German Cabinet Proposes Simplifications To Tax Grouping Rules And To Raise The Maximum Amount For Losses Carried Back


In order to improve the business location Germany, the German Cabinet on 19 September 2012 has proposed an Act to change and simplify the company taxation and the tax law regarding travel expenses. The Act will primarily simplify the rules regarding the fiscal unity for tax purposes. The proposal contains the following changes:

The cap for losses carried back of currently 511,500 EUR resp. 1,023,000 EUR shall be raised to 1,000,000 EUR resp. 2,000,000 EUR. The draft law now officially allows that companies resident in a member state of the European Union or a contract state of the EEA Agreement may qualify as a controlled company for a tax group, if their place of management is in Germany. With this change, the law will be adjusted to the existing practice of tax authorities. The most helpful amendment will allow fiscal unities to be accepted for tax purposes, even if the profit transferred was not computed correctly, if it was the profit resolved upon with the annual accounts. This will require that the fault is not based on a lack of diligence and that it is corrected with the next possible annual financial statements. Negative income of both the parent company and the controlled company...

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