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Germany: Draft guidance on tax loss and interest carryforwards

Germany: Tax loss and interest carryforwards

The KPMG member firm in Germany prepared a report of tax developments that includes the following:

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  • A decision of the lower tax court of Münster, holding there is no add-back for trade tax purposes when renting a trade fair stand
  • Draft guidance from the Federal Ministry of Finance on the application of § 8d of KStG (the corporate tax law)*
  • Requirements of electronic cash register systems

*According to § 8c KStG, unused tax losses and tax loss carryforwards are forfeited if more than 50% of the shares in a loss corporation are transferred directly or indirectly to a (single) acquirer or related person within a period of five years. However, there are exceptions, such as the group exemption provision, the hidden reserve clause or § 8d KStG. Under § 8d KStG, losses and interest carryforwards are retained, despite a detrimental change in ownership, among other requirements. The draft guidance (not yet published) includes guidelines on the application procedure, the business operation, and a catalogue of events that conflict with application of § 8d KStG or result in the forfeiture of a loss carryforward that is dependent on business continuation. 

Read an August / September 2020 report [PDF 330 KB] prepare by the KPMG member firm in Germany

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