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PKF newsletter 02|2024

Protection against the loss of tax revenues caused by cross-border arrangements

The different tax treatment of a situation in two disparate states can lead to the creation of structures that induce undertaxation. In 2021 already, German lawmakers established additional regulations to prevent such taxation incongruities or hybrid mismatches. The key elements of these rules can be found in Section 4k of the Income Tax Act (Einkommenssteuer­gesetz, EStG). In the summer of 2023 already, the Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) issued draft administrative guidance in this regard. In the following section, we present selected elements of the BMF draft.

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