Article
Last chance for the adjustment of Profit and Loss Transfer Agreements in “old cases” – Action required by the end of 2021
Revision of sec. 302 of the Stock Corporation Act requires short-term adjustment of Profit and Loss Transfer Agreements in “old cases”
With the revision of sec. 302 of the Stock Corporation Act through the introduction of the Act on the Further Development of Restructuring and Insolvency Law, so-called “old agreements” must from now on also be adjusted to the requirements of sec. 17 para. 1 sent. 2 no. 2 of the Corporate Income Tax Act in its current version. This adjustment must be made by December 31, 2021.
As already mentioned in our article from April 2021, by the Act on the Further Development of Restructuring and Insolvency Law (Sanierungs- und Insolvenzrechtsfortentwicklungsgesetz – SanInsFoG) of December 22, 2020, the loss assumption provision of sec. 302 of the Stock Corporation Act (Aktiengesetz, AktG) was amended with effect from January 1, 2021. In the scope of application of sec. 17 of the Corporate Income Tax Act (Körperschaftssteuergesetz, KStG), this may result in a need to adjust Profit and Loss Transfer Agreements that were concluded or last amended before February 27, 2013. Such “old agreements” that do not contain a dynamic reference to sec. 302 AktG must now be adjusted to requirements of sec. 17 para. 1 sent. 2 no. 2 KStG in its current version. For further details, reference is made to our article from April 2021.
In the opinion of the Federal Ministry of Finance (Bundesministerium der Finanzen), the recognition of the tax group for assessment periods from 2021 onwards is not prevented if the adjustment of the "old agreements" to include the dynamic reference pursuant to sec. 17 para. 1 sent. 2 no. 2 KStG in its current version is made by the end of December 31, 2021 at the latest (letter dated March 24, 2021, IV C 2 - S 2770/21/10001 :001).
Against this background, affected companies are urgently advised to review existing Profit and Loss Pooling Agreements for the need for adjustment and, if necessary, to implement a dynamic reference to sec. 302 AktG by December 31, 2021. Thus only 2 months are left for such implemention. As a precaution, it should be ensured that the amendment is also entered in the commercial register before the end of the year. Due to the fact that the adjustment of Profit and Loss Transfer Agreements requires some time, there is now an urgent need for action. Our contact persons will be happy to assist you with the implementation.
