In Germany, the restructuring of companies or groups in financial crisis is subject to significant tax risks.

As part of the German government’s costs savings package, a change in the German Insolvency Code may be implemented which will grant to the German fiscal authorities a preferred creditor status.

Tax treatment in the hands of the creditor

If a creditor waives an intra-group receivable, this leads to an accounting loss in the amount of the receivable. Such loss, however, is not automatically tax-deductible in the hands of the creditor.

Due to the ongoing financial crisis and the economic downturn accompanied therewith, many German companies are or will be struggling with default and insolvency problems.

The amendments of the Response Act are temporary and will apply for six months until September 23, 2020. However, subject to economic and health developments, the provisions may be expanded in both their application and scope

A SUMMARY OF MAJOR DEVELOPMENTS IN KEY AREAS GENERAL COUNSEL UPDATE 27 February 2014 LEGAL GUIDE EDITION 37

SHAREHOLDERS ARBITRATION
In a historic USD 50 billion award rendered on July 18, 
2014, an Arbitral Tribunal constituted pursuant to the 
Energy Charter Treaty held unanimously that the Russian 
Federation breached its international obligations under the 
Energy Charter Treaty by destroying Yukos Oil Company 
and appropriating its assets. 
The Tribunal, applying the UNCITRAL Arbitration Rules and sitting in The 
ague under the auspices of the Permanent Court of Arbitration ordered the 

Tax authorities have perceived recently that international corporate groups are going through internal business restructurings in large part or in whole to achieve income tax savings.

ICELAND INTRODUCES A PLAN TO LIFT CAPITAL CONTROLS

In a move that creditors have been waiting patiently forsince 2008, the Icelandic government has finally taken a step towards the lifting of capital controls which were imposed in Iceland after the financial crisis that will impact the main three failed banks;Kaupthing, Landsbanki and Glitnir.

Year in Review – Hong Kong Law in 2016