International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Germany: Exemption to Germany’s change-in-ownership rules expanded

Linn-Alexander
Braun-Thorsten

Alexander Linn

Thorsten Braun

The German tax reform 2015, published in the federal gazette on November 5 2015, includes a new exemption from the strict change-in-ownership rules that result in the forfeiture of tax loss carryforwards.

According to the change-in-ownership rules introduced in the 2008 business tax reform, a direct or indirect transfer of more than 25% of the shares of an entity to an acquirer will result in a pro rata forfeiture of tax loss carryforwards; a transfer of more than 50% of the shares will result in a complete forfeiture of tax loss carryforwards.

For transfers after December 31 2009, an exemption for intra-group reorganisations applied in cases where the 'same person' held directly or indirectly a 100% participation in both the transferring and the purchasing entity. However, the exemption did not apply to a share transfer from or to the ultimate parent entity and where the ultimate parent entity was not held by the 'same person', which would be the case, for example, for any stock exchange-listed company.

The tax reform 2015 extends the intra-group exemption rule to apply to changes of shareholders within a 100% controlled group, including the situation where an ultimate parent is the transferring or the purchasing entity and is held by more than one person. Additionally, the ultimate shareholder can be a partnership or an individual; this had been an area of uncertainty and the Federal Ministry of Finance had issued a draft decree that would not allow a partnership or individual to be the ultimate shareholder.

The new rules apply retroactively to share transfers taking place after December 31 2009, thus allowing taxpayers to benefit in cases where tax losses were already forfeited under the previous wording of the law.

Alexander Linn (allinn@deloitte.de) and Thorsten Braun (tbraun@deloitte.de)

Deloitte

Tel: +49 89 29036 8558 and +49 69 75695 6444

Website: www.deloitte.de

more across site & bottom lb ros

More from across our site

The German government unveils plans to implement pillar two, while EY is reportedly still divided over ‘Project Everest’.
With the M&A market booming, ITR has partnered with correspondents from firms around the globe to provide a guide to the deal structures being employed and tax authorities' responses.
Xing Hu, partner at Hui Ye Law Firm in Shanghai, looks at the implications of the US Uyghur Forced Labor Protection Act for TP comparability analysis of China.
Karl Berlin talks to Josh White about meeting the Fair Tax standard, the changing burden of country-by-country reporting, and how windfall taxes may hit renewable energy.
Sandy Markwick, head of the Tax Director Network (TDN) at Winmark, looks at the challenges of global mobility for tax management.
Taxpayers should look beyond the headline criteria of the simplification regime to ensure that their arrangements meet the arm’s-length standard, say Alejandro Ces and Mark Seddon of the EY New Zealand transfer pricing team.
In a recent webinar hosted by law firms Greenberg Traurig and Clayton Utz, officials at the IRS and ATO outlined their visions for 2023.
The Asia-Pacific awards research cycle has now begun – don’t miss on this opportunity be recognised in 2023
An intense period of lobbying and persuasion is under way as the UN secretary-general’s report on the future of international tax cooperation begins to take shape. Ralph Cunningham reports.
Fresh details of the European Commission’s state aid case against Amazon emerge, while a pension fund is suing Amgen over its tax dispute with the Internal Revenue Service.