In this post, I explain why that matters to me after more than ten years of international tax experience, particularly at the German-American intersection and in the venture capital context.
My Start in Cincinnati
It all started with a few cookies and a poster that I packed into my suitcase in Cologne.
The cookies were “Köln Kekse”, each containing a traditional Cologne expression. They quickly turned out to be excellent icebreakers. As soon as someone picked up one of the small notes and tried to find an English equivalent, the conversation was underway.
The second item I brought with me was a large poster showing Cologne and Cincinnati blended into a single city. To me, it symbolizes the idea of connecting different perspectives, people, and systems.
I am here to gain a first-hand understanding of the U.S. tax system, not only from a technical perspective, but through everyday practice: how U.S. colleagues evaluate tax issues, which questions they ask first, how their work is organized, and where their perspective naturally differs from the way we approach similar matters in Germany and across Europe. Along the way, I am also working toward the Enrolled Agent designation, the highest tax credential awarded by the IRS.
The goal behind all this is clear: by the end of this year, I want to know both systems well enough that I no longer merely mediate between them, but can consider both sides from the outset.
Three observations from more than ten years of cross-border practice show why I believe that is necessary.
Two Countries, Two Advisory Worlds
Anyone doing business in Germany and the United States needs tax support in both countries. The difficulty is that each system has its own laws, case law, and administrative practice.
To overcome that difficulty, businesses engage local tax advisors in each country. This is where the first sources of friction arise: information is requested and reviewed twice, one team asks follow-up questions about matters the other team has already clarified, and the administrative workload increases for everyone involved. As a result, advisory fees also rise because time is spent on what should be straightforward coordination.
Different Deadlines, Different Focus
The second observation is organizational, which is why it is easy to underestimate.
In the United States, tax work in the spring focuses on the tax year that has just ended. Depending on the taxpayer and its tax classification, important filing and information deadlines fall as early as March or April. For many taxpayers, April 15 is also a key date for the first estimated tax payment for the current year.
In Germany, the spring calendar looks different. For taxpayers represented by a tax advisor, the filing deadline runs until the end of February of the second year following the tax period. For the 2020 through 2024 assessment periods, this deadline was extended even further. By the end of February 2027, many tax advisors will therefore still have 2025 tax returns on their desks. At the same time, 2026 annual financial statements are often still being finalized, meaning that the tax bases for 2026 cannot be determined until afterward.
Viewed in isolation, both teams are doing exactly the right thing for their respective engagements: they meet their deadlines and focus on the tax year relevant to them. Because each side is deeply occupied with its own filing cycle, however, nobody asks which figures the other side needs at that particular point in time. The US side makes an estimate because it cannot wait. The German side supplies figures later that may shift that estimate again. Two processes therefore run one after the other, even though they should actually work together.
The Right Answer to the Wrong Question
The third observation is the most important one in my view. It concerns the need to understand the other tax system.
Each system is demanding in its own right. A simple translation or brief explanation of individual terms is therefore not enough to convey a set of facts and its tax treatment to the other side. German “gewerbliche Einkünfte” (business income) are not the same as US Effectively Connected Income (ECI). And the German “Veräußerungsgewinn” (gain on disposal) does not always cover the same range of assets as the US concept of capital gains.
In addition, the German-American income tax treaty applies across both tax systems. Its terms are generally interpreted under the law of the state applying the treaty. If a treaty term is therefore interpreted differently in the two countries, significant qualification and attribution conflicts can arise, potentially with unfavorable tax consequences.
For the correct German tax classification of a set of facts, it is therefore not enough to ask the US side whether capital gains arose in the context of a complex restructuring. The answer may be entirely correct from a US perspective and still not help with the German tax analysis. Instead, the facts themselves must be fully understood, the underlying terms must be examined, and the German consequences must be determined independently.
Put differently: if you do not understand the other side, you may ask the wrong question. And receive a perfectly correct answer.
What I Want to Do Differently
This is exactly where I come in. My goal is to be the advisor who understands both worlds, speaks both languages, and keeps both filing calendars in mind. I want to know who holds which data, who works with it, and who needs it and when.
That means considering both tax systems from the outset and throughout the process, actively setting up and monitoring the coordination between the teams, and relieving clients of as much of the administrative burden as possible.
What Is Taking Shape Here
On this blog, we regularly explore topics from our advisory practice at the intersection of German and US tax law. Posts on tax fundamentals appear under Tax Basics, fund and corporate topics under Business Tax, private wealth matters under Private Tax, and everything else that happens along the way under Beyond Tax.
If you coordinate between German and US advisors yourself, or move between both worlds, I would love to hear about your experience!
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