Improved tax loss deduction possibilities
Since 2008 the accumulated losses incurred by a corporate body lapse either pro rata or entirely when shares are transferred, if within five years a detrimental share acquisition of over 25 % takes place. The recapitalisation clause introduced in the context of this new loss deduction rule until the end of 2009 will be continued indefinitely. Therefore the deletion of the accumulated losses is excluded when there is a change of ownership to investors willing to carry out recapitalisation measures if the purchaser wishes to prevent or eliminate insolvency or over-indebtedness and maintain the basic company structures.
But if the corporation performs services to the shareholders within three years of transferring the new business assets, this will result in a reduction in the transferred business assets. To the extent that, as a result thereof, the necessary transfer of business assets is undercut, the conditions for the recapitalisation privilege do not exist from the outset.
Irrespective of a recapitalisation the deduction of losses in the case of restructuring within affiliated enterprises is admissible once again. As a result of an affiliated group clause the acquisition of shares where share chains are shortened is exempted in those cases where the share ratio does not change. Conversely the facilitation does not apply if new stakeholders join or third-party shareholders participate in the company.
The amendment to the law represents an improvement in practice, as a result of which unutilized losses are maintained in the amount of the hidden reserves of the taxable domestic assets which are allocable to the proportional acquisition of the share. This prevents any loss offsetting potential from extending beyond the existing hidden reserves. In this connection the hidden reserves at the time of the detrimental acquisition of the share are decisive.
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