The Federal Constitutional Court today published its long-awaited decision of 29 March 2017, according to which the provision of Section 8c sentence 1 of the German Corporation Tax Act (KStG) - now Section 8c (1) sentence 1 KStG - is incompatible with the German Basic Law.
According to this regulation, the tax loss carryforward of a corporation is cancelled pro rata if more than 25 % and up to 50 % of the shares are transferred within five years (so-called detrimental acquisition of shares). This is not compatible with the general principle of equality (Art. 3 (1) GG). There is no objectively plausible reason for the unequal treatment of corporations when determining their taxable income in the case of a so-called detrimental acquisition of shares.
The legislator now has until 31 December 2018 a new regulation with retroactive effect for the period from 1 January 2008 to 31 December 2015 meet.
See also TAXGATE Blog from 12 May 2017.
