Brigitte Romani
This article was first published in International Tax Review June 2002, p. 58.
For editorial cut-off date, disclaimer, and notice of copyright see end of this article.
Cross-border reorganizations rank among the most complex tax planning transactions. Two recent changes in German tax law open up new possibilities for accomplishing certain cross-border reorganisations without realisation of gain.
New sec. 12 (2) KStG (corporation tax law) permits the assets of the German permanent establishment of a non-resident corporation to be transferred en bloc to a new entity pursuant to a merger that takes place in a foreign jurisdiction at book value and does not qualify for tax preferred treatment under the German Tax Reorganisation Act. The transaction must be comparable to a merger under sec. 2 UmwG (German Business Reorganisation Law). Furthermore, Germany's right of taxation must be preserved. Like the previous version of § 12 (2) KStG, the new version is
