Germany Adopts Simplifications To Group Taxation Rules


Wednesday night, the joint committee of German parliament has adopted changes to its group taxation legislation, which mainly focus on relaxing rules on profit transfers, while at the same time increasing the red tape with respect to the wording of the profit-and-loss-pooling agreement necessary to conclude a tax group. It is expected that the law will be adopted by both houses early next year. The most helpful amendment allows fiscal unities to be accepted for tax purposes, even if the profit transferred was not computed correctly, where such profit was 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. Diligence requirements are usually met, if the respective annual accounts have received an unqualified auditor's certificate. As far as the wording of profit-and-loss-pooling agreements with a GmbH is concerned, formal requirements have been tightened. Even to date, such agreements were required to reference the laws on loss assumption pursuant to Sec. 302 of the German Stock Corporation Act. In future, such reference will have to be made dynamically, so as to ensure that at all times, the then current version of that provision is referenced. Here, even old profit-and-loss-pooling agreements will need to be amended. The period, by which amendments need to be made, will end on 31 December 2014. Therefore, we recommend a swift due-diligence exercise at the beginning of 2013, in order for amendments to be made in a timely manner, where necessary. The wording now clarifies that, as already accepted by the tax authorities, EU companies whose place of management is...

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