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Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 2/7/2013

Germany - Expanded scope of dual consolidated loss rules 

February 7: The German Bundesrat on 1 February 2013 passed legislation that expands the scope for applying Germany’s dual consolidated loss (DCL) rules.

Enactment of the legislation follows the president’s signature and publication in the federal gazette (Bundesgesetzblatt).


The new rules reflect the following (unofficial translation):


Losses of an Organträger [parent company of a German tax group] or an Organgesellschaft [member of a German tax group] cannot be considered within the German taxation to the extent that these losses are considered within a foreign taxation of the Organträger, the Organgesellschaft or another person.


Prior DCL rules only denied the use of losses of a dual-resident Organschaft parent company in instances when the losses were considered in another jurisdiction. The new legislation significantly expands the scope of the German DCL rules. The new DCL rules will apply equally to all members of an Organschaft—whether or not the entities are dual tax residents.


The new DCL rules apply if a loss from either the Organschaft parent or Organschaft subsidiary can be deducted in another jurisdiction either by that parent or subsidiary or, alternatively, by another person. Thus, a tax deduction of such loss would be denied for German tax purposes.


The new rules will apply to all open tax years and thus may affect prior years as well.


Read a February 2013 report [PDF 56 KB] prepared by KPMG LLP: New German Dual Consolidated Loss (“DCL”) Rules



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