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Tax havens are verboten!

Mark Holland has spotted a little gem in the German press

It would appear that the little village of Norderfriedrichskoog in Schleswig-Holstein, with a population of just 45 inhabitants, has 500 registered companies including subsidiaries of conglomerates like Deutsche Bank, Lufthansa and power giant e.ON


Because the town does not charge business tax, that is tax on profits. And the firms have saved €300 million in the last decade.

German Finance Minister Hans Eichel is desperate to get his mitts on this loot and wants to ‘reform’ local authority finances. According to Eichel’s plans, all local authorities must set a minimum rate for local business taxes.

And there was me thinking Germany was a federation. Wouldn’t the states have something to say about this? I guess Eichel is simply following the EU trend of ‘harmonisation’, ie raising upwards to the highest common denominator.

Mark Holland

9 comments to Tax havens are verboten!

  • A minimum tax rate ? And what is that going to be ? And based on what criteria ? And how many local authorities and businesses are suddenly going to be affected by this ?

    That’s going to make Germany more competitive and help with its current economic woes.

    Eichel does have budget issues but to the extent these are local taxes, I don’t get it.

  • Just Europe’s new ruling classes moving to protect their interests.

  • sandy P.

    Or keep adding more zeros. How’s that for “minimum?”

  • Rob Read

    Sandy that should be the maximum

  • Malcolm

    If there’s only 45 inhabitants then it seems this town has not managed to attract companies to actually move their business there, just to write its name on some form.

    This is significant given that one of the tactical arguments used for zero-business rate policies is that it attracts companies and the jobs follow.

  • mark holland

    Malcolm, the place is a barren polder halfway between Hamburg and Denmark. There ain’t much there apart from cows.

    From the article:

    Hans Kremer believes that the companies that came to Norderfriedrichskoog changed the face of the landscape and the lives of the people who lived there. “One should not forget that these companies did a lot for the infrastructure of the region,” he said. “The managers of these companies rented apartments up here, so the landlords in the region have made their income out of this.”

    “People go for lunch and dinner, they order food. The butcher in Oldeswort, the neighboring village, profits from the managers, who order the buffet in his store when they hold conferences. Luxury hotels that would have been closed now thrive. And don’t forget the building trade — villagers painted their houses or repaired the roofs.”

  • cerberus

    According to Eichel’s plans, all local authorities must set a minimum rate for local business taxes.

    Fine. Set it at zero.

  • Rob Read

    Cerberus because of the EU farm subsidies the effective rate of business tax for farms is much less than zero! Maybe an effective argument for scrapping the CAP?

  • David Crawford

    Cerberus, that reminds of a Simpson’s episode when Lisa’s class went on a field-trip to the local newspaper.

    PR flak for the paper: “And the paper we use is made up of a certain percent of recycled paper”

    Lisa: “What percent?”

    Pr flak: “Zero”

    Lisa scowls at her.

    PR flak: “What??? Zero’s a percent.”

    A great answer to a lot of questions: What???, zero’s a percent.