According to the decision of the Supreme Tax Court the offset of losses in case of an upstream merger with the profits of the transferring company accrued during the period of retrospective application was not abusive and in accordance with the legal (tax) provisions in force in the year of dispute (2008). Continue reading
Tax & Legal
If a corporation is merged into its parent company, which in turn is a controlled company within a corporation tax group (fiscal unity/“Organschaft”) with a corporation as the controlling company (“Organträger”), the Supreme Tax Court has ruled that no flat-rate deemed business expenses are to be added back to profits under Section 8b (3) sentence 1 of the German Corporation Tax Act (CTA) either at the level of the parent company or at the level of the controlled company, where the said non-deductible flat-rate deemed business expenses are derived from a merger gain. Continue reading
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. Continue reading
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.