No entry of a GbR after change of legal form from a GmbH
If a limited liability company [Gesellschaft mit beschränkter Haftung – GmbH] is transformed into a company constituted under Civil Law [Gesellschaft bürgerlichen Rechts – GbR], the question arises, whether it is required to enter the GbR and its shareholders into the commercial register. In practice, such entries have continuously been made, however, the Federal Court […]
A final default of a shareholder loan must be taken into account as a loss on income from capital assets – this is what shareholders should consider in the future
The Federal Court of Finance [Bundesfinanzhof – BFH] passed an interesting decision (file no. VIII R 13/15), regarding the decision of the BFH (file no. IX R 36/15) in Q4: Accordingly, the final default of a loan leads to a loss recognized for tax purposes which must be taken into account on income from capital […]
Compliance clauses within supply chains
Compliance clauses are nowadays a standard component of many (framework) supply agreements between companies. When introducing these clauses into contract negotiations, they are often extremely one-sided and present a high risk for the clause addressee. The following article demonstrates approaches and arguments which can help to achieve a proper limitation of a compliance clause.
Furnishing of upstream securities – here is what managing directors should pay attention to
The Federal Court of Justice [Bundesgerichtshof – BGH] commented on the admissibility of the furnishing of securities granted by companies in favor of their shareholders and on the so-called capital maintenance rules in AGs [Aktiengesellschaft – stock corporation] and GmbHs [Gesellschaft mit beschränkter Haftung – limited liability companies]. Capital maintenance rules have an “indirect” effect […]
Clarifying judgment of the Federal Court of Justice (BGH) on the power of representation for actions of a stock corporation (AG) towards members of the management board
Pursuant to section 112 of the German Stock Corporation Act (AktG), an AG is represented by the Supervisory Board if it acts towards the Management Board. The BGH has recently ruled on when there is no such action towards the Management Board by applying the principles developed with regard to self-dealings in accordance with section […]
In general, shareholder loans are not taken into account as subsequent acquisition costs within the scope of Section 17 EStG anymore
By its judgment of 11 July 2017 – IX R 36/15, the German Federal Fiscal Court (BFH) has fundamentally changed its jurisdiction regarding the clasification of equity-replacing financial aids of shareholders to their company as acquisition costs within the scope of section 17 of the German Income Tax Act (EStG). Financial aids are, for example, […]
Restructuring decree – no legitimate expectations in so-called old cases after all?
By resolution dated 28 November 2016, file number GrS 1/15, the Grand Senate of the Federal Fiscal Court (BFH) declared the so-called restructuring decree illegal. The legislator recognized the needs for the restructuring of companies and created a new legal basis for the tax exemption of restructuring profits (see our newsletter article in 2017 | […]
Warranty & indemnity insurance for company sales – genuine added value or unnecessary passing fad?
Warranty & Indemnity insurances (W&I) play an increasingly higher role in company sales. The parties to an M&A transaction should familiarize with the fundamental operating principle of this “tool”. This is particularly essential, because meanwhile many sellers require a W&I insurance as a precondition in order to receive a bid during a bidding process.
Reintroduction of tax exemption on restructuring profits
By passing the law dated 27 June 2017, the tax exemption on restructuring profits was stipulated once again. However, the readjustments will only become effective in case the EU commission signs off on the new legal readjustment with respect to state aid law. The new law is supposed to apply retrospectively to all debt reliefs/restructuring […]
Karlsruhe deals a severe blow: the lapse of loss carry forward upon acquisition of detrimental participation according to § 8c sec. 1 sentence 1 KStG is unconstitutional
By decision of 29 March 2017 the Federal Constitutional Court (Bundesverfassungsgericht) declared the partial lapse of loss deduction in the case of a detrimental exchange of shareholders in the amount of over 25% to 50% to be unconstitutional in all law versions between 2008 and 2015. The legislator is obliged to revise the law with […]