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Germany: Currency hedging gains, tax consolidation across borders

Germany: Currency hedging gains

A report from the KPMG member firm in Germany summarizes the following developments:


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  • The German cabinet approved a draft bill that would implement an EU directive (DAC 6) that aims to identify and reduce tax avoidance practices by requiring intermediaries to comply with certain disclosure requirements of cross-border arrangements.
  • The German federal tax court (BHF) issued a judgment in a case concerning the tax exemption on gains by a corporation on the sale of shares in another corporation (5% of the gains are deemed non-deductible business expenses, and the remaining 95% are treated as exempt from corporate income tax). In the case, the federal tax court held that gains on forward exchange transactions must be taken into account when determining tax-exempt capital gains if and to the extent that the forward exchange contracts are concluded to hedge the foreign exchange risk related to the expected proceeds on the sale.
  • A lower tax court (Schleswig-Holstein) issued a decision generally concluding that the German tax consolidation regulations were not in violation of the EU freedom of establishment.

Read a November 2019 report [PDF 360 KB] prepared by the KPMG member firm in Germany

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