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Money Laundering in Germany: Stringent New Rules for Companies

Germany is seen as a money laundering paradise. As a result, on 18 March 2021, the German government introduced the new section 261 of the Criminal Code (StGB) – the offence of money laundering. At the same time, it has implemented an EU directive into national law – more stringently than required by the EU.

With the new law, the German government wants to prevent criminals from smuggling their money, for example from tax evasion, into legal businesses. Also, even reckless subsidy fraud is a predicate offence to money laundering. The aim is to make it easier for authorities and prosecutors to track down assets of criminal origin.

Until now, they have only prosecuted money laundering if the assets in question originated from very specific criminal offences. For this there was a catalogue of predicate offences in which certain crimes and offences were listed. In terms of tax evasion, for example, these were only intentional offences committed on a professional basis or by members of a gang. This is now to be abolished.

Do you want to know when transactions are reportable? Contact us and we will support you.

Alexander Littich, lawyer, specialist lawyer for tax law and criminal law, Ecovis in Landshut, Germany

How the New German Law Affects Foreign Companies

In principle, German criminal law only applies to offences committed in Germany. However, foreign companies can also be liable to prosecution if:
they are active in Germany themselves or, for example, through a subsidiary, and must therefore be aware of and comply with German law, or
they commit criminal acts abroad which count as predicate offences for money laundering in Germany and lead to their own criminal liability here.

When Offences Abroad are Punishable in Germany

The legislator has included some regulations in the law in terms of when foreign offences related to the EU are in any case also punishable in Germany. The foreign offence must be punishable either in the country where it was committed or in Germany. The transfer, procurement or use of objects resulting from such acts is then also punishable for money laundering. Or the offence is not necessarily punishable abroad but is punishable in Germany and is one of the priority offences defined by the EU. These include organised crime, corruption, financing terrorism, human trafficking/smuggling, drug trafficking and the sexual abuse and exploitation of children. The transfer, procurement or use of objects resulting from such offences is thus punishable.

With the new regulation, it is no longer important that the perpetrator evades taxes abroad on a professional or gang basis. A single, simple act of tax evasion is sufficient. For example: An entrepreneur in England evades taxes and wants to buy a property in Berlin in Germany with the wrongly received tax refund. This act is punishable in Germany, say the lawyers at Ecovis.

The Consequences for Entrepreneurs

The obligations to report possible violations of money laundering laws are much more comprehensive. In addition to the typically known cash transactions, less commonplace business transactions now also come under scrutiny. If proceedings are initiated, entrepreneurs must justify their business procedures.

Businesses subject to reporting requirements should in future check even more intensively which transactions they have to report. Companies subject to reporting requirements include, for example, banks, real estate agents, insurance companies, tax advisors, lawyers, auditors, or trustees. If an investigation is initiated, entrepreneurs must justify their business practices.

If there is a suspicious activity report for a business transaction, the company is not allowed to continue with that business. This is only possible if the Financial Intelligence Unit (FIU) or the public prosecutor’s office agrees or has prohibited the transaction three days after the suspicious activity report. For companies, the new money laundering act means more bureaucratic effort and even more precise documentation, explain the Ecovis experts.

For further information please contact:

Alexander Littich, lawyer, specialist lawyer for tax law and criminal law, Ecovis in Landshut, Germany
Email: alexander.littich@ecovis.com

Greece Income Tax: New Amendments to the Greek Tax Framework

The Greek Parliament has passed a draft law (L. 4799/2021) amending the country’s tax law. With this, the legislator is significantly reducing the corporate tax rate and income tax prepayments and, from 2022, the solidarity contribution for certain types of income.

The Tax Changes in Law L. 4799/2021 Include:

1. Reduction of the Corporate Income Tax Rate
From the tax year 2021 onwards, the income tax rate for legal entities and individuals conducting business activity is reduced from 24% to 22%.

2. Decrease in Income Tax Prepayments
The income tax down payment for freelancers is reduced from 100% to 55%. The prepayment assessment is based on the income tax returns of the tax years 2020 onwards.

From the tax year 2021 onwards, income tax down payments for legal persons and legal entities are reduced from 100% to 80%. In addition, the down payment has been set exceptionally to 70% for 2020 income tax returns.

For Greek banking institutions and branches of foreign banks operating in Greece, income tax prepayment remains at 100% for the tax years 2020 onwards.

Would you like to know more about the effects of the tax changes on your company? Contact us.

Dimitrios Leventakis, Managing Director, ECOVIS HELLAS L.T.D., Athens, Greece

3. Exemption from the Special Solidarity Contribution for Special Types of Income for Tax Years 2021 and 2022
For the tax year 2021, all individual income including employment income earned by private sector employees, business income, income from capital (dividends, interest, royalties and rental income), and capital gains is exempt from the special solidarity contribution. The exemption does not apply to employment income earned by public sector employees and pensioners.

For the tax year 2022, employment income earned by private sector employees is exempt from the special solidarity contribution.

4. Five-Year Allocation Benefit Method
A 5-year allocation method is provided for the benefit arising from the offset of the claw back of pharmaceutical expenditure with research and development expenses. The allocation begins from the tax year in which the benefit incurred.

5. Abolition of Tax on Shares Transfer
Tax on the profits gained from the transfer of shares listed on foreign exchange stock markets or other internationally recognised financial institutions and transactions made through multilateral trading facilities is abolished with immediate effect.

For further information please contact:

Dimitrios Leventakis, Managing Director, ECOVIS HELLAS L.T.D., Athens, Greece
Email: dimitrios.leventakis@ecovis.gr

Anastasia Moschovaki, Tax Lawyer, ECOVIS HELLAS L.T.D., Athens, Greece
Email: moschovaki.anastasia@ecovis.gr

Work Permit Vietnam: Legislative Updates to the Management of Expatriates Working in Vietnam

The Vietnamese government will be monitoring the employment and administration of foreign workers much more closely in the future. To enable this, it has introduced Decree No. 152/2020/ND-CP, which tightens the requirements and documentation obligations for work permits in Vietnam. It came into effect on 15 February 2021.

Since the decree came into effect, the government has been accelerating its implementation in an effort to prevent illegal foreign migrant workers, one of the main potential causes of the resurgence of the COVID-19 pandemic in Vietnam. The most important aspects of Decree 152 are:

Work Permit Vietnam: Requirements

The decree re-defines some of the typical basic conditions for defining internal transfers, experts, and technical workers:

• Internal transfer: An employee must be employed by the foreign entity for at least 12 consecutive months prior to the transfer date, instead of only 12 months as before.
• Expert: Experts must have at least 5 years experience and a practicing certificate corresponding with the job position that the expatriate will occupy in Vietnam. Expert certificates issued by overseas organisations are no longer accepted as proof of expertise.
• Technical worker: Technical workers must now have at least 5 years experience in a job corresponding with the position that the expatriate will occupy in Vietnam.

Work Permit Vietnam: Exemptions

Decree 152 also clarifies certain cases for work permit exemption, including:

• Owner or capital contributor to a limited liability company with a capital contribution of at least VND 3 billion (VND one billion is the quivalent of around USD 43,380).
• Chairman or member of the board of directors of a joint-stock company with a capital contribution of at least VND 3 billion.
• Foreigners married to Vietnamese citizens and residing in Vietnam.
• Managers, executives, experts, or technical workers entering Vietnam for a period of work of up to 30 days and no more than 3 times a year.
• Foreigners in charge of setting up a commercial presence of a foreign entity in Vietnam.

It should be noted that the first four cases above are not required to apply for a certificate of work permit exemption, but must inform the labor authorities at least 3 days before commencing work in Vietnam, explain the Ecovis experts.

We can support you in correctly implementing the new and stricter labour laws in Vietnam.

Nghia Tran, Partner, ECOVIS AFA VIETNAM, Da Nang City, Vietnam

Term of Work Permit/Work Permit Exemption Certificate

A work permit or a work permit exemption certificate is only valid for up to 2 years.
The foreign employee can renew the work permit once for a further two-year term at least five days but not exceeding 45 days before the expiry date. After that, a new work permit must be applied for.

Reporting the Use of Foreign Workers

Vietnamese employers are required to submit biannual reports on the status of foreign workers to the relevant labour authorities before 5 July and 5 January of the following year.

The Ecovis experts highly recommend that businesses read Decree 152 carefully for purposes of labour compliance. Companies and employees who do not comply with the regulations may, in the worst case, face severe penalties or even deportation.

For further information please contact:

Nghia Tran, Partner, ECOVIS AFA VIETNAM, Da Nang City, Vietnam
Email: Nghia.Tran@ecovis.com.vn