The tax retroactive period for reorganisations has been extended from 8 to 12 months due to the coronavirus pandemic. A merger, for example, can therefore still be registered in the commercial register until 31 December 2020 and then implemented with retroactive effect to 31 December 2019. For 2021, this measure is expected to be extended by ordinances (legal ordinance of the BMJV of 20 October 2020, BGBI. 2020 I, 2258, and draft of the BMF of 6 October 2020), whereby the cut-off dates mentioned below will apply accordingly one year later in each case). In view of the aggravated economic situation of many companies and the possibly more difficult resolution on conversion, this makes sense, as the balance sheet as at 31 December 2019 can still be used as the closing balance sheet in the case of a financial year with the same calendar year. If there is a profit transfer agreement and a fiscal unity exists, the fiscal unity can still be terminated at the end of 2019 in the event of a merger between a controlling company and the controlled company. As with the previous 8-month retroactive period, this is generally unproblematic from a tax perspective. Although the profit transfer agreement will continue to exist under civil law until the merger becomes legally effective upon entry in the commercial register, the agreement will be overlaid by the profit allocation under reorganisation law. In practice, the accounts of the transferring company are subsequently integrated into those of the acquiring company. Up to now, no one has thought that there could be a threat of disaster, as the period of 4 months after the expiry of the 8-month period for filing the merger with the commercial register was always sufficient for the timely termination of the profit transfer agreement due to confusion before the end of the following financial year.
With the current 12-month deadline, this may be tight. The later the merger is filed with the commercial register in 2020, the more likely it is that it will not be registered until 2021. The consequence is that, although an elected retroactive effect is still possible for tax purposes as at 31 December 2019, the company to be merged will no longer exist for tax purposes in 2020. This also means that the tax group has already ended.
However, this is different under civil law. Annual financial statements must be prepared again at the end of 2020 that include the profit transfer and loss absorption claims, as the profit transfer agreement was still in place at the end of the 2020 financial year. The profit transfer is a hidden profit distribution, the loss absorption is a hidden contribution.
If this is to be avoided, additional measures and design considerations are required.
Dr Wolfgang Walter is a lawyer, tax consultant and specialist lawyer for tax law at the tax law firm TAXGATE, which specialises in transactions, investments and tax compliance, and comments on the tax group regulations in the KStG commentary by Bott/Walter published by Stollfuß-Verlag.
