Monthly Archives: April 2015

#NewsFlash: GGI looks to the future with the addition of three new outstanding firms

Kikivarakis & Co. – The Bahamas

Kikivarakis & Co. is a professional services firm based in the Bahamas, founded by an experienced team of principals whom collectively have over 130 years of experience in providing financial advisory services to the public and private sector.

The company specialises in Audit & Accountancy, Tax Consulting, Insolvency, Corporate Advisory, Forensic Investigations, Litigation Support, Business Management, Real Estate and Support Services.

Kikivarakis & Co. has a staff of twelve professionals including five directors; they provide services in English.

Kareem Kikivarakis

Kareem Kikivarakis

Nassau, The Bahamas

T: +1 242 327 0399
F: +1 242 327 1319

Grow Finance – Estonia

Grow Finance are an Accounting company based in Estonia. They opened in 2000 and for the past fifteen years have developed steadily through expansion of services, specialising in business development. They offer support to compile business plans, provide advice and help in forming support applications. In addition they also offer traditional business and financial leading services.

The company has a strong emphasis on outsourced accounting. This is an excellent solution for small and mid-sized companies.

With a multidisciplinary team of ten professionals overseen by one partner, they are a multi-lingual firm, with the ability to serve their clients in Estonian, English, Finnish and Russian.

Ulvi Tallo

Ulvi Tallo

Tallinn, Estonia

T:  +372 6850 800

Delta Partners Certified Public Accountants S.A. – Greece

Delta Partners Certified Public Accountants S.A. is GGI’s newest European member firm. Their corporate headquarters are located in Athens and there is a branch office in Thessaloniki allowing them to offer full services throughout Greece.

The company provides Audit & Assurance, Advisory, Tax and Accounting Services in Greece. More specifically, they offer a full range of value added professional services to a wide range of clientele consisting of all kinds of legal entities, which are operating in various industries in Greece, some of them listed on the Athens Stock Exchange.

There are 4 partners and approximately 50 professional staff who are multidisciplinary and multilingual professionals with the ability to serve their clients in Greek, English, French, German and Italian.

Akis Damilakos

Akis Damilakos

Athens, Greece

T:  +30 211 10 95 700
F:  +30 211 10 95 790

ITPG Winter Meeting 2015

High-quality tax training, recharging the batteries and cocktails

Oliver Biernat

In addition to the obvious benefit of professional development, tax meeting in the south of Spain in February certainly included some other pleasing aspects. The meeting at hotel El Fuerte Marbella was perfectly located directly on the beach and within short walking distance of Marbella’s old town. Only one participant complained that it was “only” 18 degrees centigrade and sunny while he had been enjoying 30 degrees when he left his home country; South Africa.

The meeting attracted 44 delegates and several accompanying persons to Marbella, coming not only from Europe, but also from Canada, Colombia, India, Mexico, South Africa and USA. This gave the event a truly international flavour. It was an opportunity for old friends to catch up and new acquaintances to be made.

A short walk started off the meeting on Thursday evening. Our hosts, GGI Member firm Javier Carretero y Asociados (JC&A) Abogados, represented by Maria José Rubio and Santiago Lapausa, introduced the participants to the tapas culture in nearby bars. In a relaxed atmosphere, all participants had the chance to get to know each other while enjoying delicious food and drinks.

As global chairman of ITPG, I opened the technical programme with a presentation about international tax planning software on Friday morning. After the official start of the meeting, Professor Robert Anthony took over and introduced a case study on international holding and trade companies.

Six team leaders then formed six groups with the participants, identified by scarves of different colours. Each team had three hours to prepare a 10 minute presentation explaining: “Which country would in their opinion be best to incorporate a holding company?” This was very intense and involved highly practical tax work in small groups.

After listening to all six presentations, the jury (Professor Robert Anthony, Claudio Cocca and I) decided on the winners: Team Purple, which included Julie Bryant (UK), Viviane Moro (France), Bärbel Wierzoch (Germany), Claudine Heinrich (France) and Oyvind Baltzersen (Norway). The lucky winners were awarded a bottle of French champagne, sponsored by Benefitax.

As the weather was extremely good on Friday, lunch was laid outside the hotel with a panoramic view of the Mediterranean Sea.

In the afternoon, another challenge awaited the participants and accompanying persons. In a teambuilding event, eight teams – all with members from different countries – were equipped with a map of Marbella, a questionnaire and some pesetas and had to make their way through the old town of Marbella. To successfully finish this town rally, team members had to answer questions and fulfil various tasks, not least demonstrating their drinking skills and dancing the authentic Spanish Flamenco. The afternoon was enjoyed by all, with some already planning to return to Marbella at some point in the near future.

In the evening, dinner was organised at the Club Marítimo Alevante on the harbour-front in Marbella. The winners of the teambuilding event received a prize and celebrated their success. As promised, all attendees were served a delicious Sex on the Beach cocktail.

On Saturday, I had the privilege of moderating technical tax sessions throughout the day. Ashish Bairagra (India) started with a presentation on “Taxation of indirect transfers and how do different countries tax such indirect transfers”. That was followed by a case study on “Base erosion/profit shifting” chaired by Klaus Küspert (Germany). I was joined on the panel by Brian Marita (USA), Julie Bryant (UK), Viviane Moro (France), Carlos Frühbeck (Spain), Sergio Finulli (Italy) and Artur Plutowski (Poland).

After the coffee break, I updated the participants on internal ITPG topics, the regional chairs reported news and projects from their regions and Federico Grossi introduced the next Italian Business Summit in Florence, Italy (30 May 2015). Before lunch, Robert Worthington (Canada) presented on “Cross-border financing using hybrid instruments” and Huub Kapel (Netherlands) on “Art 15 OECD/split salary”.

After lunch, Matteo Bedogna (Italy) shared his knowledge on “Transfer pricing litigation – case history with the Italian tax authority”. He was followed by Arlene Rochlin (Italy), who talked about “Compliance is elementary, my dear Watson” covering the elements of compliance for both accountants and lawyers.

After the coffee break, our host Santiago Lapausa (Spain) discussed the “Spanish Golden Visa and the Spanish tax reform”. Last but not least, Stanley Ruchelman (USA) informed on “Treaty Abuse under B.E.P.S. – L.O.B.? G.A.A.R? Both?” and Marc Nideröst (Switzerland) gave an “Update on planned major corporation tax reform in Switzerland”.

At 5.40 p.m. the meeting was closed and the participants were given a little spare time to relax. In the evening, the successful conclusion of the meeting was celebrated with complimentary drinks in the hotel lobby followed by dinner at Restaurante Buenaventura in the old town. At around midnight, more than half the attendees decided to go for another BEPS session, this time standing for “Beer Every Person Slurps”, in the nearby Irish the Claddagh bar with live music and live dancers in the shape of GGI members. After the pub closed, some went on to a discotheque near the beach with the hosts, where they danced into the small hours.

Those who had booked the golf training for beginners on Sunday morning went to the Monte Paraiso Golf Club in Marbella. In a beautiful surrounding, GGI members received individual and group training in putting and driving from golf professionals. After almost three hours, all became golf masters and five GGI teams battled against each other in a competition of two holes. All teams did very well and celebrated their newly learned skills in the open air restaurant of the golf club with a wonderful lunch of salads, paella and dessert accompanied by Spanish summer wine.

All feedback has been positive and the combination of high class technical tax topics, networking opportunities and city exploration was perceived as perfect by the majority of the participants. Our hosts summarised it brilliantly: “At the end, it is all about good friends having fun.”


Tagged ,

Russian banking system 2015: between sanctions and prospects

by Armen Danielyan


Today Russian economy shows all signs of slowdown and upcoming crisis with lowering oil prices and foreign economic sanctions tied to geopolitical tensions as main factors lying at the root of it.

Introduction of the US and EU sanctions against major Russian banks and oil companies banned middle- and long-term debt financing for the periods of more than 30 days. Another pressure point was major rating agencies’ lowering foreign currency sovereign credit ratings on Russia and its regions to speculative grades with a negative outlook. The direct effect of all these measures was the reduced supply and the increased cost of foreign currency borrowing in the money market.

Still the key questions are (1) to what extent the imposed sanctions influence the current state of Russian banking system and (2) what are the banking system prospects assuming the retention of sanctions through 2015.

  • To what extent the imposed sanctions influence the current state of Russian banking system

Analysis of the performance of banks included in the original sanctions list shows that the sanctions had no material adverse effect of the operations of those banks till September 2014. According to the Bank of Russia statistics their total assets rose by 18.0% during the period. The banks significantly reduced the volume of transactions with non-residents and focused on the Russian market. Transactions with residents expanded by 35.0%. A negative consequence of the imposed sanctions was a decrease in the volume of individual deposits by approximately 23% according to the Bank of Russia, but in general the funds raised from residents till September 2014 increased by more than 20%.

The effect of the second wave of sanctions was also not as adverse as it could have been. The banks covered by sanctions have substantial capital: according to the Bank of Russia data the capital adequacy ratio ranges from 10.5% to 15.7%. The banking system is stable now, although moderate negative trends resulting primarily from recent structural slowdown in the Russian economy are observed.

  • Lower liquidity

At the end of 2014 lack of liquidity in Russian banking sector was caused mainly by ruble devaluation processes as well as individual intentions to run on a bank. In order to stabilize Russian rouble exchange rate the Bank of Russia increased the key interest rate from 10.5% to 17% but it was not enough to keep rouble from devaluation and the lack of liquidity problems deepened. In 2015, in spite of the key interest rate decrease to 15%, most small and middle-sized banks suffer from liquidity challenges. Even widening the list of banks able to take part in the Bank of Russia credit auctions was not enough to ease tensions.

At the same time the imposed sanctions affect only current liabilities of banks and those banks and financial organizations that used external borrowing to cover cash deficiency will continue using this opportunity in future.

In order to solve current liquidity problem the Bank of Russia plans further key interest rate decrease, widening credit auctions and – if needed – lowering reserve ratio.

  • Assets devaluation

Rouble deposits of banks lost their value because of Russian rouble devaluation and inflation rate appreciation. Today banks act decisively to increase corporate loan interest rates aiming to reduce risks of assets devaluation. At the same time these measures cut demand for corporate loans.

Quite a different situation can be observed in retail lending. According to the Russian legislation banks and financial institutions are not in the position of changing retail interest rates unilaterally otherwise stated in loan agreement. So the bank activity in retail lending remains under pressure. As for the borrowers’ debt burden according to polling data provided by the Bank of Russia the debt burden of borrowers remained largely unchanged, and the weighted average value of the debt-to-income ratio (calculated as the ratio of borrowers’ total payments under a loan agreement for the past quarter to their total income) stays at 33%.

Despite the constant level of the borrowers’ debt burden, according to Unified Credit Bureau data an upward trend in the number of loans per borrower is observed. The situation may be challenging for the banks specializing in retail lending, especially for those with foreign currency denominated loans, as steep Russian rouble devaluation questions the timely repayment of debt.

  • Net income depreciation and demand for capital

Continuing Russian rouble weakness and exchange rate volatility also dented the confidence in the local currency and put a drain on deposits. To retain depositors, banks sharply increased interest rates on deposits which also led to a rise in their liability costs and further squeezed interest rate margins increasing balance sheet problems.

According to the official statistics net income in the banking sector in 2014 decreased 41% owing to earnings from operations dilution and charge for impairment provision increase. Losses on stock markets along with inability to attract foreign capital and increasing funding costs aggravated a problem of demand for capital.

These developments prompted the authorities to implement coordinated stabilization measures. The Bank of Russia introduced new 28 and 365 days foreign currency loans to banks with a capital over RUB 100 billion (for which 11 largest banks qualify). The government approved a RUB 1 trillion recapitalization plan for banks financed with domestic sovereign bonds (OFZ). The State Duma approved a bill allowing the government to place up to 10% of the National Wealth Fund on subordinate deposits and subordinate bonds of Russian banks. Banks will get RUB 550 billion from the National Wealth Fund including RUB 300 billion for Vnesheconombank, the state development bank, to increase «lending to organizations of the real sector». The authorities also prompted that more measures to avoid banking system crisis might be introduced.

  • Wave of bankruptcies

Responding to current tough conditions some experts await a wave of bankruptcies in 2015 with as many as 20% Russian banks at risk of folding. The Center for Macroeconomic Analysis and Short-Term Forecasting estimates that 200 banks face collapse this year and 160 – next year on the back of combination of bad loans and Russian rouble devaluation. Others are predicted to face a steep challenge to stay afloat.

These forecasts seem to be exaggerated. The resolution of Russian banking system is a prerequisite for its globalization and, according to the projections based on evaluation of already taken and planned stabilization measures the number of bankruptcies will not exceed its usual annual ratio: 20-30 banks with most weak financials.

Thus, current problems of Russian banking sector, not so much originating from the imposed sanctions, as dealing with structural slowdown in the Russian economy, are far from being critical or adverse.

  • What are the banking system prospects assuming the retention of sanctions through 2015

Taking into account (but no fully based on) the imposed sanctions the main tendencies in Russian banking system through 2015 are supposed to be as follows:

  • Net loss: Russian banks are expected to post net loss in 2015 of about RUB 500 billion.
  • Key interest rate – 13%: The expected key interest rate level will remain at the level of 13% or higher throughout the 2015, substantially increasing the overnight REPO price.
  • Authorities support: Russian authorities will continue implementing coordinated stabilization measures, including capital injection which may prevent Russian rouble from strengthening.
  • Lending revival: a RUB 1 trillion recapitalization plan for banks financed with domestic sovereign bonds (OFZ) is set to revive lending and increase loan portfolio by about RUB 800 billion annually.
  • Consolidation: Increasing dominance of state-related banks and progressive concentration of the market are likely to continue. New entrants will be limited due to economic situation and 20-30 banks with weakest financials will go bankrupt.
  • Eastern money market in focus: Over the long Russia is predicted to seek less dependence on Western capital markets in favour of Asia and BRIC countries.

Cooling economic growth, provoked by lowering oil prices and foreign economic sanctions, triggers certain challenges for Russian banking system in 2015. At the same time processes, that take place in Russian banking at the moment, will make it much more resistant to external shocks in the long run.


Armen Danielyan


Delovoy Profil

Auditing & Accounting, Tax, Advisory, Corporate Finance

Moscow, Russia

Armen Danielyan




Tagged ,

10 Tips for employers when sending employees abroad

By Merrill April

Travel for Work

Sending employees overseas to international offices is becoming increasingly common in today’s business world. It is essential that the employee’s contract reflects what is expected of him or her in their new role abroad, and specifies the changes in line manager, salary, role, duration of role and other changes.


  • Who should be the employer?

One of the first questions that needs to be asked is who should be the employer when the employee moves to a foreign office. It could either be the current employer or, alternatively, the Host employer if there is a suitable entity in the destination country, e.g. a subsidiary or sister company.

There will inevitably be an impact on tax and social security so that is likely to be a driving force in deciding on the right employer.


  • The Employment Contract

Whether the employee is remaining with the current employer, or transferring to the Host employer, the employment contract will need to be amended.

An employee will expect continuous service with the current employer to be preserved and this needs to be stated in the contract to avoid disputes. This is extremely important because it offers the employee protection from unfair dismissal and gives them the right to a redundancy payment, dependent on their service. Unilateral change cannot be forced on behalf of the employer, so all the changes need to be skilfully negotiated.


  • Key terms included in either the variation or the new contract

It is essential to specify the duration of the employee’s assignment abroad in their contract.

E.g. If the employee has a fixed term in the new country – “you will be based in Australia for a fixed term of 24 months.”

E.g. If the employee is based in the new country indefinitely – “you will be based in Australia for an indefinite term.”

E.g. If the employee is based in the new country on a fixed term with a notice period – “This arrangement will be terminable by either party giving to the other not less than [3] months’ written notice.”
E.g. Does the employee have the right to return to the UK when his assignment is terminated? This will need to be clarified – “It is expected you will return to x’s London office at the end of the 2 year period.”

Should there be a “probationary”/trial period?

You know your employee but you do not know how they will adjust to life in a new country. Therefore, it is sensible to write a trial period into the contract. e.g. “subject to a formal review after the first [x] months it is intended you will be based in Australia from 1 July for a period of 24 months.”


  • Management during the assignment

It is imperative that the employer considers how local customs and laws in the host country will affect the employee’s work.

Hours – The hours of work may be different in the new country and the employee will be expected to follow local practice.

Holidays – The public holidays may be slightly different in the new country. An employer needs to decide who will authorise the holidays; will it be the normal line manager or the boss in the new country?

Cultural Issues – An employee who is transferring from London to the People’s Republic of China may need some cultural norms/expectations incorporated into the contract.

Reporting – An employer needs to decide who the employee will report to when working the new country.

Grievance and disciplinary issues – An employer needs to state who the employee should go to in the event of a grievance issue; will it be the normal line manager or the boss in the new country?

Training – An employer needs to decide whether their employee is subject to continuing professional development obligations. They also need to decide whether these obligations can be suspended when working in the new country and, if they cannot, will this involve them travelling back to their original workplace to fulfil training obligations?

Clawback Provision – An employer needs to consider what happens if an employee moves to a competitor firm once he arrives in the new country. If appropriate clauses are drafted into the contract it will be possible to retrieve some of the costs of moving the employee to the new country. If there are no clauses in the contract, this will not be possible.


  • Remuneration and allowances/benefits

The employment contract needs to explain the changes in salary and payment that will commence once the employee is working in the new country.

Is the current salary simply converted into the currency of the new country or will there be some new arrangement?

Is the pay period exactly the same? Will it change to weekly or monthly?

What exchange rate will be used?

Is there a provision to review the exchange rate? E.g. every 6 months. “And a new exchange rate will be applied to the conversion if the exchange rate moves by 10% either way”.



An employer needs to consider what the position will be with housing

Whose responsibility is it to find accommodation?

Whose responsibility is it to pay for accommodation?

Insurance (Health/life)

Will London schemes cover this or will this need to be replaced with a local equivalent?
The level of cover of insurance also needs to be documented in the contract.


  • Tax Reimbursement Policy

An employer must carefully consider, and make clear in the contract, any changes in tax procedures that will occur when working in the host country.

Will the employer deduct the tax in the source country?

Will the employee be paid gross and have to account for their own tax?

Is there a promise that the employee will be no worse off than if they were working in the UK?
e.g Tax equalisation / tax neutral position.

If the employee is removed from UK payroll and transferred to a new country, what will happen to their national insurance contributions? It may be possible to make voluntary contributions – this is not a matter for the contract but it may be something your employee may expect advice on.

It must be completely clear who is paying what and when.

Does employee know what they will get at the end of 1st month and subsequently?

Is the employee clear what their responsibilities are?

Is the employer offering tax return services to the employee?


  • Liability and Insurance (Tax is not the only liability!)

As an employer, you have a duty not to expose your employee to unnecessary risk.
An employer needs to consider exactly what risks their employee will be exposed to, whether the premises are safe to work in and, if the employee is required to go onto sites to assess other projects, what health and safety measures will be in force onsite.

Although risk-assessments are crucial for an employer, they should be considered on a case by case basis. For example, there is no need to risk-assess a scheduled flight from London to New York.

Example: This is a case where an employer was accountable for the fatality of an employee. The employee moved to the Peruvian office of his firm. Whilst working, he and some other colleagues were taken to visit a site in the Peruvian mountains in a helicopter. Unfortunately, the helicopter crashed mid-flight into the mountains and all the workers on board died. The accident could have been prevented had the employer ensured that the correct health and safety checks were carried out. The employer was responsible for their employee’s safety and was liable for the accident.

  • Regulatory Issues

Is there a need for accreditation with the competent new country’s authorities?

–           If so, what is the process?

–           How long will it take?

–           Who is responsible?

You don’t want to find that the employee cannot work in the new country after all.

Ensure your employee is fully briefed as regards to the Bribery Act and other relevant legislation in the Host country.


  • Termination

This is an extremely important part of the contract to consider. Indeed, the greatest number of disputes arise in this area. The employer needs to make clear in the contract whether the assignment is ending or whether the employment is ending.

If the trial period doesn’t work and the employee is pulled back to the UK, it needs to be clear what will happen to the employee’s family. For example, if the employee has young children, will they be able to finish their school term before moving back to the UK?

The employer needs to make clear in the contract what would happen if the employee’s contract is terminated during the assignment, for example, if the employee was made redundant.

The employee may have accrued rights in the host country, as well as having UK employment rights. Both of these will need to be adhered to in order to avoid unfair dismissal claims.

Compromise and settlement agreements may well be needed in two jurisdictions with two sets of advisers.

  • Repatriation (a type of Termination)

If the employee is to return to his original employer, it is essential that his contract specifies what is to happen. For example, is the employee to return to their former role, or a different role?

The parties will need provisions dealing with post-termination obligations to assist e.g. with the recovery of money from tax authorities.


Why is it important to have an assignment contract?

It is essential to have an assignment contract when an employee works abroad. Firstly, the contract will help to manage your employee’s expectations and assist their understanding of the move. Secondly, the contract will help to reduce the likelihood of disputes. Thirdly, the contract will help to allocate and, in some cases, to contain costs.

Merrill AprilMemery Crystal

Law Firm

London, UK

Merrill April





Tagged ,

Investment funds based in Canada, China, India, Israel, Japan, Korea, Switzerland and the USA as well as other Asian countries may claim Polish CIT refunds

By Artur Plutowski

Last year the European Court of Justice (ECJ) issued a judgement in case DFA Investment Trust Company vs. the Head of Tax Chamber in Bydgoszcz (C190/12). Generally, the case concerned investment funds benefiting from exemption in income tax (CIT). In particular, it referred to whether such exemption may depend on where the registered office of the investment fund is located.


According to Polish regulations, investment and pension funds based in Poland are exempt from CIT. It is worth mentioning that in 2011, due to infringement proceedings initiated by the European Commission, Poland extended the scope of the exemption and included funds from other European Union (EU) member states and EEA member states (under some conditions). However, investment funds located in non-EU and non-EEA member countries still remained outside the scope of the exemption.

The case resolved by the ECJ concerned the U.S.-based fund that applied for refund of the CIT paid on dividends distributed in Poland, in both 2005 and 2006. DFA Investment Trust Company was managing Emerging Markets Series and claimed that the income tax paid was undue, and submitted a refund application to the relevant tax authority. The tax authorities refused the refund and rejected the application. The core argument was that Polish regulations limit the scope of exemption to investment funds with registered offices in either EU or EEA member states.

The District Administrative Court in Bydgoszcz DFA Investment Trust Company requested suspended issuance of its verdict due to doubts regarding compliance of Polish limitation with the EU regulations and referred the case to the ECJ. By referring this case to the ECJ, the Court sought to resolve the following issue: is the EU regulation contradicted by provisions adopted by the EU Member State under which dividends received by investment funds established in the USA may not benefit from CIT exemption?

The ECJ issued judgement in which it stated that a member state may not exclude from exemption dividends paid by companies with their registered offices in Poland to an investment fund located in a third state if an undertaking to render mutual administrative assistance exists between those two states. However, the ECJ noted that it is the task of the national court to examine whether the contractual obligations between Poland and the country in which the foreign fund’s registered office is located actually allow Polish tax authorities to verify the information provided by the investment funds and to establish whether they carry out their business activities within a regulatory framework equivalent to the regulatory framework of the EU.

This judgement has substantial impact for investment funds based outside both the EU and the EEA that have received or will receive earnings from Poland.

Such investment funds investing in Poland may benefit from the Polish CIT exemption provided that they meet requirements listed in Polish CIT, for example (i) shall be subject to taxation on their worldwide income, (ii) shall be supervised or (iii) their assets shall be kept by a depositary.

Support is available to investment funds located outside the EU or the EEA, in countries such as Canada, Switzerland and the USA as well as in Asia, to review and analyse whether conditions listed in Polish regulations are met and if a particular fund may benefit from CIT exemption in Poland. If the outcome of the analysis is positive for any given investment fund, there is a refund entitlement. Assistance will also be provided to the claimant over the administrative process for claiming.

Please also note that the judgement may give basis for resuming proceedings in already concluded cases in which Polish tax authorities refused the refund of tax.

Artur Plutowski


EFS Group Sp.z.o.o.

Tax, Corporate Finance

Lodz, Warsaw, Poland

Artur Plutowski




Tagged ,

Germany introduces a statutory minimum wage

Minimum Wage

by Michael Wendler

On 1 January 2015, the Minimum Wage Act (MiLoG) came into force in Germany, which fixes the minimum hourly rate at €8.50. Around 3.7 million workers in the low-pay sector will benefit from the new legislation, with their wages rising as a result. A statutory minimum wage is now in force across every sector of 22 of the 28 EU member states, with the exceptions being Austria, Cyprus, Denmark, Finland, Italy and Sweden.

In Germany, a nationwide statutory wage already applies to some sectors and industries, since a collective wage agreement was declared to be generally binding under the terms of the Employee Act (AEntG).

Most employees whose working conditions in particular industries or sectors come under a minimum wage collective agreement of this type may already be earning more than the €8.50 statutory minimum, but some collective wage agreements (which have already been in force for some time) specify a lower minimum wage.

The legal entitlement to a minimum wage applies to anyone aged 18+ who works in Germany. It also covers foreign staff if they are working in Germany, irrespective of whether they are employed by a domestic or foreign company. However, the law also provides for a few exceptions.

The Minimum Wage Act does not contain any express regulation on which types of contractual or actually paid remuneration elements can be included when determining the minimum wage. In the past, the European Court has examined the potential inclusion in the minimum wage of variable remuneration elements paid in connection with wages.

The court found that variable remuneration elements could be included if they represented a consideration paid to remunerate the regular activity of the employee.

Inclusion of payments based on an entitlement to a minimum wage pursuant to a collective wage agreement depends on whether the additional elements of remuneration are equal in value in practical terms to the intent of the minimum wage, for example in the case of one-off payments made under the terms of collective wage agreements.

Conversely, elements of remuneration which pursue a completely different purpose and are subject to other provisions are not admissible for inclusion. This covers, for example, capital-forming benefits, compensation for rotating shifts, dirty work bonuses, overtime payments, night shift bonuses, Sunday and bank holiday work bonuses, danger money, time workers bonuses or quality bonuses.

Whether these basic principles as established by the European Court will actually apply to the statutory minimum wage remains to be seen. Since the law does not give any clear ruling, the courts may well have to decide this issue.

Employers are liable – regardless of culpability – as absolute guarantors, for the net amounts owed to their employees under the terms of the provisions covering the minimum wage. However, this does not apply to taxes and social contributions relating to minimum wages.

In future, the level of the minimum wage will be verified by a commission of parties to the collective wage agreement. When determining the minimum wage, the commission will take into account the development of collective wage tariffs in Germany. In the context of an overall assessment, it will investigate whether the minimum wage provides employees with appropriate minimum wage protection, allows fair competitive conditions and does not jeopardise employment. The legislation provides for an adjustment to the statutory minimum wage every two years.

With the introduction of the Minimum Wage Act, employers are subject to new record-keeping obligations. From 1 January 2015, they are obliged to record the start, end and duration of the hours worked by marginal employees (defined as “mini jobs“) within one week of the work being carried out and to keep these records for a term of two years.

In certain industries and sectors (e.g. construction, gastronomy, building cleaning, exhibition construction and the meat industry) the employer’s obligation to record working hours extends to include all employees. Over and above this, employers whose registered office is situated abroad must notify the German Head Office of Finance West of the job for which employees are being taken on prior to their employment.

Compliance with payment of the minimum wage and with notification and record-keeping obligations will be strictly monitored in future by the Financial Supervisory authorities for the prevention of black labour (undeclared work), a department of the German Financial Administration. The Minimum Wage Act provides for substantial penalties in the case of infringements.

Dusseldorf, 3 March, 2015

MIchael Wendler


Wendler Tremml Rechtsanwälte

Law Firm

Berlin, Dusseldorf, Germany

Michael Wendler




Tagged ,

Memery Crystal Obtains Successful Judgment in the Commercial Court

GGI member firm Memery Crystal obtained a successful judgment on a number of crucial preliminary issues in the Commercial Court last week acting for Japanese owned energy company, Idemitsu Petroleum UK Ltd, in a dispute with BG over Opex sharing. This dispute also involves Canadian energy group, Talisman Energy.

The case arose from the shared use of an FPSO vessel in the Ross Field and adjoining Blake Field and the basis on which operating expenditure was agreed to be shared between two fields.

Talisman and Idemitsu, licensees of the Ross Field, claimed that BG, the Blake Operator, has failed to pay over £100 million, part of its share of operating expenditure. BG, on the other hand, denies this and claims that it has been overcharged by £35 million.

The case is likely to require two further trials to conclusion and some issues may end up in the Court of Appeal.

Memery Crystal’s team was led by Dispute Resolution Partner Jane Marsden with Associate Ryan Lynch.

Jane Marsden commented: “This is an interesting example of the sort of disputes over expenditure which are becoming increasingly common in the North Sea. We anticipate more such disputes over expenditure, as fields become more marginal.”

This successful judgment follows on from the Memery Crystal team winning the Litigation Team of the Year (The Lawyers Awards 2014) and the Dispute Resolution Team of the Year (The Legal Business Awards 2014). It marked the first time that a firm has won both awards in the same year.

Memery Crystal’s Oil & Gas team is an industry-focused team across the disciplines of the firm, led by dedicated industry specialists supported by partners from the Corporate Finance, M&A, Banking/Debt Finance and Dispute Resolution practice areas. Our lawyers are experts in a wide range of disciplines but all share a common theme – knowledge of and service to the Oil & Gas sector.

Screen Shot 2015-04-02 at 12.45.03 PM


Memery Crystal

Law Firm

London, UK

Jane Marsden




David E. De Lorenzi named among Top 25 IP Attorneys nationwide

David E. De Lorenzi, Chair of the Intellectual Property Department at GGI member firm Gibbons P.C., has been named among only 25 intellectual property attorneys nationwide by the BTI Consulting Group in its 2015 BTI Client Service All-Stars Report. The newly released report is the comprehensive result of interviews with more than 300 senior legal officers and other executives overseeing the provision of legal services at companies with revenues of $1 billion or more.

The top 25 attorneys were selected based on their innovation and thought leadership, proficiency and talent, and their understanding of their clients’ businesses and needs, as well as value and results. In particular, the ranked IP attorneys were noted for their deep insight into the complex connection between the business, technical, and legal issues their clients face.

“There’s a small but important trend of clients wanting to acquire more IP services from the single firm,” says Michael Rynowecer of BTI. “One thing that stands out about these IP All-Stars is that they seem to have a little bit better understanding of that than most. They’re very good at going back into their firms and putting together a team that fits perfectly for clients.”

Mr. De Lorenzi, who has also been ranked among the world’s leading patent practitioners by Intellectual Asset Management (IAM) for each of the last four years, has 25 years of trial court experience before federal courts nationwide and the International Trade Commission in all fields of intellectual property law, spanning a variety of technologies. The other half of his practice involves counseling clients on their strategic intellectual property development, acquisition, divestiture, and enforcement needs, and negotiating intellectual property transactions that accomplish those business goals. Mr. De Lorenzi’s representative clients are in the life sciences, alternative energy, telecommunications, and consumer products industries.


DDLGibbons P.C.

Law Firm

New York (NY), Newark (NJ), Trenton (NJ), USA

David E. De Lorenzi




GGI member firm Rantalainen Accounting Services Ltd expands in Southern Finland

GGI member firm Rantalainen Accounting Services Ltd has purchased a group of 11 accounting offices in Southern Finland from Osuuspankki Bank. Following this acquisition, the Rantalainen Group covers 30 cities with a staff of 430 skilled professionals and a turnover of EUR 30 million. Senior Partner Ossi Sopen-Luoma comments: “We have significantly strengthened our position in Finland and are now amongst the biggest accounting firms in the country, while remaining independent. Despite our size, we keep our entrepreneurial spirit and offer proactive, reliable service to build on our clients’ success.”


GGI member firm

Rantalainen Accounting Services Ltd.

Auditing & Accounting, Tax, Advisory, Corporate Finance

30 offices in Finland

Ossi Sopen-Luoma




Prager Metis CPAs, LLC Expands New York Presence; Merges with Polakoff & Michaelson, CPA, P.C.

NYC Accounting Firm, specializing in Family Office Services to Join Forces with Prager Metis.

GGI member firm Prager Metis CPAs, LLC, a top 100 public accounting and consulting firm with offices in the U.S. and London, announces the merger with Polakoff & Michaelson, CPA, P.C., a boutique accounting firm based in New York City, which focuses on Family Office Service. The combined firms will offer a wider breadth of services to family office entities and high-net worth individuals as well as accounting services. The merger is effective immediately (January 2015).

Craig Michaelson is the Chairman and CEO of P&M, a firm founded more than 75 years ago. What sets aside P&M from other Family Office Service firms is that his team works very closely with their clients to learn about their lives and care for their issues. He says, “They are more than just clients, they’re like our family.” Michaelson also added, “We are thrilled to be joining such a dynamic firm with Los Angeles, London and New York offices, and their additional services and technological capabilities. They provide the depth and scale that we were looking to provide for our clients.”

“We are very excited with their addition of Polakoff & Michaelson,” says Glenn Friedman, Co-Managing Partner and Partner-in-Charge of M&A for Prager Metis CPAs, LLC. “We wanted to expand our service capabilities by increasing our family office services. Polakoff & Michaelson’s bring a tremendous breadth of experience as well as a shared value of hands-on client service. It is the perfect fit.”


Prager Metis International LLC

Basking Ridge (NJ), Long Island (NY), Los Angeles (CA), New York (NY), White Plains (NY), USA

Audit & Accounting, Tax, Advisory, Corporate Finance, Fiduciary & Estate Planning

Glenn Friedman




Tagged ,