Feeds

Tax haven for German ICT firms to disappear

Back to Bermuda, then

  • alert
  • submit to reddit

The Essential Guide to IT Transformation

Does Norderfriedrichskoog really need an IT company to serve a community of just 47 inhabitants and a dozen thatched homesteads 200 kilometres north of Hamburg?

Well, yes. According to the Offshore Financial Review, it is the world's most unfashionable tax haven. Little Monaco in Germany, they call this god forsaken place. Think cows and farmland, instead of sandy beaches and swaying palm trees. Nor are there any shops, hotels or pubs in this hamlet along the coast of the German state of Schleswig Holstein (to have a peek, follow this link. )

Not that anyone cares. For local businesses, this is haven. The village (with only two streets) levies no trade tax, thanks to a decree issued 300 years ago by a local duke.

To benefit from the appropriate tax regimes, a company’s records, communications and core business activities must be located in Nordfriedrichskoog. That’s why ten years ago farmers began renting out barns and cowsheds to Deutsche Bank, Eli Lilly, Unilever, Lufthansa and power giant E.On, to name but a few.

Deutsche Telekom in particular adores this tiny parish in the North: it dug many ditches for underground phone lines.

Over 500 companies are now located in Norderfriedrichskoog, including dozens of hi-tech companies. We searched the Internet and found: ERO Online GmbH, SEX.DE, 2-Gather GmbH, OMEGA EDV-Internet- und Managementsysteme GmbH, SMC Netze und Kommunikations- Beratung GmbH, VR Telecommunications GmbH & Co, and AI Aktuelle Information GmbH Agentur für Telekommunikation & Co.

Some well-known IT companies may also have registered passive investment subsidiaries in Germany to siphon off much of their profits, but there is no way of telling. The folks of Norderfriedrichskoog are staying tight-lipped.

Perhaps not for long. The booming years for Norderfriedrichskoog may soon be over. This week, the German finance ministry hopes to close the village’s tax loophole. There are too many dubious letter box companies, the department says. Local authorities must set a minimum rate for local business taxes. The reform already passed the Bundestag (the German parliament), and this Friday the Federal Council or Bundesrat will cast its vote. German cowshed IT and telecom companies will have to move to Bermuda, or pay taxes. ®

Boost IT visibility and business value

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.