Quote:
Originally Posted by omgt
ok, when it first broke etc,
the papers were saying it was because they (the cyprus company) had'nt paid the tax on the German workers they had employed.
It was inferring or stating that tax (that was allegedly) due to the German authorities had been avoided (by fabian + the company) by paying the workers through the cyprus company.
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This is not called VAT, and it is not 19%: it is called wages tax and more complex to quantify. The VAT tax it is only on sales (purchases made by final european customers), nothing to do with employees or salaries. The wages tax (tax on income from employed work) it is when employer will deduct the amount of tax and social security contributions due from the employees salary at source: retained directly by the employer before the earnings are paid out to employee, and given to German govt. Then the employee may pay further personal tax on what's left, especially if he earned extras from other sources.
If the employer is a foreign country such as Cyprus, I would suppose zero wages tax it is paid to German govt, they may pay it to Cyprus govt. It depends what's the employment contract, people can be eemployed in many ways, and each got own tax rules. If people in Hamburg was employed stable way by Cyprus, never been in Cyprus, that may be questionable.
A similar case it is Ryanair airline, they employed all their italian staff from Ireland, where wages tax is smaller. Then Italy Tax guys argued: they're italian citizens working in italian airports, they're never in Ireland:
http://www.irishtimes.com/newspaper/...325339094.html
http://www.ryanair.com/it/novita/gen-en-171012
It ended with this deal: who was employed before from Ireland can keep that way, but "from now on", the new italian employees must be hired by an italian subsidiary.
It seems, European internatinal taxation laws are quite weak and conflicting. i.e. a mess.