1. Introduction
The term “unfortunate group” refers to cases in which a corporate tax group relationship is not recognized by the tax authorities due to the lack of individual requirements of Sections 14 and 17 KStG.
In the case of violations, a distinction must be made as to whether the five-year period of the profit transfer agreement has already expired or not. In the event of a violation during the minimum term, the legal consequences of the tax group cease to exist from the start (R 14.5 Para. 8 No. 1 KStR). After the minimum term has expired, tax consequences only arise for the year in question (R 14.5 Para. 8 No. 2 KStR).
2. The legal consequences of a non-recognized or revoked corporate entity
The legal consequences of a corporate tax group not being recognized or revoked after several years can be diverse and complex.
Below are individual legal consequences that are affected here:
No attribution of income: One of the main consequences is that the income of the controlled company is no longer attributed to the controlling company. In a recognized tax group, the income of the controlled company is allocated to the controlling company and is subject to corporation tax or income tax. If the tax group is not recognized, this attribution is no longer carried out and the controlled company and the controlling company are taxed separately.No loss compensation: In a recognized tax group, loss compensation can take place between the controlling company and the controlled company. However, if the tax group is not recognized, this loss compensation is no longer possible.No use of losses: Pre-organizational and post-organizational losses cannot be offset against the profits of the controlled company during the duration of the tax group and therefore cannot be used by the controlling company. If the tax group is not recognized, these losses can no longer be used.Retroactive non-recognition: If the union is terminated within the first five years, it will not be recognized retroactively from the start, unless the termination occurs for an important reason.Liability for tax debts: In a controlled entity, the controlling company is generally liable for tax on the income attributed to it by the controlled company. However, if the controlling company becomes insolvent, the controlled company is also liable for the controlling company’s tax debts, which are caused by the control group relationship. If the tax group is not recognized, this liability regulation changes.
3. Conclusion
Both establishing and maintaining a corporate tax group can be complex and requires a high level of knowledge of tax law and corporate law. Mistakes and misjudgments in this context can mean lasting financial and economic losses.
In the worst case, the entire group of companies can get into trouble.
Planning and changes in this context should therefore only be carried out with an expert lawyer or tax advisor.
This article does not represent specific and individual legal advice, but rather only provides a rough initial overview of the very complex legal matter described. You can only obtain legal certainty for your specific case constellation through coordinated examination and advice from an expert lawyer.
I would be happy to assist you as a lawyer and specialist lawyer for a legal assessment and assessment of your case and represent your interests assertively and resolutely. the tax authorities and the tax investigation. Please feel free to contact me by phone or write to me.
I advise nationwide on site or via Zoom as a specialist lawyer in the legal areas of corporate law, tax law and insolvency law, including in the cities and metropolitan areas around Stuttgart, Heilbronn, Karlsruhe, Freiburg, Ulm, Augsburg, Munich, Frankfurt, Wiesbaden, Saarbrücken, Kaiserslautern, Bonn, Wuppertal, Duisburg, Nuremberg, Münster, Saarbrücken, Düsseldorf, Cologne, Dortmund, Hanover, Kassel, Leipzig, Dresden, Bremen, Hamburg and Berlin.
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