With § 8c KStG, the legislature replaced the existing “coat purchase regulation” in § 8(4) KStG in 2008. The purpose of the provision is to avoid abuse by eliminating certain loss carry forwards when more than 50 % of the shares in a corporation change shareholders. However, special features apply to the acquisition of own shares by a corporation. Because here § 8c KStG basically does not apply!
1st principle: cancellation of losses according to § 8c KStG
In the context of corporate entities or by merger of two corporate entities, losses incurred by one enterprise are offset against the profits of another enterprise. Corporations can take advantage of this circumstance by “buying” another corporation with existing loss carry forwards. The acquired loss carry forward then reduces the profit of the acquiring company and thus saves corporate and business tax.
In order to avoid such arrangements, §8c KStG provides for loss loss reduction. Losses not used (carried forward) until the sale of the shares are completely lost and no longer have any (tax) advantages for the acquirer of the shares. However, a prerequisite for the application of § 8c (1) sentence 1 KStG is that
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.