Germany: Tax evasion made easy, legally

Some prominent German artists and athletes do not pay taxes in Germany. This is perfectly legal in certain circumstances, but it can sometimes backfire, as Boris Becker found out. 

Those who earn a lot of money must also pay a lot of tax. In Germany, the top tax bracket currently sits at 45 percent. For high earners there is no choice other than to pay what the tax office demands, or not pay at all. At least not in Germany, when someone is located abroad and pays taxes there. Well known celebrities, artists, athletes and entrepreneurs like Steffi Graf, Boris Becker, Ralf and Michael Schumacher seem to be doing it.

Paying tax is not a question of nationality, but where you live. Dirk Beyer, a lawyer with LHP in Cologne and a tax law expert tells DW in an interview that someone cannot simply choose where they want to pay their taxes. But, " freedom of movement within the EU [European Union] exists, and from that alone, one is able to effectively choose. And its from taht point, that the respective tax law takes effect."

Thomas Eigenthaler, Chairman of the German Tax Union (DSTG) agrees, "in general it is true that it depends on where you reside." Tax evaders buy or rent homes and apartments in Switzerland or Monaco, in Cyprus or the Canary Islands as if it were their new residence. Bayer says this is because "some countries have much lower tax rates. In Cyprus, for example, it is at 10 percent. There are countries with 12.5 and 15 percent."

Read more: Tax evasion made easy, legally | Germany | DW.DE | 12.01.2013