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German Practice - What's New

• Dual Citizenship Becomes Reality for Germans Abroad

• German Hate Law Reaches Out

• Germany Threaten to Tax Internet Access

• German Tax Reform

Dual Citizenship Becomes Reality for Germans Abroad

Recent changes to German law have made it possible for Germans living in the United States to become citizens of the United States without losing their German citizenship. Previously, the oath requirement for the United States was thought to conflict with German law regarding fealty to the Republic of Germany. By applying to retain German citizenship prior to applying for US (or other foreign) citizenship, German citizens can retain their German citizenship. There are limitations, however. Applicants must demonstrate that there are valid reasons for the decision to apply for foreign citizenship and that they retain continuing ties to Germany. If you read German, you can go directly to the German government's webpage on dual citizenship. website. For more information or for copies of the German consulate information sheets on this and other family or tax law matters contact Chris Erb.

topGerman Hate Law Reaches Out

A German court recently applied German hate law to materials posted outside of the country. A German court reacted recently to the posting of website information denying that the Holocaust took place by holding that German hate laws apply even outside of Germany if the materials could be accessed by German citizens. The case involved a Holocaust apologist with a website based in Australia. Jewish organizations praised the decision, while free speech advocates expressed concern over the increase in extrajurisdictional regulation of Internet content.

topGermany Threaten to Tax Internet Access

Germany threatens to tax surfing time. The German Finance Ministry recently suggested that it may begin taxing employees' internet access as a benefit. The tax would only apply to employees who have unlimited free access to the Internet while at work or who use more that DM 50 (roughly $22) work of time a month. Although the tax is not expected to be applied to many employees, German businesses are rightly concerned that this sends the wrong message at a time when the country is looking to encourage the development of a strong Internet and E-Commerce industry.

topGerman Tax Reform

New tax laws in Germany should make the country more business friendly for both European and American companies. The reforms, passed after last-minute wrangling by Chancellor Gerhard Schröder, introduces sweeping changes in German tax law. Among other things, the law:

• Reduces the top personal tax rate to 42% from 51%

• Reduces the corporate tax rate to 25% on retained earnings and 30% on distributed profits, from 40%

• Eliminates tax on sale of shares by corporations

• Reduces taxes on dividends to half the personal income tax rate.

This reform is expected to lead to the disentanglement of German industries, many of whom have held each others shares since the 1940s due to unfavorable capital gains tax rates, and to an increase in mergers and acquisitions.