In order not to endanger existing income tax groups, it may be necessary to adjust existing profit and loss transfer agreements by December 31, 2021.
The reason for this is the amendment to Sec. 302 of the German stock corporation act (AktG), which came into force on January 1, 2021, through Article 15 of the Act on the Further Development of Reorganization and Insolvency Law of December 22, 2020.
For profit and loss transfer agreements concluded before February 27, 2013 or for the last time amended, in which, according to Sec. 17 sentence 2 No. 2 of the German Corporate Tax Act (KStG) old version, the loss is assumed by static reference to the regulation of § 302 AktG in the version of Article 9 of the law of November 10, 2006 or has been agreed by a verbatim reproduction of this regulation, it is imperative that changes are made.
For the further recognition of the tax group according to § 17 KStG it is a prerequisite that the previous agreements on the assumption of losses in the profit transfer agreement are adapted. According to the current legal situation, the assumption of losses must be agreed by referring to the provisions of Section 302 AktG in its currently valid version (dynamic reference) in accordance with Section 17 Paragraph 1 Clause 2 No. 2 KStG.
In a letter dated March 24, 2021, the Federal Ministry of Finance (BMF) announced that the recognition of the tax group for assessment periods from 2021 onwards does not preclude the adaptation of the old contracts to include the dynamic reference according to page 2, section 17, paragraph 1, sentence 2 No. 2 KStG is made by the end of December 31, 2021 at the latest. It depends on the registration of the change for entry in the commercial register.
However, the adjustment can be omitted if the fiscal union relationship is terminated before January 1, 2022.
The adjustment of the profit transfer agreement to include a dynamic reference to Sec. 302 AktG does not constitute a new conclusion of the agreement according to the tax authorities. A new minimum term in accordance with Sec. 14, Paragraph 1, Clause 1, No. 3, Clause 1 of the KStG is not set in motion by the addendum.
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