Germany's Company Tax Reform Act of 2008

The article outlines Germany's recent company tax reform. The act will become effective from January 1st, 2008, except for some minor points and for companies with an alternative fiscal year. The description comprises the reduction in the corporate income tax rate, repeal of declining-balance depreciation, changes in the trade tax, and tighter rules regarding transfer prices and loss deduction. Close attention is paid to new instruments such as the interest limitation, preferential treatment of retentions, and the final withholding tax. The paper provides political background, evaluates the changes economically, and puts them in legal and international perspectives.