On 06-25-2021, the German Bundestag passed a law to prevent tax avoidance and unfair tax competition and to amend other laws. The aim is to make business relations unattractive to certain areas which, according to the EU, are on the list of so-called non-cooperative countries and territories for tax purposes. These currently include among others Cayman Islands and the Seychelles.
The draft law follows various measures:
Operating expenses arising from business relations with these countries are no longer deductible for tax purposes. In addition, stricter withholding taxes apply, among other things, to payments to residents in tax havens, and certain tax advantages that would otherwise apply to distributions of profits in group structures are not used. A more stringent set of CFC-rules applies to companies which are resident in those jurisdictions.