• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 5/5/2014

Germany - Draft guidance amending corporate tax loss limitation rules 

May 5:  Draft guidance issued in April 2014 by Germany’s Federal Ministry of Finance (BMF) would replace prior guidance concerning the corporate tax loss limitation rules.

Under the tax loss limitation rules in Germany, loss carryforwards and losses not used by a corporation are forfeited partially, if within a period of five years, more than 25% of the share capital in a corporation is transferred to an acquirer or a “group of acquirers.” When more than 50% of the shares are transferred, the loss deduction is denied in full.

The BMF draft guidance would replace existing guidance from 2008 and addresses new items including:

  • Mid-year changes in ownership
  • A group exemption provision
  • Hidden reserve provisions

Read a May 2014 report prepared by the KPMG member firm in Germany: German Tax Monthly

This KPMG report also contains discussions about:

  • A new income tax treaty between Germany and China
  • A BFH decision on the early termination and minimum term of profit and loss absorption agreements
  • A BFH decision on the constitutionality of earnings stripping rules
  • Treatment of interest on back taxes and tax refunds for income tax purposes
  • A lower tax court of Nuremberg decision on repayment of equity from corporations in non-EU countries

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