Until now, German citizens lost their German citizenship when they accepted another citizenship (such as through US naturalization). Since 2000, however, it has been possible to apply for an advance “retention approval” (Beibehaltungsgenehmigung) in advance from the Federal Office of Administration (Bundesverwaltungsamt). For that, one must prove strong ties to Germany and show a need for dual citizenship.

This is now changing with the new Law to Modernize Nationality Law (Gesetz zur Modernisierung des Staatsangehörigkeitsrechts, StARModG), which was passed by the Bundestag on January 19, 2024 and will enter into force on June 26, 2024. This means that after June 26, a retention approval is no longer necessary.

This makes life easier for German “expats” in the USA, who can now apply for US citizenship without this formality of retention approval. In the past, the retention process took about a year, and then there was the U.S. naturalization process, which also took about a year.

With this new law, multiple nationalities will be generally accepted in the future.

From the perspective of the professional recruiters at TH Bender & Partners, the leading German-American personnel consultancy, this new law is of great importance for many Germans working in the USA. It not only shortens the time it takes for German citizens to obtain U.S. citizenship, it also facilitates professional activities that de facto require U.S. citizenship. This is generally the case for government and public administration positions. See Executive Order 11935. This is also de facto the case for intelligence activities and other controlled activities such as those falling under the “International Traffic in Arms” (ITAR) regulations.

Further information is available on the website of the German Bundestag: https://www.bundestag.de/dokumente/textarchiv/2024/kw03-de-staatsangehoerigkeitsrecht-986286

In January 2021, Congress enacted the Corporate Transparency Act (“CTA”), which is intended to bring the U.S. into compliance with international anti-money laundering standards. It will primarily achieve this by requiring certain entities to register with the Financial Crimes Enforcement Network (“FinCEN”) and requiring beneficial owners of those entities to identify themselves as such and provide FinCEN with certain limited personal information.

Effective Dates of the CTA

The CTA goes into effect in two phases:

• January 1, 2024 for companies formed or registered from January 1, 2024 onward; and
• January 1, 2025 for companies already formed or registered before January 1, 2024.

Entities Required to Report and Exempt Entities

Entities that will come under the purview of the CTA include limited liability companies, corporations, and any entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Native American tribe, including statutory trusts (but not common law trusts) (“Reporting Companies”). Although broadly inclusive, there are thirty-three (33) entities that are exempt from reporting altogether. Some notable exempt entities include:

• entities with over twenty (20) full-time U.S. employees, $5 million in gross revenue, and a physical U.S. office;
• financial services institutions that are already regulated by the Securities and Exchange Commission, Federal Deposit Insurance Corporation, or Comptroller of the Currency;
• subsidiaries 100% owned by exempt entities; and
• churches, charities, 501(c) nonprofit entities, and charitable trusts.

Entities Subject to Reporting Under the CTA

Reporting Companies must report certain limited information on the Company itself, a “Company Applicant,” and a “Beneficial Owner.”

A Company Applicant is one who files, or directs or controls the filing of, an application to form the entity or enable it to do business in the U.S. (which could be the outside lawyer or paralegal that causes the filing of an application for a new entity).

A Beneficial Owner is each individual who exercises “Substantial Control” over an entity or owns or controls twenty-five percent (25%) or more of the ownership interest in an entity.

Among those who exercise Substantial Control are:

• senior officers of the reporting company;
• individuals who can appoint or remove senior officers or a majority of the board of directors of the reporting company;
• individuals who direct, determine, or have substantial influence over important matters of the reporting company; and
• individuals who have any other form of substantial control over the reporting company.

The definition of Beneficial Owner is intentionally broad, but does contain a few exemptions from individuals having to provide their personal information in respect of a Reporting Company, including for:

• minors;
• individuals acting as nominees, agents, intermediaries, or custodians on behalf of another individual;
• individuals acting as employees (excluding senior officers);
• individuals whose interest in the reporting entities are through rights of inheritance; and
• creditors.

Reporting Information

A Reporting Company must report the following information about itself:

• its full legal name and any d/b/a names;
• the street address of its principal place of business;
• for a foreign Reporting Company, the street address of the primary location in the U.S where it conducts business;
• for a domestic Reporting Company, the State or Tribal jurisdiction where it was formed;
• for a foreign Reporting Company, the State or Tribal jurisdiction where it was first registered to do business; and
• the Tax Identification Number (TIN) of a domestic Reporting Company or a foreign TIN for a foreign Reporting Company without a U.S. TIN.

Besides reporting information about itself, Reporting Entities must also report the following information about each Beneficial Owner and Company Applicant:

• full legal name;
• dates of birth;
• current residential or (for Company Applicants only) business street address;
• unique identifying numbers from an acceptable identification document, such as passports and drivers’ licenses; and
• a copy of the identification document.

All reporting will be done electronically through a website being developed by FinCEN.

Reporting Entities have a continuing obligation to update information about themselves and their Beneficial Owners, but not about the Company Applicants. Changes to Beneficial Ownership and exemption status must be reported within thirty (30) days of such changes.

Penalties for Non-Compliance

Willfully providing false information, or willfully failing to update information, to FinCEN can result in civil penalties of up to $500 per day and criminal penalties of up to two (2) years of imprisonment and fines of up to $10,000. However, reporting entities have a ninety (90) day window to correct inaccurate information after submitting such information in good faith without actual knowledge that the information was incorrect.

Confidentiality of Information

FinCEN, and those with access to personal information submitted to FinCEN, have an obligation under the statute to keep such information confidential. FinCEN may only disclose such personal information in very limited circumstances to a statutorily defined group of domestic and international governmental authorities and financial institutions. Further, knowingly disclosing or using such personal information without authorization can result in civil fines of up to $500 per day and criminal penalties of up to ten (10) years of imprisonment and fines of up to $500,000.

If you have any questions regarding the CTA or guidance, please reach out to Alessandra Ferrero and Marc Latman at Smith, Gambrell & Russell, LLP.

On January 10, 2024, the U.S. Department of Labor (DOL) published its Final Rule amending the criteria used to determine whether a worker qualifies as an employee or an independent contractor under the Fair Labor Standards Act (FLSA). The Final Rule is available here. While the Final Rule goes into effect March 11, 2024, legal challenges are expected and may impact when or if the Final Rule takes effect.

The Final Rule rescinds the preceding 2021 rule and replaces it with six-factor test focused on the “economic reality” of the relationship between a potential employer and a worker to determine whether a worker is economically dependent on an employer. Historically, both courts and the DOL applying the economic realities test have analyzed multiple factors to determine whether a worker is an employee or an independent contractor, with no factor or factors having predetermined weight.

The Final Rule provides six, non-exhaustive factors to be used as part of the economic reality test, which are:

1. Opportunity for profit or loss depending on managerial skill;
2. Investments by the worker and the potential employer;
3. Degree of permanence of the work relationship;
4. Nature and degree of control;
5. Extent to which the work performed is an integral part of the potential employer’s business; and
6. Skill and initiative.

No one factor is determinative; rather, the court and/or DOL will evaluate all the circumstances of the relationship. The courts and the DOL have applied these factors, or some similar variation of them, for more than 70 years, which provides ample basis for understanding each factor. In addition to the caselaw, 29 CFR 795.110 (available here) will, effective March 11, 2024, also include additional information intended to assist in the independent contractor classification analysis under the economic realities test. The DOL has also published frequently asked questions, available here.

While the Final Rule may be subject to legal challenges, DOL investigators may rely upon the Final Rule in conducting their audit and/or investigation. As such, employers should carefully review and evaluate their classification practices.

If you have any questions regarding the issues raised in this client alert, please contact your Labor and Employment counsel at Smith, Gambrell & Russell, LLP.

The Corporate Transparency Act (“CTA”) takes effect in two stages, January 1, 2024, and January 1, 2025. The CTA is particularly aimed at beneficial ownership reporting by “small” businesses.

In January 2021, Congress enacted the Corporate Transparency Act (“CTA”), which is intended to bring the U.S. into compliance with international anti-money laundering standards.

Under the CTA, certain entities will be required to register themselves (“Reporting Companies”), the individuals that are the direct or indirect “beneficial owners” of such Reporting Companies and the individuals that undertook the actual creation/formation of the Reporting Company (the “Company Applicants”).

For purposes of the CTA, “Beneficial Owners” include “senior officers” of the Reporting Company as well as individuals determined to have substantial control over the Reporting Company or 25% or more control over the ownership interests in the Reporting Company. The concept of who is a Beneficial Owner is intentionally broad.

The CTA will be implemented by the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”). The reporting under the CTA will be through a FinCEN operated website and will include basic information about the Reporting Company and basic information (but personal information) about the Beneficial Owners and the Company Applicants, including legal name, date of birth, street address of legal residence (for Beneficial Owners), work address (for Company Applicants), government issued identification information and a copy of such government issued identification.

The information submitted to FinCEN will be subject to strict confidentiality requirements (not available to the general public). FinCEN may only disclose such information to a statutorily defined group of domestic and international governmental authorities and financial institutions.

Effective Dates

The CTA goes into effect in two phases:

• January 1, 2024 for companies formed or registered from January 1, 2024 onward; and
• January 1, 2025 for companies already formed or registered before January 1, 2024.

Please let the Smith, Gambrell & Russell attorneys assist you with navigating whether the CTA applies to you or your company and if so, how to comply with the CTA. Please regularly check our website, https://www.sgrlaw.com/insights/webinars/, for upcoming webinars about the CTA.

To have us assist you with CTA matters, please contact your SGR relationship attorney or reach out to our corporate heads in each of our offices:

Tom Hong and Brett Lockwood (Atlanta/Austin/Charlotte)

Marc Latman (New York/Washington D.C.)

Ken Crane (Chicago)

Adam Buss (Jacksonville/Miami/Tampa)

Elizabeth (Betsy) Blakely (Los Angeles)

Ben Graham-Evans (London)

Wie findet man qualifizierte Führungkräfte in den USA? Personalberater Tilman Bender kennt sich aus und spricht aus Erfahrung in diesem neuen Interview mit dem Markt und Mittelstand-Magazin, „Der Kampf um Topleute in den USA ist härter“ (Februar 2024). Sie finden das Interview hier: https://www.marktundmittelstand.de/personal/der-kampf-um-topleute-ist-in-den-usa-haerter

Beispielsweise erklärt Tilman auf die Frage ob es ein Patentrezept dafür gäbe, „Die herausfordernden Stellen- und Persönlichkeitsprofile, der niedrige Bekanntheitsgrad der Niederlassungen und die geringe Bereitschaft, den Wohnort zu wechseln, machen es notwendig, eine große Menge von potenziellen Kandidaten zu identifizieren und persönlich anzusprechen. Stellenanzeigen, auch auf den bekannten digitalen Plattformen, produzieren wesentlich weniger qualifizierte Bewerber wie vergleichbare Ansätze in Deutschland. Gute Leute wollen direkt angesprochen werden und müssen überzeugt werden, dass Arbeit bei einem Mittelständler eine nachhaltige Karrierechance darstellt.“