In 2009, the Citizen Relief Act amended the so-called Mantelkauf regulation which places various restrictions on the use of loss carry-forwards of companies acquired in share-purchase arrangements. The amendment to the regulation implemented a restructuring exception, initially valid for two years, which was intended to ease the restrictions in order to facilitate company restructurings during the current economic crisis. The Act for the Acceleration of Economic Growth extended application of the restructuring exception for an unlimited period of time.

In a decree of 24 February 2010, the European Commission noted that the restructuring exception of the German law could constitute inadmissible state assistance in favour of ailing companies. Therefore, the Commission initiated a procedure to determine whether the aid granted by Germany is compatible with the rules of the internal market under Article 108 (2) Consolidated Version of the Treaty on the Functioning of the European Union.

In response, the German Federal Ministry of Finance, on 30 April 2010, (Bundesministerium der Finanzen, or BMF) issued a decree stating that the restructuring exception is currently no longer applicable and that the following consequences for German tax assessment result from the pending European review.

• Taxes will be assessed on a provisional basis without the restructuring exception until the Commission reaches a decision, the assessment being subject to re-examination after the decision. This also applies in cases for which the German tax authorities have issued an advanced ruling (verbindliche Auskunft) to the corporation.
• Assessments already carried out (including the relevant assessments of loss carry forwards) will remain in effect until further notice. The decree points out, however, that in the event of a negative decision by the European Commission, the “unlawful” assistance will have to be reclaimed from the affected taxpayers.