Log in or register
Share on LinkedInShare on LinkedIn

ARTICLE · 04 DECEMBER 2020

German Tax Circular Has Wide-Ranging Implications For IP Transactions And M&A

Mayer Brown
Mayer Brown
Contributor
Mayer Brown

Mayer Brown

Mayer Brown is a leading international law firm positioned to represent the world’s major...

View firm profile
Explore more from Mayer Brown

On November 6, 2020, the German Ministry of Finance (BMF) issued a circular (the "Circular") interpreting a long-ignored provision of German tax law confirming that German income tax applies...

GermanyTax
Volker Junge
Volker Junge
Dr. Ulrich Worm
Dr. Ulrich Worm
Michael Lebovitz
Michael Lebovitz
Author LinkedIn connections

On November 6, 2020, the German Ministry of Finance (BMF) issued a circular (the "Circular") interpreting a long-ignored provision of German tax law confirming that German income tax applies to the licensing and transfer of intellectual property that is registered on a German register. The tax applies even where there is no German party or other German connection to the transaction and where the German-registered IP is just one component of a global transaction.

Because the Circular is an interpretation of existing law, it applies to future transactions as well as transactions that took place in prior open tax years, possibly as far back as 2013. Consequently, taxpayers should be taking an inventory of their prior transactions to determine where the tax may apply. Moreover, the impact of the Circular should also be addressed as part of tax due diligence in international M&A transactions.

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the “Mayer Brown Practices”). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. “Mayer Brown” and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2024. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

View source

Related Articles

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

See more popular content from

Article

BMF: Draft Bill Would Tax Exchange Crypto-assets As Investment Income

Germany's Federal Ministry of Finance has proposed a fundamental shift in how exchange crypto-assets like Bitcoin and Ether are taxed, moving them from "other income" to investment income with a flat 25% tax rate. The reform abolishes the one-year tax-free holding period for new acquisitions while introducing withholding tax obligations for domestic crypto-asset service providers. How will these changes affect long-term investors, high-income earners, and the operational burden on crypto platforms?
GermanyTax
A&O Shearman
A&O Shearman
Article

Beware Of Hidden Costs: Hiring Foreign Temporary Workers In Germany

When a German employer hires foreign EU workers for a short-term project without proper tax and social security documentation, what appears to be a cost-effective staffing solution can quickly transform into a financial burden. Through a detailed case study and sample calculations, this analysis reveals how routine audits can expose compliance gaps that nearly double the actual employment costs.
GermanyTax
GGI | Global Alliance
GGI | Global Alliance
Article

Loss Forfeiture In The Event Of Share Acquisitions: New Developments In Judicial Review Proceedings

The German Federal Constitutional Court is set to rule on the constitutionality of Section 8c of the Corporate Tax Act, which mandates complete forfeiture of tax losses when more than 50% of a corporation's shares change hands. The Hamburg Fiscal Court has supplemented its 2017 referral order with new details about a specific case where losses would be forfeited solely due to share acquisition, raising fundamental questions about whether this provision violates Germany's constitutional principle of equality
GermanyTax
A&O Shearman
A&O Shearman
Article

Fiscal Court Of Münster Clarifies Relevant Date For Assessing A Contribution In Kind Under Section 20 (1) UmwStG

The Fiscal Court of Münster has ruled on a critical question in German reorganization tax law: when assessing whether a contribution in kind qualifies for tax-neutral treatment, should authorities examine the circumstances on the actual contribution date or the retroactive tax effective date? This decision challenges longstanding administrative guidance and could fundamentally reshape how businesses structure tax-efficient reorganizations involving partnership interests and special business assets.
GermanyTax
A&O Shearman
A&O Shearman
Article

The End Of The Signing Closing Issue: The New Rules On German Real Estate Transfer Tax In Share Deals

Germany has enacted significant reforms to its real estate transfer tax rules for share deals, addressing the controversial issue of double taxation that previously arose when signing and closing occurred at different times. The new legislation establishes a clear hierarchy between tax provisions and extends notification periods, fundamentally changing how M&A transactions involving real estate-owning companies are taxed.
GermanyTax
A&O Shearman
A&O Shearman
Article

DOL Announces Enforcement Actions Against Employers In H-1B And PERM Fraud Probe

The Trump Administration has launched an unprecedented enforcement action suspending permanent labor certification processing for eight major employers, linking immigration sponsorship to layoff histories and recruitment practices. This development signals a fundamental shift in how the government evaluates employer access to H-1B and green card programs, with investigations already underway and subpoenas served.
United StatesEmployment and HR
Mayer Brown
Mayer Brown
Article

Trump Administration Announces New Enforcement Actions Against Employers In H-1B And PERM Fraud Probes

The Trump Administration has launched an unprecedented investigation into H-1B visa and PERM labor certification programs, with the Department of Labor's Office of Inspector General issuing dozens of subpoenas and suspending employers' ability to process applications. Federal agencies are deploying new enforcement tools including whistleblower programs and criminal prosecution threats...
United StatesImmigration
Mayer Brown
Mayer Brown
Article

Landmark DoorDash Settlement Confirms NYC DCWP’s Aggressive Enforcement Posture

New York City's Department of Consumer and Worker Protection secured a landmark $131.5 million settlement with DoorDash, marking the largest worker settlement in the city's history and the largest involving food delivery workers nationwide. The agreement provides over $115 million in direct compensation to more than 260,000 delivery workers who were underpaid, unpaid, or paid late, while establishing a comprehensive three-year compliance monitoring program.
United StatesEmployment and HR
Mayer Brown
Mayer Brown
Article

SEC Staff Statement On Fair Value Measurement And Disclosure Considerations For Private Assets

The SEC Staff has issued new guidance addressing fair value measurement and disclosure practices for private credit and other illiquid assets held by registered funds and business development companies. As private credit portfolios have grown nearly 60% since 2020, reaching $270 billion, regulators emphasize the critical importance of robust valuation methodologies, transparent disclosure of significant judgments, and careful application of accounting standards when market prices are unavailable.
United StatesAccounting and Audit
Mayer Brown
Mayer Brown
Article

Contracting Opportunities And Challenges For Emerging Agentic AI Companies

Emerging providers of AI agents face unique contracting challenges as autonomous AI tools evolve beyond traditional SaaS models. This analysis examines critical issues in defining agent authority, structuring pricing models, calibrating warranties, and navigating regulatory uncertainty. How should providers balance customer expectations with the unpredictable nature of autonomous AI systems?
United StatesMedia, Telecoms, IT, Entertainment
Mayer Brown
Mayer Brown