no longer strictly refusing” to automatically share information about international accounts with other countries’ tax authorities, starting in 2015. EU countries have also been in negotiations with Switzerland about similar issues for several years, though individually as separate countries and not with the full power of the EU.

Until now, foreigners banking in Luxemburg have paid an anonymous tax of 35% on interest earned there. This will be changed in Luxemburg e.g so that account holders’ names will be included in the information shared with German tax authorities.

German critics say this is insufficient because other Luxemburg income, such as company profits, remains untaxed for foreigners. Also, Luxemburg isn’t the only European tax oasis. Jürgen Trittin of the Green Party criticized Austria, for example, where names of foreign account holders earning interest in Austrian banks are only shared after initiation of criminal proceedings. Green Party finance guy Gerhard Schick wrote that the G20 summit in 2009 actually agreed to end Bankgeheimnis; certainly some reforms were enacted that year though movement has been slow since, until the recent data leak. The ZDF report concluded by saying that economists have warned that if only some tax oases reform their laws, the ones that don’t will profit from acquiring fleeing customers.

Update on 09 Apr 2013: “In principle, Liechtenstein has separated itself from its tax haven past.” Speaking of Liechtenstein, it looks like they had an interesting idea for a new field for financial services experts in former tax oases to move into: ratings agencies that are independent of the big three on Wall Street. The nonprofit Carlo Foundation (carlofoundation.org), said to be the world’s first independent fund rating agency, was founded in Liechtenstein in July 2012.

Update on 22 May 2013: At their summit in Brussels all 27 EU leaders confirmed in principle their finance ministers’ decision to eliminate Bankgeheimnis for “foreign”-held bank accounts, insurance policies and investments starting in 2015. The leaders of the two last holdouts, Luxemburg and Austria, said they too would agree to the automatic exchange of data after the EU as a whole negotiated banking agreements with relevant third-party countries such as Switzerland, Liechtenstein or Monaco. Luxemburg’s prime minister Jean-Claude Juncker said his country is particularly concerned that the same competition conditions apply in finance centers inside and outside the EU. Negotiations with Liechtenstein, Monaco, Andorra, Switzerland and San Marino about automatic exchange of banking data are underway and expected to be concluded quickly, in “two to three months.” If all goes according to schedule, EU leaders could completely eliminate Bankgeheimnis at their meeting in December 2013.

Update on 20 Mar 2014: The 28 E.U. heads of government agreed to end Bankgeheimnis in the European Union, with comprehensive exchanges of tax data. This will also end banking secrecy for foreigners, though that might mean only for foreigners from other E.U. member states. Five third-party countries, Switzerland, Liechtenstein, San Marino, Monaco and Andorra, also agreed to exchange sufficient information to end banking secrecy de facto with regard to interest income, said Luxemburg’s prime minister, saying this fulfilled Luxemburg’s conditions for also agreeing to the new policy.

The O.E.C.D.’s standard for automatic data exchange will be the orientation point, and the E.U. hopes it will become the standard for tax information exchange regulations worldwide, said E.U. Council President Herman Van Rompuy. But today’s breakthrough E.U. policy agreement goes beyond the requirements of the O.E.C.D. standard:

“In future, the data exchange is supposed to apply not only to private persons but also to certain trusts and foundations. The guideline will also apply for stock profits and certain insurance profits, particularly from life insurance and investment funds. The banks are also to be obligated to collect more information in future about the actual economic owners of companies.”

(BONK geh HIGH mniss.)

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07

Apr

Durchgangssteueroase

“Pass-through tax oasis” or “flow-through tax oasis,” in a third country; also called a Vertragssteueroase (treaty tax oasis). The fierce discussion triggered in Germany by the publication of what is being called the  “Offshore Leaks” data trove on 04 Apr 2013 has moved from international tax avoidance by individuals, usually heirs in journalists’ examples, to international tax avoidance by companies, not least because these schemes do require a complex web of service providers and subsidiaries to move the money around. So, say your company earns income in a foreign country where your country has a double taxation agreement* with that country’s government not to tax it. As a first obfuscatory step, you can transfer this money to a Durchgangssteueroase, a third country that also has a nontaxation agreement with the country where you earned the income. The Netherlands is one of the world’s biggest pass-through tax oases because of agreements they’ve made with Asian countries that do a lot of manufacturing.

Income can thus be transferred out of high-tax countries to a pass-through tax oasis such as Mauritius to a zero tax oasis (Nullsteueroase) such as the Cayman Islands. Hans-Lothar Merten’s book “STEUEROASEN Ausgabe 2013: Neue Einblicke in die Offshore-Welt” explains that countries acting as pass-through tax oases justify being the first step in the chain by saying they are providing an important service in avoiding double taxation but, he says, what they are providing is in fact double nontaxation. ~20 trillion euros flowed through the Netherlands in this manner in 2012, Merten said [p. 29]. Ireland has provided useful related services.

German media are also reporting, or perhaps repeating each other’s examples of, perfectly legal situations where international companies’ foreign subsidiaries reduce their local net income by paying high licensing fees—for the rights to use their parent company’s brand—to subsidiaries in low-tax countries, perhaps while also deducting their expenses in high-tax countries.

(DOER chh GONGZ SHTOY er oh OZ iss.)

* Durchgangssteuerungsabkommen, “double taxation agreement,” “double tax treaty”: country A makes a (bilateral) agreement with country B to not tax income earned by country B people in country A. However, people who are residents of neither country can take advantage of the advantages by hiring an intermediary. The result is international flows of capital that are, writes Hans-Lothar Merten, inexplicable for any reason other than double taxation agreements and so-called “treaty shopping.” He cites the example of the island of Mauritius, which has double taxation agreements with ~50 other countries. Cyprus had them with ~45 countries, according to Wikipedia, with more in negotiation.

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06

Apr

Kapitalverschleierung über Steueroasen

“Using tax oases to veil capital.” Methods for doing this were disclosed by financial data about 130,000 people, in 170 countries, >120,000 “mailbox companies,” >260 GB in >2 million documents from a time range of ~30 years sent anonymously to the International Consortium of Investigative Journalists over a year ago. The story hit the world press on 04 Apr 2013. Greek and Filipino tax authorities announced that they will be investigating. The vice president of Mongolia‘s parliament will probably have to resign. Some of the still-legal methods to create tax opacity to be gleaned from the data were shown to have been used by the Deutsche Bank in Singapore, which had an intermediary agent (Trustverwaltungsfirma, “trust administrator company”) create >300 companies in so-called tax paradises (Steuerparadise).

In response: Gerhard Schick (Green Party) suggested Germany follow France’s example of levying an additional tax on all transactions with low-tax countries, disincentivizing tax flight (Steuerflucht) by neutralizing the advantages. Joachim Poß (SPD) proposed “an international anonymous NGO and a comprehensive information exchange, starting here in Europe.” The Leftists party proposed following the USA’s example of linking tax obligations to citizenship, so that every German residing abroad would be obligated to report “their total income every year, how much property they owned in total and what taxes they had had to pay for that in the Seychelles that year. And the difference between that and their German tax obligation” would then have to be paid in Germany, said Gregor Gysi (Die Linken).

The Süddeutsche Zeitung reported that they and NDR were the two German media outlets given access to the data (of “the biggest leak in world history”), and furthermore that a representative of Finance Minister Wolfgang Schäuble requested access to the data on Thursday, 04 Apr 2013, but the SZ would not grant that request. The data were protected under freedom of the press (Pressefreiheit), which includes protecting one’s sources, the Süddeutsche wrote. Sharing the data with government authorities might endanger those sources and obstruct the SZ’s ongoing research. NDR also refused the request to share the data. Now Focus magazine seems to have acquired the data somehow.

Update on 06 Apr 2013: “I have a certain degree of pleasure from the fact that this public scandalization in all countries has very much increased the pressure,” said German finance minister Wolfgang Schäuble with quiet satisfaction on 05 Apr 2013. “And now we have better chances to make progress faster than was possible in the past.”

Critics say the German finance minister has to be kidding because everyone’s known about this for years. If Schäuble were serious, they say, his office would be drafting new legislation. Income tax is regulated state-by-state in Germany, for example, and some people are calling for it to be centralized, made into a uniform federal-level taxation system with fewer “tax bait” niches. The OECD seems to be the locus for international negotiations in response to the new information; that group wants to issue a list of proposed actions in response to the “Offshore Leaks” data trove by July 2013.

(Cop ee TALL fer SHLY er oong   üüüberrr   SHTOY er oh OZ en.)

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31

Mar

Blaupause

To this foreigner, Blaupause looks like “blue break,” which might indicate a nice use of free time in a well-situated beer garden because “blue” means drinking in Germany. But the word actually means “blueprints.”

New ESM head Jeroen Dijsselbloem angered some small countries whose economies are dependent on a large banking sector or at least threatened by large bank failures when he indicated that elements found to work in what the EU does in Cyprus—reduction of a banking sector that had grown to 7x the size of the country’s economy, reregulation of the remaining banks—could be applied to other Member States that get in too much trouble.

About Cyprus: German news reports that, during the past fortnight of negotiations when large transfers from Cypriot banks were supposed to be frozen, over a billion euros were nevertheless transferred off the island by foreign banks, mostly in London. A whistleblower list has appeared containing names of parliament members, local officials and associated companies and organizations that received millions in loans between 2007 and 2012 from the country’s two largest banks (Bank of Cyprus and Laiki Bank, plus Hellenic Bank in only one instance so far) but did not have to pay the full loans back. The only Cypriot political parties not represented on that list were a social democratic party and an environmental party, fwiw. A second whistleblower list is expected to appear containing names of large deposit holders who managed to get their money off the island just in time.

The corruption details cited in the Spiegel article were reported by the Cyprus news portal 24h.com.cy, Greek journalist Kostas Vaxevanis, and the Greek newspapers Ethnos and Kathimerini.

(Bl ow! Pow! Zah.)

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28

Mar

Parlamentarisches Pokern

“Parliamentary pokering,” brinksmanship on the part of some politicians from countries with bartering and/or bluffing cultures.

(Parl ah ment ARR ish ess   POKE ern.)

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