The German Government introduced the Draft Act Concerning the Improvement of Corporate Loss Utilization (the Draft Act) into the legislative process on September 14. The objective of the Draft Act is to allow a loss corporation to maintain its German tax loss carry forward in spite of an otherwise potentially damaging change in ownership event. Pursuant to the proposal, a tax loss carry forward shall be preserved after a change in ownership event, if the loss corporation continues its historic business and a utilization of its losses against other income sources is avoided. Consequently, the Draft Act allows loss utilization only if a number of factors are absent. In particular, to be entitled to the proposed benefit, the loss company cannot be a parent of a tax consolidated group.Also, following its meeting on September 8, the Finance Committee of the German State Council (Bundesrat) published its recommendations on the Act Concerning the Implementation of Changes to the EU Administrative Cooperation Directive and of Additional Measures Against Base Erosion and Profit Shifting, introduced on July 13. The core part of the draft is the implementation of the non-public Country-by-Country (CbC) reporting standards, as proposed by the Organisation for Economic Co-operation and Development (OECD) in its report on Action Item 13 of the Base Erosion and Profit Shifting (BEPS) project.

A Tax Alert prepared by EY's Global Tax Desk Network, and attached below, provides additional details.

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Full text of Tax Alert 2016-1585