Commercial tax havens: How large companies save taxes

The Falke Group apparently maintains letterbox companies for the Burlington sock brand in a German trade tax haven. Research by Plus minus and SZ near. Other entrepreneurs also use such low-tax municipalities.

A small shop on the edge of a deserted pedestrian zone in Schönefeld, Brandenburg: the offices of two companies from the premium sock manufacturer Burlington are said to be behind the shop window. But all you can see is a table, a few chairs and a plastic plant. The names of around a dozen other companies are stuck to the mailbox. From employees: no sign. There is also no sign of management.

For months, reporters from Plus minus and “Süddeutsche Zeitung” (SZ) repeatedly drove to the alleged premises of the two Burlington brand companies. But they didn’t find any business activity there.

For Christoph Trautvetter from the Tax Justice Network, there is a lot to be said for a mailbox company headquarters: “Such mailboxes, such shop windows, where there are long lists of companies without anything taking place there, should actually be investigated and prevented by the local tax authorities,” he says .

corporate tax evasion

On request, the Falke Group, to which the Burlington brand belongs, states that it adheres to all legal requirements, including tax law. It goes on to say: “As a successful commercial enterprise, we welcome the politically desired competition among municipalities and thus performance-enhancing management by municipalities for their citizens.” What is meant by this is that municipalities can decide for themselves on the trade tax rate.

However, several small communities, including Schönefeld, have made it a business model to keep it very low in order to attract companies. An absurdity for Trautvetter: “The commercial tax havens are just like the international havens a place for tax evasion.” Thanks to them, large companies would artificially shift profits in order to have to pay less trade tax, which would be a shame for all of us.

A mailbox as a company headquarters

It’s legal as long as companies have an actual “place of business” in order to be able to benefit from the low tax rate, explains Henning Tappe from the University of Trier. “If an office is only opened to pretend, nothing happens on site, except that mail and calls are forwarded, there is no permanent establishment there,” says Tappe.

In order to justify such a thing, the management has to meet on site again and again and make the important business decisions there. Otherwise such a company headquarters would be a suspect case for the tax auditors. However, the office of the Burlington companies in Schönefeld still resembles a mock office. The Falcon Group comments to Plus minus and SZ that “the rare business decisions and shareholders’ meetings” would be held in Schönefeld.

Billionaire Ludwig Merckle and the tax havens

The low trade tax rate in Schönefeld is apparently attracting other major German entrepreneurs to the small municipality of Schönefeld: around a hundred companies belonging to the family of billionaire Ludwig Merckle are also said to have their headquarters in Schönefeld. research by Plus minus and SZ show that Merckle apparently operates tax haven hopping: The company network reported today in Schönefeld was previously based in Zossen, Brandenburg.

When the municipality of Zossen increased the trade tax rate slightly, the Merckle companies moved on to Schönefeld, where the trade tax is even lower. Ludwig Merckle does not want to comment on this.

“Billionaires like Merckle really don’t need to save on taxes at all,” says Christoph Trautvetter. “But when those who can afford it use tricks to reduce their fair contribution to the community, others have to pay for it.” And that means: In the end, the municipalities lack money for important infrastructure such as swimming pools, roads or playgrounds.

Nationwide measures needed

The municipality of Schönefeld sees no need for action, similar to Brandenburg’s Finance Minister Katrin Lange. “Municipalities have a right to set their own assessment rates,” she says. However, it is important to take action against tax evasion – even if that is very time-consuming. The Berlin Senator for Finance, Daniel Wesener, on the other hand, is aiming for a minimum tax rate for the Greater Berlin region. “The ruinous competition has to end,” he says. “The proposals are all on the table – now it’s time for them to be implemented.”

The responsible Federal Ministry of Finance informed on request that a reform of the trade tax is not planned. However, the ministry is in close contact with the highest financial authorities of the federal states because it is of nationwide importance if trade tax havens are exploited. One wants to sound out the necessary and possible need for action this year.

Cooperation: Nils Wischmeyer