The tax treatment of securitisations in Germany is a recurring source of uncertainty. This is due to both national and European requirements. A current example is the German Defence against Tax Haven Act (Steueroasen-Abwehrgesetz, StAbwG), which can be traced back to an EU initiative in the context of the international BEPS project (Base Erosion and Profit Shifting) to combat harmful tax competition.
Interest expenses no longer tax deductible in the future?
From 1 January 2025, the provision of Section 8 StAbwG could make it more difficult to raise debt capital through bearer bonds – and thus also through securitisations – because interest on bearer bonds may no longer be deductible as operating expenses. This concerns payments to recipients in non-cooperative tax jurisdictions. However, the regulation could also apply if the issuer is not certain whether the investors are resident in such territories.
This uncertainty applies not only to new bearer bonds, but also to corresponding securities that have already been issued (conventional bank and corporate bonds, securitisations, etc.). This also applies to, in particular, Public ABS. Similar problems have already arisen in connection with Section 10 StAbwG, which deals with withholding tax measures for payments under certain securities. In 2022, an exemption was created for bearer bonds traded on stock exchanges.
There is a need for follow-up action
There is no comparable exemption for bearer bonds in Section 8 StAbwG. Legislative intervention is therefore still urgently needed to eliminate tax uncertainties, maintain the attractiveness of the German financial market and prevent a possible migration of issuing activities.