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An analysis by Flick Gocke Schaumburg, Taxand Germany
Dr. Gustav Liedgens of our German firm, Flick Gocke Schaumburg, has analysed a move by the German Federal Finance Court (BFH), which issued four judgements affirming that financial inclusion criteria under tax law is met when acquiring ownership through a conversion process. The BFH applied the ‘footsteps theory’, stating that the acquiring entity assumes the tax status of the transferring entity in cases of conversion.
The judgements also addressed financial integration in mergers and share exchanges, providing clarity on tax group establishment. The BFH’s decisions support the importance of conversion tax legal succession for financial inclusion, simplifying tax group formation in restructurings. However, there may be a potential conflict with current regulations, and it remains uncertain if tax administration will adopt the BFH’s principles.
Read the full analysis here.
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