Amendment of tax loss utilisation rules for corporations

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 new rules represent a significant change for corporations in the tax treatment of loss utilisation

Loss utilisation restriction (Section 2a (1) Sentence 1 No. ...

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).

Tax & Legal News – Issue 1, February 2017

In this issue: PwC Reports, Official Pronouncements and Supreme Tax Court Cases. ... PwC Reports Amendment of tax loss utilisation rules for corporations German Government adopts bill to

No deduction of final branch losses following EU law.

Payments made to a purchaser to compensate for a poor economic position following the transfer of an interest in a partnership may not be deducted from the domestic tax base to the extent they are attributable to a foreign branch (i.e. a permanent establishment for tax treaty purposes) of the partnership. In its decision the Supreme Tax Court cited a decision of the European Court of Justice (ECJ) from 2015. ... could no longer actually be utilized in the source state but also to circumstances where, whilst the loss

Curtailment of loss relief for companies in part unconstitut ...

The German Constitutional Court held that the rules for curtailment of loss relief on change of shareholders to be in breach of the formal provisions of the constitution under the principle of equal treatment insofar as changes of more than 25% and up to 50% of the shares in a company within a period of five years are concerned. ... On 23 December 2016 the Act for the Further Development of Tax Loss Utilisation for Corporations was

Final loss utilization by parent company in case of merger a ...

The European Court of Justice will have to decide once again on the justification of the non-deductibility of ‘final losses’ in the foreseeable future. In two Swedish cases the Advocate General has formulated her opinion and is not convinced of a "finality" or cross-border loss utilisation due to the particularities of the cases.

Cologne Tax Court - no cut-off period for applications for c ...

The Cologne Tax Court held in its decision (10 V 1706/18) published on 15 January 2020, that the wording of Section 8d (1) Sentence 5 of the Act did not contain a cut-off period according to which the application under Section 8d (1) CTA for continuance-bound loss carry-forwards must be filed in the first tax return - and only there. ... Rather by making an application under § 8d CTA, the taxpayer is choosing  a type of loss utilisation

Tax loss of value of shares following the opening of insolve ...

If the shareholder's right of membership in a domestic stock corporation (AG) lapses because the AG is dissolved, wound up and deleted from the register as a result of insolvency, the shareholder incurs a taxable loss if he does not receive his contribution back in full or in part.

Bundestag adopted the Act for the Mandatory Reporting of Cro ...

On 12 December 2019, the Bundestag adopted the Act for the Mandatory Reporting of Cross-Border Tax Planning Arrangements. The final approval by the Bundesrat will take place on 20 December 2019.

European Court of Justice: Final Losses

The European Court of Justice held in its decision Memira Holding AB issued on 19 June 2019 that when assessing whether the losses of a non-resident subsidiary are final within the meaning of its judgment in Marks & Spencer on 13 December 2005 (C‑446/03), the fact that, in the event of a merger, the subsidiary’s Member State of establishment does not does not allow the losses of one company to be transferred to another company liable for corporation tax, is not decisive, unless the parent company can demonstrate that it is impossible for it to deduct those losses through ensuring that - in particular by means of a sale- the losses are fiscally taken into account by a third party for future tax periods.

Italy Step up regime: Italy reinstates modified ‘step-up’ re ...

Tax Consolidation Groups (“Organschaft”) for income tax purp ...

According to a decision of the Supreme Tax Court published on 9 November 2017 a profit pooling agreement will not be recognised for tax purposes where the compensation agreement with the external shareholder contains both the right to a variable compensation payment calculated on the basis of the profits of the subsidiary/controlled company/"Organgesellschaft" (“subsidiary”) and a fixed amount.

Municipality as a business for VAT

In a recent decision the Supreme Tax Court dealt with the provision of services by public bodies under German VAT law. If the economic activities of a public body are not outstanding and distinct from its overall activities it is not a taxable business for VAT and thus not eligible to deduct input VAT incurred on the underlying costs.

Tax administration issues guidelines on use of group name

The German Finance Ministry has commented on possible profit adjustments under Sec. 1 Foreign Tax Act with respect to the use of group name and logo between the taxpayer and a related party.

Bundesrat set to approve draft for relief from curtailment o ...

The new law dealing with relief scenarios to allow for a continued utilization of losses, i. e. in cases where the business operation does not change, is now under way and will be finally dealt with by the Bundesrat before year end.

No EU objection to German tax rules on EU branch losses?

An ECJ advocate general has suggested that neither the German refusal to allow a deduction for branch losses incurred in other member states, nor the recapture provision in the event of disposal of the branch offend against community law.

Tax & Legal News – Issue 1, January 2016

In this issue: Official Pronouncements, Supreme Tax Court Cases, From Europe and From PwC

Tax & Legal News – Issue 4, October 2013

In this issue: PwC Reports, Official Pronouncments, Supreme Tax Court Cases, From Europe and From PwC.

Exemption of loss forfeiture for troubled businesses not ill ...

The ECJ overturned an earlier judgment of the European General Court and held that the German tax legislation concerning the possibility of a loss-carry forward to future tax years despite a harmful share acquisition in cases of a rescue plan to save the company from insolvency – known as the salvage clause - is not illegitimate state.

Foreign branch loss recapture provision confirmed

The ECJ has confirmed a German provision for the recapture of foreign branch losses previously deducted on sale of the foreign permanent establishment.