By Mr Robert Kullgren, an attorney at Kilpatrick Stockton's office in Stockholm & co-authored by Mr Ralf Ek, Hölters & Elsing
Article in Dagens Industri (the Swedish equivalent to The Wall Street Journal), Thursday, May 16, 2002
A buying opportunity exists for companies wishing to establish themselves or expand their business on the German market. Germany is currently implementing a large tax reform. As of January 1 of this year, the rules regarding taxation of capital gains from the sale of corporations have changed.
Now, capital gains arising from the sale of stocks by a German corporation (AG or GmbH) are not taxed. In addition, only a maximum of half of the capital gains arising from the sale of stocks by private persons is taxed.
Further, the corporate tax has been reduced to 25 percent for German corporations and the tax on dividends between German companies has been abolished.
Also, the new law regarding acquisition of companies that has entered into force at the turn of the year makes it easier to acquire German companies, especially large ones. The new law simplifies "hostile" takeovers in Germany. These new possibilities have already been used by foreign companies.
The new taxation rules are expected to lead to the selling off of companies from the large German conglomerates such as Deutsche Bank and Allianz. Privately owned small and medium-sized companies, so called Mittelstand, are also expected to be sold off to a much greater extent than previously.
The new tax reform and the increased possibilities to acquire German companies is a golden opportunity for companies wishing to establish themselves on the German market or to expand a business already existing in Germany. The German market is large and difficult to work, which leads to the setting up of a business from scratch being lengthy and costly combined with uncertainty. By acquiring suitable German companies, it is possible to get an established channel to increase the turnover on the German market. Companies can thus get a flying start to their establishment in Germany if the object of an acquisition is right.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.
