Germany proposes amendments to NOL forfeiture rules

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October 2016


The German government has published a draft bill (the Bill) that would amend the German net operating loss (NOL) forfeiture rules.

The Bill would allow a German corporate taxpayer to carry forward NOLs that otherwise would be forfeited due to a ‘harmful ownership change’ — that is, a greater-than-25% direct or indirect transfer of shares. To benefit from the new rule, a German corporate taxpayer’s business activities must not have changed in the previous three years and must not change prospectively, until the NOLs are utilized. The new rule also will not apply if the German corporation was the controlling entity in a tax group or if it was a partner in a trading partnership.

If the Bill becomes law, the rule is expected to apply to a German corporate taxpayer’s income and trade tax NOLs f0r harmful ownership changes occurring after December 31, 2015. 

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