Tax & Legal

The ECJ has held that if a country excludes capital gains and losses on investments from taxation, the exclusion may also extend to that part of the loss that directly resulted from exchange rate fluctuations.

The Supreme Tax Court has held that unused loss relief may only pass to transferee under the Reconstructions Tax Act up to December 12, 2006 if the loss making business was still held by the transferor on date of transfer.

The Supreme Tax Court has held that even if a company is entitled to offset the loss of its foreign subsidiary at all, it cannot do so before the loss becomes irrecoverable.

The loss forfeiture rules of Section 8c of the Corporation Tax Act in the version valid for 2014 are not applicable to deductible losses which are allocated to a corporation as partner of a limited partnership pursuant to Section 15a Income Tax Act. With this decision, the Supreme Tax Court contradicts the view of the tax administration.

The Supreme Tax Court has referred to the Constitutional Court on whether a confiscatory effect of the loss offset deferral provisions can be a breach of the equal treatment requirement of the constitution.

The Supreme Tax Court has held that the 1999 introduction of “minimum taxation” rules limiting loss offset by income type do not apply to a 1999 loss carried back to 1998.

The Supreme Tax Court has held that a loss incurred on an investment project of a closed-circle investment fund can be deducted by investors from their other income if the loss was not pre-planned and factored into the fund’s yield calculations.

The Supreme Tax Court has held that a tax evader who came forward under an amnesty could not offset a previously unreported capital loss against his income declared in retrospect, as tax had not been evaded on the loss, now statute-barred under normal rules.

The Supreme Tax Court has held that a foreign PE loss that for all practical purposes cannot be offset in its country of origin can be offset in German as the country of the head office.

Under certain conditions, changes in shareholders and the admission of new investors will in future be possible without giving rise to a forfeiture of losses carried-forward. On 23 December 2016 the Act for the Further Development of Tax Loss Utilisation for Corporations was published after having been adopted by the German Parliament (Bundestag and Bundesrat) on 20 December 2016.

The ECJ has upheld a Commission ruling to the effect that the exemption from the provision for loss forfeiture on change of shareholders for troubled companies being rescued constitutes unlawful state aid.

The European Commission has concluded that the rule exempting troubled companies from the loss relief forfeiture on change of shareholders is unauthorized state aid.

The Supreme Tax Court has held that an upstream merger leads to new assets in the accounts of the parent (surviving entity) and thus to forfeiture of that company’s remaining loss carry-forward if the new assets are substantial.

The Supreme Tax Court has held that the merger loss of a life assurance company is deductible insofar as it arose from an excessive book value of the shares in the acquired company.

According to a decision of the Supreme Tax Court published on 21 October 2021, the loss of a silent partner's contribution, which is reflected as a partial write-down for tax purposes, does not fall within the scope of the loss utilisation restriction under Section 2a (1) Sentence 1 No. 5 in conjunction with Sentence 2 Income Tax Act (ITA).

The Regional Tax Court of Muenster held that a loss from the exchange of profit participation rights for shares in a registered cooperative ("eG") and bonds may be set off against income from capital investments. Thus, the tax office's attempt to regard the loss as belonging to the non-taxable private asset portfolio of the plaintiff failed.

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 held that the 1999-2003 “minimum taxation” rules apply to “paper” losses, but not to those borne with true economic effect.

The Supreme Tax Court has held that a downstream, but not an upstream, merger leads to new assets for the surviving entity that can imperil its loss carry forward.

The Supreme Tax Court has held that a truck lessor may accumulate a provision to cover an agreed loss on sale after the lease period in proportion to the rental income.