Corporate Tax

In this section you can find current tax news relating to “Corporate Tax”:

Change of Control regulation regarding tax losses – violation of European law:

On January 26, 2011 the European Commission decided that the exception for insolvent companies regarding the German “change of control” regulation (“Sanierungsklausel”) violates European law. Usually, losses of a German corporation will no longer be usable in case more than 50% of its shares are transferred. Under certain conditions the exception allows for transfer of shares in an insolvent companies without the forfeiture of its losses. The Commission is of the opinion that this rule constitutes a European aid and as such would have to have been approved by the Commission. Germany has announced that it will fight the decision before the European Court and in addition intends to abolish the exception from 2011 onwards.

Fiscal unity – minimum period for profit and loss transfer agreement:

The minimum period for the profit and loss transfer agreement (“Gewinnabf├╝hrungsvertrag”) which is necessary to implement a fiscal unity for corporate income tax and trade tax purposes must be five years. On January 12, 2011 the Federal Fiscal Court (“BFH”) decided that the term “year” is equal to “calendar year” instead of “business year”. With this decision a longtime argument was settled in favor of the tax authorities. Taxpayers must be aware of this when concluding the profit and loss transfer agreement.