The “cracks” in the German economy described in May seem to widen in some areas, but to heal in others. Hence, a crash is at least not imminent from the early warning indicators, June rather presents a mixed picture:
After the last attempt by the German Federal Ministry of Finance (“Bundesministerium der Finanzen” (“BMF”)) to limit the effects of a ruling on the so-called “Decree on Turnaround” (“Sanierungserlass”) by the German Federal Tax Court (“Bundesfinanzhof” (BFH)) (here) in relation to old cases had failed brilliantly (here), the Ministry started another attempt to upheld the decree at least for old cases under the principle of the protection of legitimate expectations with a decree as of of 29 March 2018. To no avail.
What do the current cases of Theranos, Valeant or Quindell have in common? They are all examples of potential “fraud”. Although the number of such cases is rising in Germany – e.g. Volkswagen, S&K or P&R, to name but a few – this area of law is still rather under-lit in the German Mittelstand (in contrast to the anglo-american legal system), as the following anecdote may illustrate:
As part of a compliance event, one of the speakers asked the auditory if the so-called “Fraud Triangle” was known. From the perhaps one hundred participants only three or four reluctantly raised their hands. If this basic knowledge is lacking even within an expert audience, my very own conclusion was, how should a medium-sized business manager even recognize fraud in his own company or committed by one of his customers or suppliers? Reason enough to present some basics of this area.
Shall – especially in a group-structure – a loss-carrying subsidiary be wound-up, quite frequently (and especially with regard to taxation) the question arises, on how to handle any group loans that may have been granted to the subsidiary. In order to synchronise the actions of the tax authorities in these cases, the Frankfurt Regional Tax Office (“Oberfinanzirektion Frankfurt, OFD Ffm”) has recently issued a general decree, which shall be discussed in the following article.
The discussion about the introduction of a specific criminal law for enterprises (“Unternehmensstrafrecht“) has been on and off the political agenda for several years, although it was rather quiet for the last year. Now, the Coalition Agreement of the (not so recently any more) sworn federal government resumes this discussion and envisages a comprehensive revision of the sanctioning law for enterprises.
In a ruling issued in January 2017, the German Federal Court of Justice (“Bundesgerichtshof, BGH“) has once again extended the scope of liability for a so-called “hard” letters of comfort.