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German rules on limiting tax-loss utilization : a first critical qualification of the draft decree / Bernd Cloppenburg and Günther Strunk

Main Author: CLOPPENBURG, Bernd Coauthor: STRUNK, Günther Conjunt level: / Intertax / ed. Fred C. de Hosson. - V. 27, n. 4(April 1999). - Hague : Kluwer, 1993. - ISSN 0165-2826. - P. 154-162. Topical name: Alemanha | Política Fiscal | Evasão Fiscal | Sistema Fiscal Classification: H300(430)
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Item type Location Call Number Status Date Due
Analítico Mediateca da Universidade Lusíada de Lisboa INTERTAX 11.01.02-59 (Browse Shelf) Empréstimo local

The development began with the restrictions incorporated in s. 8, para. 4 of the Corporate Income Tax Act (KStG) and s. 12, para. 3 of the Reorganization Tax Act (UmwStG) effective as of 5 September 1997. This article focuses on the German tax authorities' view on the application of these procisions as stated in the draft decree they issued. Although the initial draft submitted for discussion has been with-drawn and a final draft is expected to be issued in spring 1999, the basic view of the German tax authorities is already evident in the initial version. Thus, it is worthwhile to comment on these views and on the effects they will have on the German taxpayers. This contribution will discuss first considerations and questions, but also will ofter suggestions for changes and amendments to the initial draft. In particular, methods interpreting the new regulation taking into account the present system of taxation and the main principles on which it is based will be discussed. We are, however, awere of the fact that not all problems can be touched on, but we would, nonetheless, like to contribute to the debate, which will no doubt become a controversial issue.

In its desire to increase revenues, the German legislative body Deutscher Bundestag has made in the past numerous attemps to limit tax-loss utilization. The latest attempt is the draft Tax Reform Act for the years 1999, 2000 and 2001, which proposes the elimination of tax-loss carry-backs for corporate income tax purposes. In addition, it proposes to establish a kind of "alternative minimum tax" by disallowing the set-off losses from passive income with positive income from active businesses. However, it would be premature to evaluate these proposals at this point in time.

Sumário:

1. Introduction

2. Classification of s. 8, para. 4 of the KStG in the German system of taxation

A. Substantive aspects

B. Procedural aspects

3. Regulations of the decree in detail

A. Personal criterion for the assignment of the majority of shares

B. Factual criterion for the transfer of mainly new operating assets

C. Period of continuation and relationship between individual constitutive elements in terms of time

D. Catch-all clause of s. 8, para. 4, Sentence 2 of the KStG

4. Amendments and peculiarities of s. 12, para. 3, Sentence 2 of the UmwStG

Resumo:

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