Lawyer expert in Tax and Banking Law

7 posts in this topic

Dear All, 

I would  request to the Community  a reference of a good, reliable lawyer expert in German Banking / Tax / Civil Law .

I quickly summarize the topic, omitting some details for sake of time, so don´t take this as a complete description but just as a summary. 

The subject is a  transfer of Financial Assets (Shares)  from an Italian Bank to my German Bank where I have an account (I am resident in Berlin). 

The transfer of the assets happened in 2018, however after 2 years, this  German Bank informed they needed from the Italian Bank some  additional data related to the historical purchases of the shares  +   certification of their continued ownership until the transfer to set correctly the tax data.  

I provided this information in the format they requested (official documents from the Italian Bank) , but they are now making further requests that seem to be absurd and probably not feasible to comply with. I will not enter in the details but as of now they have set up the tax data in a way that would create a huge and unjustified damage to my finances. 

I will try a last attempt with them but if they continue to refuse official documents, I will need to take more formal actions and therefore the assistance of a qualified english speaking lawyer would be essential. 

Any advise or recommendation would be highly appreciated. 

Thank you, 

 

 

 

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If your German bank does not have a reliable record of the cost basis of your shares transferred in from the Italian bank where you acquired them, then upon the sale of those shares your gain will be computed - and tax withheld - using the Pauschalmethode auf Basis einer Ersatzbemessungsgrundlage.

 

This entails multiplying your net proceeds from the sale by 30% and withholding tax on that amount.

 

However, you are not bound by that determination and can override it by filing a tax return with evidence of the actual basis and thus the actual gain/loss on the transaction.

 

My understanding is that German banks are supposed to transfer cost basis information for transfers within Germany and for that reason you would be forced to get the basis information corrected in order to obtain relief from the Pauschalmethode.

 

My understanding is that a transfer in from a bank in the EU should also be accompanied with cost basis information but where that interbank communication fails you apparently can obtain relief by obtaining basis certification information from the Italian bank on your own and submitting that as substantiation for the figures you use on your tax return.

 

The matter is governed by § 43 of the EStG.

 

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I was in a similiar situation with a fund inherited from my mom who had bought it more than 20 years ago. I had no proof of the purchase price so the bank assumed it was zero and withheld tax accordingly, which resulted in taxation of fictive profits which were higher that the proceeds of the liquidation of the fund. I engaged a tax lawyer to no avail but in the end an accountant could fix the problem (it helped that I could find a 2004 account statement proving that this fund  had been in my mom´s possession already before 2008, when a law change regarding capital gains taxation came into effect). I don´t remember all the details but before spending money on a lawyer I´d talk to an accountant.

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@straightpoop

I am impressed: even without providing the details you have spotted EXACTLY the issue. To further elaborate on what happened, I will give you an example with sample dates and values. 

In 2017: 

-          On June  8th  using my Italian Depot I buy 7 shares of Company “A”  at 1000€  (acquisition price) + 20€ commissions

-          On June 9th using my Italian Depot I buy other 3 shares of Company “A” at 1010€ , no commission to be paid

Then no trading activities take place and shares are held in the Italian depot until the time of the Transfer

 

In 2018:

- On September 4th  I  issue an order to the Italian Bank to  transfer to the Depot of the German Bank the 10 shares of Company A

- One week later the transfer is made. The Italian Bank does not send  to the German bank  the 2 separate records but one info record only for the 10 shares with date September 11th  and price of 1005€.

How this price of 1005€ has been calculated?  As weighted average price of the 2 acquisitions: 

 

[ (1000€*7) + (1010€*3)]/ 10 = 1003€ 

+

-      The overall costs of commission divided for the overall number of shares: 20€ /10= 2€

1003€+2€= 1005€

 

 

Then as you said,  I sell some of the share 2 years later and I discover  this taxation of 30% applies, even if I had a capital loss!. Of course big shock and a request to my German Bank to investigate the reason which is the one you gave in your post, exactly this.  

Now, being clear that a legal requirement is a legal requirement and there is no discussion on whether to comply or not  with it, the 2 key questions are

 

  1. Is this obligation to transmit the historical data when you transfer financial assets (shares)  a EU requirement or a German Law requirement?  Because in the first case who has failed to comply with the law would be the Italian Bank.

  2.  If it is only a German Law requirement, had my Bank the obligation / duty  to let me know at the time of the transfer this was needed in order to set up the tax data correctly? The point is very simple: if it is a German Law requirement then the Italian Bank is not supposed to know this and I cannot be aware of it.  In addition to this, through the email exchanges I had with my Consultant at the German Bank I made clear it was important to have the historical prices uploaded and let me know if there was need from my side to provide or ask any information.  Nevertheless this could have been created a big damage. For example, in case I had sold my shares in 15 years it would have been impossible to get the historical information required to set up the tax data from the Italian Bank. Could this be seen as breach of “Einhaltung der Sorgfalt” and could I make the German Bank liable for it?

I have in the meantime got back from the Italian Bank the official electronic versions of the historical purchase record details, and if they accept them they can apply the correct tax charges.  But I am shocked that neither the Italian Bank nor the German Bank has given to me any warning at the time of the transfer that this information was needed or missing.

 

If you could give me your opinion, it would be very appreciated

Thank you.  

 

 

 

 

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1 hour ago, jeba said:

 (it helped that I could find a 2004 account statement proving that this fund  had been in my mom´s possession already before 2008, when a law change regarding capital gains taxation came into effect). I don´t remember all the details but before spending money on a lawyer I´d talk to an accountant.

 

Thank you for your post, which I will use to elaborate an additional related question. I have shares in 2 American Broker Accounts which were bougth in 2001 and 2007. From these accounts I can extract statements that prove ownership of these shares before 2008.

However  the requirement of the German Law is dual 

 

1)  You need to provide evidence of the acquisition of these shares with all historical info  (ex: I bought 5 shares of Company "A" on June 19th 2001 at 1000 USD price per share etc etc)

2) You need to provide evidence of continuos ownership of these shares until the time of their sale. 

 

My question to you: have the German tax authorities challenged you, in your specific case,  on the second requirement? Playing the Devil´s (tax) advocate, a statement provided in 2004 proves ownership at that time but not continued ownership. Have they challenged you on this? And how you solved it?

 

Thank you, 

 

 

 

 

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1st a correction:  It is § 43a of the EStG that governs the obligation to transfer cost basis data - but only between German banks.  So far as I know there is no requirement for the Italian bank to do so.

 

Until 2011 when US banks were required to report cost basis to the IRS, cost basis info almost never transferred from one US bank to another. Instead, the books of the transferee bank would show the transfer date as the acquisition date and the market price on that data as the cost basis.

 

This same procedure used to apply in Germany until the introduction of the Abgeltungssteuer effective 1.1.2009.

 

The conduct of the banks as you describe it seems to me to be unobjectionable.  By obtaining the Italian basis information for substantiation you will be able recoup the excess amount withheld by the German bank on your 2020 tax return. You lose the time value of that money but in a negative interest rate environment not a big deal.

 

 

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8 hours ago, Fede69 said:

have the German tax authorities challenged you, in your specific case,  on the second requirement?

No. At least my accountant didn´t ask for it but I still received a refund. I filed on behalf of my mom who had already died though. No idea whether that played a role. It might have seemed an unreasonable demand to expect me to have proof of something my deceased mom had done many years ago.

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