Recently the German legislature passed a new law, exempting extraordinary profits created by the waiver of claims under restructurings from income tax liability. The amendment was necessary because the German Federal Tax Court had previously held the original administrative decree (which in a conceptually different manner avoided the tax burden on such profits) unlawful. This article gives a brief overview over the legislative history and the practical consequences of the amendment. Continue Reading Extraordinary profits created under restructurings according to German law – to be exempt or not to be exempt, that is the question!

Rather surprisingly on 16 February 2017 the German Parliament finally executed a long discussed reform of the German insolvency code aimed to soften the law on voidable transactions. The law now needs to pass the federal council (Bundesrat) before it can become effective.  Continue reading

In a fundamental decision the Grand Senate of the German Federal Tax Court (Bundesfinanzhof – BFH) has nullified the Restructuring Decree of the German Federal Ministry of Finance. According to the BFH the Restructuring Decree went beyond the tax authorities’ legal competences and was therefore unlawful. The court found that a general regulation regarding the waiver of taxes on profits resulting from restructurings needs to be made by the legislator.  Continue reading