Tax Haven Defense Act (StAbwG)

Why international companies must act now

Business relationships with non-cooperative tax jurisdictions are increasingly coming under the scrutiny of tax authorities. With the entry into force of strict defensive measures under the Tax Haven Defense Act (StAbwG) from 2024, the pressure to act is increasing for many internationally active companies – not least due to the listing of Russia.

Whether it's a shareholding, transaction or service relationship, the law provides for far-reaching consequences for business activities with certain countries. The measures include a ban on deducting operating expenses, stricter documentation requirements, withholding taxes, and restrictions on profit distributions.

Against this backdrop, structured tax compliance management and systematic monitoring of group-wide tax data are becoming increasingly important.

Tax Haven Defense Act: What exactly is it about?

The StAbwG implements EU requirements for combating aggressive tax practices. The aim is to discourage domestic companies from having relationships with countries that, in the EU's view, do not meet the standards for tax transparency, fairness, and international minimum standards (BEPS).

The consequences for affected companies are significant:

• Expenses related to such countries can no longer be deducted for tax purposes (e.g., wages, supplier invoices, depreciation)
• Active and passive income from investments may be subject to stricter additional taxation
• Withholding taxes on payments may apply, even for third-party service providers
• Cooperation obligations and digital reporting requirements are increasing

Particularly critical: Many companies are affected without knowing it—for example, through investments in Russia or services related to listed third countries.

The challenge: Recognize, document, act

The challenge lies not only in the legal classification of individual business transactions, but above all in data availability, deadline control, and group-wide transparency.

In addition, the list of affected countries is regularly updated, so companies must know at all times whether existing relationships are affected and be able to implement appropriate measures in real time.

Our solution: Structured data and risk management via the Tax Shared Service Center

We support you in setting up a central tax data management system that addresses these requirements – with clear operational support:

• Maintenance of central data overviews on investments, business partners, payment flows, and risk countries
• Monitoring of tax-relevant business transactions with links to listed countries (e.g., Russia)
• Implementation of a group-wide tax questionnaire for risk identification
• Coordination of documentation processes and communication with external tax advisors
• Establishment of early warning systems for deadline compliance, compliance, and reporting obligations

The aim is to relieve tax departments in the long term, highlight tax-related risks and create a stable basis for external consulting, auditing or strategic tax planning.

Conclusion: Operational clarity creates certainty for action

The Tax Haven Defense Act has a profound impact on international corporate structures – some of it visible, some of it hidden. Companies that have a centralized, structured tax compliance monitoring system in place today can identify potential risks at an early stage, act efficiently, and avoid unexpected tax consequences.