The Resource DCL rule changes : impact on German inbound financing structures via holding partnerships

DCL rule changes : impact on German inbound financing structures via holding partnerships

Label
DCL rule changes : impact on German inbound financing structures via holding partnerships
Title
DCL rule changes : impact on German inbound financing structures via holding partnerships
Creator
Subject
Language
eng
Summary
The executive branch of the German government introduced changes to the German fiscal unity system (Organschaft) for corporate income and trade tax purposes as part of the new Company Taxation Bill 2012. Both Houses of Parliament have approved the Bill. One change will be that European dual-resident companies that have their place of management in Germany but their registered office in another European country will be allowed to become subsidiaries in a German Organschaft. Due to the dual residency, this type of company may be able to function as a subsidiary in the German Organschaft and also become a member of a tax group in the country where it has its registered office. In the event of losses, the Organschaft subsidiary might be able to deduct the losses twice. This means that it could deduct its losses in both Germany and the country of residency (double dip). Consequently, the Bill extends the existing German dual consolidated loss (DCL) rules to dual-resident Organschaft subsidiaries. The DCL rules disallow the deductibility of tax losses if a foreign jurisdiction allows for the tax deductibility of the same losses. Due to the way that the new provision is drafted, however, the amended DCL rules might also apply to other structures.This article discusses the impact of the new rules on a typical German inbound financing structure via a holding partnership, which many multinational corporations have implemented. The new DCL rules will be effective retroactively for all open assessment periods and so will affect previous assessment periods
Citation source
In: Journal of international taxation. - New York. - Vol. 24 (2013),
http://library.link/vocab/creatorName
  • Menger, J
  • Polatzky, R
Geographic coverage
  • European Union
  • Europe
Language note
English
http://library.link/vocab/subjectName
  • dual residence
  • holding company
  • partnership
  • dual consolidated loss
Label
DCL rule changes : impact on German inbound financing structures via holding partnerships
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Publication
Label
DCL rule changes : impact on German inbound financing structures via holding partnerships
Publication

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