BMF (Federal Ministry of Finance) commenting on restructuring decree

With the decree dated November 28, 2016 published on February 8, 2017 the Grand Senate of BFH (Federal Fiscal Court) decided that the so-called restructuring decree breaks the principle of legality of administration and therefore does not represent a permitted legal basis for a tax exemption of restructuring profits.

Within the “law against harmful tax practices in connection with the transfer of rights” a sustainable arrangement for taxation treatment of restructuring profits is supposed to be adopted as soon as possible. The German parliament already agreed to the draft law on April 27, 2017. However, the new law will possibly not become effective until the European Commission will determine by resolution that the regulation is not to be considered as public aid.

In this context the Federal Ministry of Finance now commented by letter from April 27, 2017 on the treatment of restructuring profits for the purpose of granting a prompt legal security in the event of involved restructuring cases. The letter particularly distinguishes between the protection of legitimate expectation and the timing circumstances regarding the restructuring planning.