An investment in Germany almost always touches several tax systems: the parent company's country, perhaps the country of an intermediate holding, and Germany. Each country has its own rules, deadlines and forms. What matters to you as an investor is something else: one person who keeps the overview, and answers that fit together. This article shows how we divide the work between Mannheim and partner firms in more than 20 countries, how double taxation is avoided, and why we make no compromises on sanctions and anti-money laundering checks.
Who does what
In Germany, only certain professions may provide tax advice on a commercial basis. Tax advisors are among them. The law describes their role as follows:
“Tax advisors, tax agents and professional practice companies have the task, within the scope of their engagement, of advising their clients in tax matters, representing them and assisting them in handling their tax affairs and in fulfilling their tax obligations.” (our translation)
§ 33 Satz 1 Steuerberatungsgesetz (German Tax Advisors Act)
That is why we keep the roles clearly separate:
| Party | Role |
|---|---|
| TABAK Consulting | Structure, market entry, coordination of all parties, accounting integration and IT |
| TABAK Steuerberatung (partner tax firm) | German tax advice: tax returns, bookkeeping, annual financial statements, representation before the tax office |
| Partner firm abroad | Tax law and reporting obligations in the country of the parent company or holding |
| Notaries and lawyers | Notarisations and legal advice, for example on corporate or employment law |
The firm is bound by professional secrecy (§ 57 StBerG). We bring in external advisors only with your consent. Your contact remains in Mannheim, even when three countries are working together behind the scenes.
How we work together
- Initial meeting: goals, timeline and all countries involved on one page.
- Identity verification (KYC): required by law, see below.
- Structure chart: who holds what, and where do profits, interest and royalties flow?
- Questions to the partner firm: precisely worded, with a deadline and with your approval.
- One coordinated result: one document instead of three contradictory opinions.
- Ongoing support: one shared deadline calendar for all countries.
“International mandates rarely fail for lack of expertise. They fail because each country only sees its own part. We make sure the answer from Germany and the answer from the home country fit together before the investor decides.”
Fatma Tabak, tax advisor · TABAK Steuerberatung
Avoiding double taxation: the basic principle
Double taxation arises when two states tax the same income: the state where it originates and the state where the recipient is resident. Double taxation treaties (DBA) allocate taxing rights between two states. Typical features are lower withholding taxes on dividends, interest and royalties, and a credit or exemption in the home country. Where there is no treaty, German law unilaterally credits foreign tax in certain cases (§ 34c EStG, and § 26 KStG for corporations). The typical mistakes made in applying treaties are described in our article Understanding double taxation treaties. How dividends flow from Germany to other countries is shown in our article Repatriating profits from Germany.
When both states tax anyway: the mutual agreement procedure
If two states disagree on interpretation, the taxpayer can apply for a mutual agreement procedure. The tax authorities then negotiate directly with each other. The deadline is short. The 2014 treaty between Germany and China, for example, requires the case to be presented within three years of the first notification of the action (Art. 25 Abs. 1). The authorities “shall endeavour” to find a solution (Art. 25 Abs. 2); the treaty does not guarantee agreement. Within the EU, there is also a dispute resolution procedure. A three-year deadline applies there as well, even if the tax assessment is already final (§ 4 Abs. 3 EU-DBA-SBG).
The three-year deadline runs from the first notification of the action, not from the end of an objection or court case. That is why every tax assessment with cross-border effect goes straight into the shared deadline calendar.
Why we do not accept mandates connected to sanctioned states
We offer tax support to investors from almost every country. We make a deliberate exception for individuals and companies from states subject to comprehensive EU sanctions regimes, such as Russia, Belarus, Iran and North Korea. The EU Sanctions Map lists dedicated sanctions regimes for all four. For Russia and Belarus, tax advice is even expressly prohibited:
“It shall be prohibited to provide, directly or indirectly, accounting, auditing, including statutory audit, bookkeeping or tax consulting services, or business and management consulting or public relations services to: (a) the Government of Russia; or (b) legal persons, entities or bodies established in Russia.”
Art. 5n(1) Regulation (EU) No 833/2014, inserted by Regulation (EU) 2022/879
For Belarus, Art. 1jc of Regulation (EC) No 765/2006 contains an identically worded prohibition for the state, its public bodies and persons acting on their behalf or at their direction. In addition, there are lists of individual persons and companies whose funds are frozen. In Germany, breaches of financial sanctions can be prosecuted as a criminal offence or an administrative offence (§§ 18, 19 Außenwirtschaftsgesetz, the German Foreign Trade and Payments Act). Our exclusion deliberately goes further than the individual prohibitions: where comprehensive regimes apply, we do not accept a mandate. This also protects our other clients.
The Sanctions Map also lists China, with measures relating to the events of 1989. The regulations cited here contain no prohibition on tax advice for China comparable to that for Russia or Belarus. We therefore support investors from China in the normal way, subject to the same checks as everyone else.
KYC: what we check and why
Under the German Anti-Money Laundering Act (Geldwäschegesetz, GwG), tax advisors are “obliged entities” (§ 2 Abs. 1 Nr. 12 GwG). Before a mandate begins, they must, among other things:
- identify the contracting party – for individuals using a valid official photo ID, for companies using a register extract (§ 12 GwG);
- establish whether there is a beneficial owner behind it and, for companies, determine the ownership and control structure (§ 10 Abs. 1 Nr. 2 GwG);
- record the purpose and nature of the business relationship and check whether a politically exposed person is involved (§ 10 Abs. 1 Nr. 3 and 4 GwG);
- monitor the business relationship on an ongoing basis (§ 10 Abs. 1 Nr. 5 GwG).
Where the risk is higher, for example where a high-risk third country listed by the European Commission is involved or where transactions are unusually complex, enhanced due diligence applies, such as senior management approval and measures to establish the source of the assets (§ 15 GwG). If identification cannot be completed, the business relationship must, as a rule, not be established (§ 10 Abs. 9 GwG). In practical terms, this means: have passports, current register extracts and an organisation chart down to the last natural person ready. A complete organisation chart saves most follow-up questions.
An example from our article series: if a Chinese industrial investor acquires a German automotive supplier, the partner firm in China clarifies how the later dividends will be taxed there. TABAK Steuerberatung clarifies the German side. We keep both together in one plan.
We advise you in English — directly, without intermediaries.
Frequently Asked Questions
Does TABAK Consulting provide tax advice itself?
No. Tasks reserved by law for tax advisors are performed by our partner tax firm TABAK Steuerberatung. TABAK Consulting is responsible for structure, coordination, accounting integration and IT.
In which countries do you work with partner firms?
We coordinate with partner firms in more than 20 countries. Which firm is brought in depends on your structure and happens only with your consent.
What happens if two states tax the same income?
In that case, a mutual agreement procedure under the relevant double taxation treaty may be an option, and within the EU also a dispute resolution procedure. In both examples in this article, the deadline is three years from the first notification.
Why do you need so many documents from us?
The Anti-Money Laundering Act requires us to identify contracting parties and beneficial owners and to understand the control structure. We may not act until the checks are complete.
Do you work with investors from Russia or Iran?
No. We do not support individuals or companies from states subject to comprehensive EU sanctions regimes. For Russia, EU law expressly prohibits tax advice to companies established there, apart from narrowly defined exceptions.
Sources
- § 33 StBerG – scope of activity
- § 57 StBerG – professional duties, confidentiality
- § 10 GwG – general due diligence obligations
- § 15 GwG – enhanced due diligence obligations
- EU Sanctions Map
- Regulation (EU) 2022/879 – Art. 5n of Regulation (EU) No 833/2014 (Russia)
- Regulation (EU) 2024/1865 – Art. 1jc of Regulation (EC) No 765/2006 (Belarus)
- Deutsche Bundesbank: financial sanctions
- BMF: Germany–China double taxation treaty of 28 March 2014
- § 4 EU-DBA-SBG – dispute resolution complaint
More than 20 years advising entrepreneurs, investors and family businesses. Reserved tax services are provided by our partner tax firm, TABAK Steuerberatung.
Author profile →Several countries, one plan.
We coordinate your structure with partner firms in more than 20 countries. German tax advice is provided by our partner tax firm TABAK Steuerberatung.