070 Treatment of the carryforward of unused tax losses
According to the German Corporation Tax Law 8c, if an individual or a group acquires more than 25% interest of German corporations or 50% interest within 5 years, he or it will not be able to take advantage of all or a part of the carryforward of unused tax losses. As an exception, if the purchase of the share is for the purpose of corporate restructuring, it does not apply. However, the European Committee recognized that the carryforward of unused tax losses is an unfair national support, so they asked Germany to remove the special treatment to German companies whose performance is not well.
Since German companies hold more carryforward of unused tax losses than expected, the determination of the removal of the special treatment would stop the decreasing tax revenue. On the other hand, most of those ill companies do not retain earnings within themselves, which would make it difficult for them to restructure the companies. Companies that have subsidiaries or such would have to be very careful on this matter.
