A recent judgment of the German Federal Fiscal Court (FFC) will have significant impact on the restructuring tool kit afforded under German law. The FFC has found that the existing practice of permitting a tax liability arising from restructuring gains to be deferred and (eventually) waived violates fundamental principles of German law. The ruling has created uncertainty regarding the proper tax treatment of restructuring gains, which may have the effect of diminishing the prospect of success of a restructuring for a company in financial distress.
Welche Folgen hat die Entscheidung für abgeschlossene Verfahren? Was bedeutet sie für die Zukunft?
Mit seinem Beschluss vom 28. November 2016 (veröffentlicht am 8. Februar 2017) hat der Große Senat des Bundesfinanzhofs („BFH“) den sogenannten „Sanierungserlass“ (BStBl. I 2003, 240; ergänzt durch BStBl. I 2010, 18) des Bundesfinanzministeriums („BMF“) verworfen. Dieser hatte bislang eine Steuerbefreiung von Sanierungsgewinnen über den Weg eines Billigkeitserlasses der Steuerzahlung nach §§ 163, 227 Abgabenordnung („AO“) ermöglicht.
Deutsches Recht: Blick zurück 2016
Unternehmens- und Gesellschaftsrecht
Year in Review - German Law in 2016
Corporate and Commercial
Amendment to the Stock Corporation Act: The Amendment to the Stock Corporation Act 2016 (Aktien-rechtsnovelle 2016) introduced, among other things, the option to issue preference shares without subsequent payment, an extended conversion right for convertible bonds, a limitation of the issue of bearer shares for non-listed companies and new provisions on the due dates of dividend payments.
Legal background
Under German criminal law, it is illegal for the management not to fulfil tax obligations when due, whereas under German insolvency law a company must treat all creditors equally when the company is illiquid. By paying taxes after the company becomes illiquid, the management would violate this obligation and prefer the state.
Key points
The ‘qualified subordination’ tool is a useful device for a German company that may be balance-sheet insolvent.
Background
German insolvency law requires the directors of a company to file for insolvency when the company is over-indebted pursuant to sec. 19 German Insolvency Code (‘InsO’). The failure to comply with this obligation is a criminal offence, and can also trigger directors’ liabilities under German corporate law.
‘Qualified Subordination’
Banking & Finance
Aktuelle Informationen des
Geschäftsbereichs Banking & Finance
News from the Banking & Finance practice
Dezember / December 2014
In retrospect, 2012 likely will be remembered as another year of manifold challenges in the Eurozone and of slow consolidation rather than one of fundamental reform or renaissance. However, the policy of Mr. Draghi, the chairman of the European Central Bank, appears to have stabilized the markets and the Euro since last summer, Germany's economy is prospering and the stock markets are almost back to pre-2008 levels. Nonetheless, there are fundamental doubts that the measures taken have a lasting effect and will fundamentally reform the economies in the Eurozone.
Restructurings have become an integral part of the reality of the German debt and equity markets.