Tax & Legal

The finance ministry has brought its position on value impairment write-downs into line with the relevant Supreme Tax Court cases.

The Supreme Tax Court has refused a company a write-down to current market value of an interest-free long-term loan asset on the grounds that ultimate repayment was not in doubt and that the value impairment was therefore only temporary.

The Supreme Tax Court has held that the Corporation Tax Act prohibition on impairment write-downs on foreign investments in 2001 must be disapplied if the investment is protected by the EU freedoms of establishment or capital movement, or if it leads to retrospective taxation.

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.

According to Section 7 (8) sentence 1 of the Inheritance and Gift Tax Act, the increase in value of shares in a corporation is deemed to be a gift. In a most recently published decision, the Supreme Tax Court held that this provision does not contain any subjective elements, neither in the form of awareness of the gratuitous nature nor of an intention of personal enrichment.