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. Continue →

On 29 March 2010, the German Federal Ministry of Finance published its draft of the 2010 Annual Tax Law Act (Jahressteuergesetz 2010 or JStG 2010).

It should be noted that, in addition to specific tax acts which generally only deal with one substantive matter, the German legislature regularly (more or less annually) introduces tax acts which deal with various unrelated matters regarding several types of taxation. Continue →

On 26 March 2010, the German Bundesrat ratified the Act Regarding the Implementation of EC Tax-Law Guidelines Including Further Tax Regulations (Gesetz zur Umsetzung steuerrechtlicher EU-Vorgaben sowie weiterer steuerrechtlicher Regelungen).

The act is based on several decisions of the European Court of Justice published in 2009 which dealt with topics such as deductibility of donations Continue →

On 4 March 2010, the German Federal Constitutional Court announced a decision from 27 January 2010 regarding the German trade tax (Gewerbesteuer).

The plaintiffs, two German municipalities located in the German state of Brandenburg, challenged a 2004 amendment to the German trade tax law which obligates municipalities to assess a minimum trade tax. The Federal Constitutional Court rejected the municipalities’ claim and held the regulation to be in conformance with the German constitution. Continue →

Germany’s premier drug store chain “Schlecker” has deemed its corporate structure too ineffective to continue in the changing German market. In 2004, with its overwhelming share of the drug store market crumbling, a restructuring of a large number of small stores seemed to be too great a burden for Germany’s largest drug retailer leading, instead, to the closure of around 1000 outlets. Recently Anton Schlecker, the owner of the drug-store chain, stated in Manager Magazine that a complete overhaul of Schlecker’s business structure is once again needed.

Since the start of its downfall in 2004, the company has experienced mostly Continue →

On February 8th, 2010, the Bundesverfassungsgericht declared the Hartz 4 social legislation for unemployed benefits and similar welfare acts, enacted as part of the Agenda 2010 reform package, unconstitutional. While this is not one of our usual economic topics, it’s repercussions for the Nation are as severe as any. Continue →

On 9 November 2009, the German government announced a draft Act for the Acceleration of Economic Growth (Gesetz zur Beschleunigung des Wirtschaftswachstums or Wachstumsbeschleunigungsgesetz, hereinafter the “Economic Growth Act”.

This act is intended to implement some of the election pledges of the newly elected coalition government. The Economic Growth Act therefore contains several amendments to recent legislation intended to limit the negative consequences to the German economy resulting from the current economic crisis. Continue →

On 4 November 2009, the German Federal Finance Court published a decision from 25 August 2009 in which it held that the so-called “exit tax” imposed by Sec. 6 of the Foreign Tax Act (Außensteuergesetz or AStG), is compatible with the German Constitution and European law.

In the case under consideration, two spouses each held more than 25% of the shares of two German public limited companies Continue →

The coalition agreement concluded by the CDU (Christian Democratic Union), the CSU (Christian Social Union) and the FDP (Free Democratic Party) following the recent federal elections contains several taxation measures which are planned for the near future.
One such measure is the German Inheritance and Gift Tax Act (Erbschaftsteuer- und Schenkungsteuergesetz, ErbStG), which was subject to major amendments effective as of 01.01.2009 and is to be amended again in regard to Continue →

In early October, the Finance Court of Cologne published its decision of 7 July 2009 regarding the lawfulness of short-term tax audits.
In the case under consideration, the taxpayer was classified as a “large” firm based on its profit and turnover. The local tax authority chose the plaintiff for a tax audit that would cover only the year 2007. The plaintiff appealed against the order asking for a preliminary injunction (vorläufiger Rechtsschutz) against the conduct of the tax audit. Continue →