Loss deduction for German corporations after change of shareholders – continuation

With the Annual Tax Act 2018, the German Federal Ministry of Finance has rewritten Art. 8c (1) sentence 1 KStG (German Corporation Tax Act) after the decision of the Federal Constitutional Court. It is now stipulated by law that in cases of share transfers of German corporations between 25% and 50% existing loss carryforwards will not be proportionally shortened if the shares were transferred in the period from 1 January 2008 to 31 December 2015. For transfers of shares after 31 December 2015, however, the loss deduction limit shall apply again. The latter has nevertheless to be checked for constitutionality.

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With regard to share transfers of German corporations between 50% and 100%, the Federal Constitutional Court has not yet taken a decision with regard to a complete extinction of the loss carryforwards. Therefore, the Federal Ministry of Finance has not yet proposed a change in the law.

Loss deduction for German corporations after change of shareholders (2017)