Cross-border Tax Talks

German Tax Update: Freshly served  

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Arne Schnitger, a Berlin-based International Tax Partner at PwC Germany and co-host of the German-language tax podcast “Frisch Serviert.” Arne previously served in the German Ministry of Finance and brings deep insight into both domestic and cross-border policy developments. Doug and Arne discuss Germany’s evolving corporate tax landscape, including potential rate reductions, simplification initiatives, and the implications of recent coalition negotiations. They dive into Germany’s controlled foreign corporation (CFC) regime, explore the mechanics of the constitutional ‘German debt brake,’ and unpack recent developments surrounding Pillar Two. The conversation highlights the intersection of German and US tax policy, the ongoing tension between multilateralism and unilateral measures, and the administrative and technical challenges multinationals face under the global minimum tax framework. They also examine prospects for EU-level simplification and the future of long-standing anti-avoidance measures in light of Pillar Two implementation. 

• 00:00 Introduction from Prague and baseball vs. football (soccer) 
• 02:45 Germany’s corporate tax framework and competitiveness pressures 
• 04:15 Overview of the German CFC regime and comparison to subpart F and GILTI 
• 06:00 German election outcomes, coalitions, and implications for corporate tax policy 
• 09:15 Independent reform reports and simplification proposals in Germany 
• 12:50 The ‘German debt brake’: constitutional spending limits and economic implications 
• 16:10 Constitutional court ruling on the reunification surcharge tax 
• 17:15 Transition to Pillar Two and thoughts from German policymakers 
• 18:50 US executive order: Sections 891 and 899 and implications for the UTPR 
• 20:50 Pillar Two implementation and guidance status and practical taxpayer concerns 
• 23:30 Is multilateralism at risk? Complexity and diverging country approaches 
• 25:30 Pillar Two treatment of M&A transactions: refunds are an unresolved challenge 
• 27:05 Lack of Pillar Two QDMTT return formats and process across jurisdictions 
• 27:55 Can Germany or the EU pause or repeal Pillar Two?  
• 32:00] Pillar Two compliance burden, data readiness, safe harbors for German MNEs 
• 35:20 EU simplification: questioning ATAD, DAC6, CFC rules and other measures 
• 38:35 Wrap-up and reflections on AI podcast translations and collaborations 

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