The profit pooling agreement under the concept of a tax consolidation group (Organschaft) must be concluded for at least five years and be followed throughout its entire term. According to the decision of the Supreme Tax Court recognition of the Organschaft is to be denied with retroactive effect if preliminary annual financial statements of the controlled company can no longer be adjusted due to insolvency and if a different result would have been reported in the final annual financial statements if the accounting principles under commercial law had been applied correctly.
The Supreme Tax Court has held that a sale of shareholdings within a group was not sufficiently good cause for breaking an unwanted German tax group before its expiry date.
A partial compromise was reached by a mediation committee of the two chambers of Parliament leading to a modified Bill for the Revision and Simplification of Corporate Taxation and of the Tax Law on Travel Cost and to acceptance of a modest increase in the basic personal allowance for income tax. The Bundestag has now passed both bills and forwarded them to the Bundesrat for confirmation at its next session, due to be held on February 1, 2013.
The Supreme Tax Court has held that there is no serious doubt that a profit pooling agreement must provide for a ten year statute bar on loss subvention claims of an Organschaft subsidiary.
The Supreme Tax Court has rejected an Organschaft as the profit pooling agreement was not properly implemented when the annual profit was surrendered without covering losses brought forward.
