Tax & Legal

Tax & Legal

Bundesrat approves the Act to Modernise Corporate Income Tax


In its session on 25 June 2021, the Bundesrat gave its approval to the Act to Modernise Corporate Income Tax Law. The Bundesrat thus followed the recommendation of the Finance Committee. The law is should enter into force on 1 January 2022.

See below for more details.

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Finance Act 2018

On 8 November 2018, the Finance Bill 2018 was adopted by the German parliament and received the consent of the Bundesrat on 23 November 2018 in the form of “The Act for the Avoidance of VAT Losses on the Trading of Goods on the Internet and Amendments to other Tax Regulations”(hereafter “Finance Act 2018”). This article sets out a selection of the new regulations. Continue reading

Tax Consolidation Groups (“Organschaft”) for income tax purposes: Compensation payments to minority shareholders; failure to amend to “old agreements” of a GmbH following Section 302 (4) Stock Corporation Act.

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. This also applies to subsidiaries in the form of a GmbH (i.e. limited companies as well as to public limited/stock companies (AGs)). The Supreme Tax Court also ruled that the requirement of Section 17 2nd Sentence No. 2 Corporation Tax Act (old version), according to which the assumption of losses was to be expressly agreed in the profit pooling agreement of a GmbH in accordance with Section 302 (4) Stock Corporation Act, was not only to be complied with at the time of conclusion of the agreement but also in each of the following years. It followed that those parts of the Section 302 regulation which had not entered into force at the time of the conclusion of the contract were also to be taken into consideration. Thus where a loss assumption agreement is not inserted into an “old” profit pooling agreement, (i.e. one concluded prior to the entry into force of Section 302 (4) Stock Corporation Act), in order to meet the requirements of the amended section and where this omission was not subsequently redressed under the amnesty rule, the Organschaft was no longer to be recognised for income tax purposes. Continue reading

Exclusion of domestic sub-subsidiaries from tax group conflicts with freedom of establishment?

An ECJ advocate general has suggested the court hold that the Dutch provisions on tax groups are in conflict with the freedom of establishment insofar as they do not allow domestic sub-subsidiaries of a foreign subsidiary or domestic subsidiaries of a foreign parent to join or form a Dutch tax group. Continue reading