ARTICLE · 20 JULY 2001

231. Tax Authorities Relax Reorganisation Requirements

KPMG Germany

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Brigitte Romani

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The German Tax Reorganisation Act in force since 1995 permits three types of divisive reorganisations – split-ups, split-offs, and drop-downs – without triggering tax, provided two principal conditions are met:

any unrealised appreciation (hidden reserves) inherent in the assets transferred must remain subject to German taxation and
the assets transferred – and for split-offs the assets retained as well – must constitute a branch of activity, an interest in a commercial partnership, or a 100 % share in a corporation.

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