Following recent favourable rulings by the Federal Fiscal Court (BFH) on the tax group break and the minimum term of the profit transfer agreement in the event of a reorganisation, the pendulum has now swung back to the other side (Judgement of 10.05.2017, Ref. I R 93/15). There is a threat of expensive adjustments, especially to older profit and loss transfer agreements, as well as even stricter ongoing monitoring of tax groups.
If it was possible to register with a GmbH as a tax group company with Equalisation payments While the tax authorities have previously been comparatively generous towards minority shareholders and felt on relatively safe ground due to corresponding statements by the tax authorities, everything is now different. The BFH applies the provisions of stock corporation law on compensation payments in full to a GmbH. This includes the fact that, in addition to fixed compensation, any variable compensation is based on the result of the controlling company, but not on the (fluctuating) profit of the controlled company.
All equalisation provisions that are somehow based on the profit of the controlled company are therefore likely to be inadmissible, even if they are only supplements to a fixed equalisation. If a profit transfer agreement currently contains such provisions, it should be amended as quickly as possible. It may be little consolation that, following the other judgements from the same day mentioned above, a break in the tax group no longer generally and retroactively causes a tax group to fail during the minimum term.
The judgement also concerns so-called old contracts whose Loss transfer rules not yet refer to Section 302 (4) AktG, which was added with effect from 15 December 2004. It is necessary for a profit transfer agreement to be adapted to amended civil law reference standards. The BFH negates the fact that a provision such as § 302 para. 4 AktG did not yet apply at the time the agreement was concluded in the case in dispute by postulating an obligation to adapt. In the case of permanent legal relationships, it is generally the responsibility of the contracting parties to ensure that the contractual agreements comply with the statutory provisions over time.
In the case of a GmbH as a controlled company, profit transfer agreements with a compensation payment based on the profit of the controlled company and old agreements without reference to section 302 para. 4 AktG should be reviewed immediately and adjusted if necessary, despite the associated costs and circumstances.
Dr Wolfgang Walter is a lawyer, tax consultant and specialist lawyer for tax law at TAXGATE, a tax law firm specialising in transactions, investments and tax compliance, and comments on the tax group regulations in the KStG commentary published by Stollfuß-Verlag.
