TheChek News Flow

Berlin overhauls nationality criteria to include adherence to the country’s values

A landmark new citizenship law came into force in Germany on Tuesday with an explicit requirement for applicants to declare the state of Israel’s right to exist.

The socially liberal government of Chancellor Olaf Scholz made dual nationality a key campaign pledge when elected in 2021, promising to shorten the waiting time for new citizens to obtain a German passport to five years. The country did not previously allow dual citizenship for first-generation migrants.

But rising antisemitism, an increasingly fractious debate over Israel’s war against Hamas and a surge in popularity for anti-immigrant far-right politics have prompted Berlin to recast its citizenship overhaul as a tougher measure of loyalty to German values.

“Anyone who shares our values and makes an effort can now get a German passport more quickly and no longer has to give up part of their identity by giving up their old nationality,” said interior minister Nancy Faeser on Tuesday.

“But we have also made it just as clear: anyone who does not share our values ​​cannot get a German passport. We have drawn a crystal-clear red line here and made the law much stricter than before.”

German parliamentarians agreed on the legal basis of the new citizenship requirements in January but the specific content of the citizenship test that is at its centre is set by government regulation.

The interior ministry had previously indicated it intended to include questions on Judaism and Jewish life in Germany but stopped short of saying whether it would include a specific declaration regarding the state of Israel.

The interior ministry on Tuesday confirmed it would now be a requirement.

“New test questions have been added on the topics of antisemitism, the right of the state of Israel to exist and Jewish life in Germany,” the interior ministry said.

Declaring a commitment to gender equality, democracy and Germany’s historic responsibility towards Judaism as a result of the crimes of National Socialism will also be part of the test.

Presenting his annual report on Tuesday, Germany’s official government commissioner for fighting antisemitism, Felix Klein, described a “catastrophic” rise in hate crimes against Jewish people in Germany.

Antisemitic incidents logged by his office increased 83 per cent, year on year, in 2023 to 4,782 — the vast majority of which were acts of publicly documented hate speech, but with several hundred occurrences of physical violence to people and property, he said.

The government has declared zero tolerance for antisemitism in Germany but has also sparked anger by appearing to crack down on specific criticism of the Israeli government over its conduct in Gaza, fuelling a debate over free speech in Germany, particularly among artists and academics.

Sabine Döring, Germany’s junior minister for higher education, was forced to resign earlier this month after her ministry started exploring legal options to defund the research of German academics who had signed a public letter criticising a police crackdown on anti-Israeli student protests.

The issue has also become a flashpoint in Germany for young Muslims, who officials warn are becoming increasingly radicalised by what they see as government oppression of their right to express their opinion.

Co-ordinated levy on total wealth of super-rich is feasible and enforceable, says paper commissioned for G20

A global minimum tax on billionaires raising up to $250bn a year is “technically feasible” and could be successfully enforced even if it was not adopted by every country, according to a report commissioned by the G20.

Gabriel Zucman, an economist and author of the paper, said a co-ordinated minimum tax on the total wealth of the world’s 3,000 billionaires was needed to increase their contributions.

The current effective tax rate of billionaires was equivalent to just 0.3 per cent of their wealth, said the report, which was published on Tuesday. G20 finance ministers meet to discuss the proposals next month.

“Very few individuals agree with the notion that billionaires can have lower tax rates than other social groups,” Zucman, a professor of economics at the Paris School of Economics and at the University of California, Berkeley, told the Financial Times. “The super-rich shouldn’t pay less tax than schoolteachers or fire fighters. That’s just not OK.”

The report recommended individuals with more than $1bn in total wealth, including assets such as real estate, equity stakes and larger corporate shareholdings, pay a minimum amount of tax equal to 2 per cent of their wealth.

This would raise $200bn-$250bn a year, it said. Extending the levy to individuals with a net worth of more than $100mn would raise an additional $100bn-$140bn, it said. Individuals who already pay more than 2 per cent of their wealth in income tax would face no extra tax liability.

Zucman said a level of 2 per cent would help the total tax levy from being seen as regressive for the super-rich. “We’re talking about 2 per cent. That’s not very much. We’re not talking about making it progressive but just making it less regressive.”

The study said developments over the past 15 years, such as the widespread ending of bank secrecy laws and automatic exchange of information between tax agencies, meant authorities were in “a better situation” to successfully implement the proposal.

However, it acknowledged there were “several potential challenges” associated with the idea. These included the difficulties of valuing individuals’ wealth, improving compliance and ensuring effective taxation if some countries refused to implement the levy.

To be effective, the report said countries would need to create new forms of cross-border information exchange on rich individuals. Nations would also need to boost identification of the ultimate beneficial ownership of financial and other assets including properties, companies and other legal vehicles.

If some jurisdictions did not enact the measure, Zucman said countries could employ exit taxes or use a “tax collector of last resort” mechanism similar to that introduced in the global minimum corporate tax, which came into effect this year.

Under the reform, if profit by a multinational is taxed below a minimum 15 per cent effective tax rate in one country, other countries can charge a top-up levy.

“That’s very important because it provides incentives for all countries to join the agreement. Not joining means leaving tax revenue on the table for others to collect,” Zucman said.

Brazil, which holds the G20 presidency, has been championing the idea of increasing taxation on the super-rich. It commissioned the report after inviting Zucman to speak to G20 finance ministers in February.

Ministers from South Africa, Spain, France and Germany have backed the proposal. Zucman said Belgium, Colombia, and the African Union were also supportive of the levy.

US Treasury secretary Janet Yellen seemed to reject the idea last month, but President Joe Biden’s proposed levy on billionaires “shares the same logic”, Zucman said. The G7 advanced economies, which include the US, this month said it “will work to increase our efforts aimed at progressive and fair taxation of individuals”.

“The goal of the report is to start the conversation, not to end it,” Zucman added. “We can make [a global tax on billionaires] work, but now there’s a political decision that needs to be made.”

Coalition government agrees annual levy on emissions from livestock after months of fraught negotiations

Denmark is moving ahead with the world’s first carbon tax on agriculture, with cattle farmers set to be charged almost €100 a year for the greenhouse gas emissions from each of their cows.

After months of fraught negotiations with trade bodies and environmental groups, Denmark’s ruling coalition on Monday night agreed an effective tax rate of DKr120 (€16) per tonne of carbon dioxide equivalent emissions from livestock.

Countries around the world are struggling to cut emissions from food production — which accounts for almost a quarter of global emissions including land use changes — while maintaining food security.

Ruminant animals such as cows and sheep produce methane through their digestive systems, while synthetic nitrogen fertilisers in the grass they eat also produce greenhouse gases. Livestock accounts for 11 per cent of global emissions, with almost two-thirds of that driven by cows.

The Danish agreement, which lays the ground for the levy to be introduced in 2030, comes just months after farmers protested across Europe against EU environmental measures. Mette Frederiksen, Denmark’s centre-left prime minister, said she hoped the tax would “pave the way forward regionally and globally” for similar initiatives.

Farmers organisation Bæredygtigt Landbrug, which was not involved in the talks, immediately criticised the deal, while some green organisations privately argued there were too many deductions for the tax to be effective.

“I think it’s crazy,” said Peter Kiær, chair of Bæredygtigt Landbrug, adding that it would hinder much-needed technology investment in a country that was already one of the world’s greenest agricultural producers. “[The government] aren’t listening to the farmers.”

Denmark’s parliament is expected to vote to approve the tax later this year, which has a headline rate of DKr300 per tonne of CO₂ equivalent in 2030, rising to DKr750 per tonne CO₂ equivalent in 2035. There are built-in incentives for farmers to reduce emissions, and the tax will be phased in with a basic tax deduction of 60 per cent for at least the first two years.

The average Danish cow produces six tonnes of CO₂ equivalent per year, according to green think-tank Concito. Using the lower tax rate of DKr120 would incur a charge of about DKr720, or €96.50.

Lars Aagaard, the country’s climate minister, said agriculture was Denmark’s largest greenhouse gas emitter. “This cannot continue,” he said. “Agriculture must contribute and be part of the green future.”

Søren Søndergaard, chair of the Danish Agriculture & Food Council, said: “We have succeeded — against all odds — in getting a tax model where the farmer who uses approved and economically sustainable climate solutions can completely avoid the tax.”

But Peder Tuborgh, chief executive of Denmark-based dairy co-operative Arla Foods, said the tax regime could unfairly affect some farmers, including organic producers, who were already doing everything they could to reduce their emissions, and he called for policymakers to further examine this. 

New Zealand this month scrapped an attempt to launch a similar tax on sheep and cow farmers in an effort to cut methane emissions.

The European Commission is studying how it could set up an EU-wide agricultural emissions trading system, looking at options including requiring farmers and landowners to pay directly for their emissions.

Kristian Hundebøll, chief executive of DLG Group, one of Europe’s biggest agribusinesses, a co-operative owned by 25,000 Danish farmers, said it was “crucial” for the tax to be “anchored in Europe” rather than for Denmark to act unilaterally.

At an event held in Brussels last week, Alexandre Paquot, deputy director-general of the commission’s climate arm, said bringing agriculture into the bloc’s emissions trading system should present a “new business case and new opportunities for farmers”.

Investment could revive speculation about takeover scenarios among world’s biggest luxury groups

Bernard Arnault, the billionaire founder of luxury goods group LVMH, has bought shares in Richemont, the rival Swiss-based conglomerate behind high-end jeweller Cartier.

The stake is too small to be disclosed in public registers and is a personal investment by Arnault, one of the world’s richest men, two people familiar with the matter said. It is a holding among many other stocks owned by the family and does not signal any particular move on Richemont, they added.

LVMH and Richemont declined to comment.

The investment could nevertheless revive speculation about possible takeover scenarios among big luxury groups, especially as Richemont, controlled by 74-year-old South African billionaire Johann Rupert, is gearing up for a succession challenge.

Cartier has long been one of the most attractive Richemont assets, one of a rarefied circle of very top brands that LVMH would be interested in if it ever came on the market, people at the world’s largest luxury group have acknowledged in the past.

Arnault completed a $15.8bn acquisition of US brand Tiffany in 2021 as he added to LVMH’s jewellery stall that also includes Bulgari, though the group’s biggest revenue driver remains fashion and handbag maker Louis Vuitton.

Richemont has also drawn interest from LVMH’s French rival Kering, which had tried to approach the Swiss group with a tie-up plan but was rebuffed.

Rupert has long insisted on wanting to preserve Richemont’s independence and recently overhauled the group’s management, by appointing a new chief executive, Nicolas Bos, who formerly ran its Van Cleef & Arpels brand.

It was not immediately clear when the Richemont shares were purchased. Bloomberg first reported news of Arnault’s stake, saying the French billionaire intended to hang on to it as an investment.

Richemont shares are up about 24 per cent this year and rose about 2.8 per cent on Tuesday, though have come off highs reached last July as the luxury sector grapples with worries over weaker demand in the key Chinese market.

LVMH shares are broadly flat since the start of this year, having taken a hit in the past fortnight as jitters over a looming legislative election in France and the rise of the far right roil the stock market.

Arnault, 75, is known as a canny dealmaker who has used stealth before to try and get closer to his targets. He stunned Hermès, the maker of luxury Birkin handbags, in 2010 when it suddenly transpired he had built up a large stake through derivatives and using intermediaries, which eventually grew to more than 23 per cent.

Arnault had insisted at the time that he had no intention to take control of Hermès, whose family backers fought back, and the stake was distributed to LVMH shareholders in 2014.

In an interview with Bloomberg published on Tuesday, Arnault shrugged off questions about future acquisitions, saying he had “ideas for the future” and evoking unnamed brands that would fit well within LVMH, but adding: “We don’t need to do it.”