Individuals

With the globalisation of organisations and the increasing cross-border deployment of employees with those organisation, consideration of the cross-jurisdictional tax issues is critical for any expatriate. Hofmann Klafsky & Fertig has expertise in advising private individuals on the taxation of their income, the calculation of tax equalisation procedures/hypothetical taxes, net wage agreements and the taxation of employee remuneration models (e.g. stock options) within the framework of their assignment from Germany abroad or from abroad to Germany. Hofmann Klafsky & Fertig is also qualified to provide specialised tax advice to cross-border commuters, expatriates and relocations as well as wage tax treatment by employer organisations.

Tax provisions are subject to constant changes and reforms. Hofmann Klafsky & Fertig advises individuals on pending changes to the law and is adept at providing clear and concise advice on how the proposed changes and reforms may impact on an individual’s current tax situation and how that individual may be benefitted or, conversely, adversely affected and, in this scenario, the steps that can be undertaken to mitigate tax exposure.

As a consequence of increasingly far-reaching international disclosure practices, information exchanges between tax authorities in different countries and enhanced regulation obliging financial institutions to disclose previously confidential information, the risk that previously undisclosed income or assets will be discovered by the tax authorities and individuals subject to prosecution for tax evasion has increased significantly. Hofmann Klafsky & Fertig is experienced in advising individuals in the preparation of voluntary disclosures (and the circumstances in which they should be considering a voluntary disclosure to tax authorities) and, where necessary, supporting them in criminal tax proceedings.

In some cases, legal uncertainties remain despite thorough research undertaken, for example because there are no relevant or contradictory court rulings or opinions provided by the tax authorities. In order to exclude or at least minimize remaining risks, it may in some cases make sense to apply for so-called binding ruling from the responsible tax office. Binding rulings can only be given if it refers to a planned action and therefore was not implemented yet. The tax office charges a fee for processing the binding ruling.

Hofmann Klafsky & Fertig have a broad range of experience in advising individuals on estate succession planning and inheritance to ensure that assets are transferred and dealt with in the most tax effective manner.

Through its international network, Hofmann Klafsky & Fertig has the experience and knowhow to advise individuals on the tax consequences of relocating their domicile to or from, and declaring their income in or outside of, Germany.
Individuals who intend to move from Germany to another country or move from abroad to Germany often face tax consequences. Hofmann &amp Fertig advises individuals on the tax consequences of relocating their domicile and declaring their income in Germany. This may apply, for example, in cases in which an individual intending to change its residency holds a significant interest in a corporation. Therefore, the change of residency should be carefully planned in advance and specialised tax advice sought.

If an individual own assets in another jurisdiction or earns foreign income, or if they intend to move from Germany to another jurisdiction or vice versa, international tax provisions will apply and conventions for the minimisation of double taxation between Germany and the respective country must also be taken into account in determining the tax liability of that individual. Hofmann Klafsky & Fertig has the relevant expertise to assist individuals in navigating the complex issues arising from cross-border taxation issues.

Tax assessment notices issued by the tax authorities may not be correct. According to statistics from the German Federal Ministry of Finance, two out of three appeal proceedings in relation to tax assessment notices are successful. Hofmann Klafsky & Fertig can support and guide individuals in the review of their tax assessment notices and, where appropriate, successfully challenging that tax assessment in appeal proceedings or the tax courts.

Tax assessment notices issued by the tax authorities may not be correct. According to statistics from the German Federal Ministry of Finance, two out of three appeal proceedings in relation to tax assessment notices are successful. Hofmann Klafsky & Fertig can support and guide individuals in the review of their tax assessment notices and, where appropriate, successfully challenging that tax assessment in appeal proceedings or the tax courts.

Hofmann Klafsky & Fertig provides tax support to individuals in respect of the acquisition and disposal of real estate (including, income tax, real estate transfer tax and value added tax arising on any such acquisition or disposal), the ongoing determination of taxable income derived from real estate assets, the valuation of real estate assets (in the context of succession planning or otherwise) and the retention of real estate assets through compliant tax minimising vehicles and structures.
Furthermore, Hofmann Klafsky & Fertig can offer viable and effective tax planning solutions for the incurrence of capital expenditure and other improvement costs in relation to real estate assets and suitable tax arrangements for related parties, for example, in the instance real estate assets are rented to family members.

Hofmann Klafsky & Fertig advises individuals on tax-optimised structuring of their affairs.
According to supreme court rulings, it is generally accepted that relatives who typically lack a conflict of interests are allowed to structure their legal relationships among themselves as favourably as possible from a tax perspective and that the motive of saving taxes does not yet make a tax structure inappropriate. A legal form is usually only inappropriate if the taxpayer does not use the form envisaged by the legislator to achieve a certain economic goal, but instead chooses an unusual or artificial way in which the goal is not to be attainable according to the assessments of the legislator.

If an individual receives severance payments as a result of redundancy or employer restructuring programmes, these severance payments are subject to special tax treatment in Germany. Hofmann Klafsky & Fertig are specialised in advising individuals on the taxation of severance payments, including in the event an individual is proposing to change their country of residence.

Private individuals with a high income, in particular, individuals with an annual income in excess of EUR 500,000 may be subject to a tax audit by the tax authorities. Hofmann Klafsky & Fertig can support and guide individuals during a tax audit to ensure that their rights and interests are protected.