In the conversion of companies, two laws are of great importance: the conversion law and the conversion tax law. While the conversion law regulates the civil aspects of a company conversion, the conversion tax law in particular includes standards for the tax situations associated with a conversion. The conversion tax law thus covers such different issues as the taxation of hidden reserves, loss carry forwards, retained earnings and takeover profits. In addition, the conversion tax law contains deadlines for the retroactive effect of a conversion and blocking periods after conversions. And of course, the conversion tax law also answers questions about the respective taxation of both the transferring and the assuming legal entity.

The conversion tax law flanks the conversion law enshrined in civil law with regulations that have a tax connection. Although one has to pay attention to the regulations of both laws in order to convert a company, in this article we want to focus mainly on the scope of the conversion tax law.

Already in the introductory § 1 UmwStG it is clearly defined which tasks the conversion tax law fulfills. It sets out a list of the different types of tax-related conversions and the types of undertakings concerned. Of course, the conversion tax law also refers to the conversion right in order to supplement it with the tax dimension of a conversion. In addition, there are other regulations that contain both options and restrictions regarding the conversion of a company and are more indirectly tax relevant.

However, a few conversion processes are without tax impact. In part, they are also explicitly named in the list of §1 UmwStG, but in part also generally excluded by exclusion criteria. For the sake of completeness, we also include these exceptions in our article.

2. The scope of the Conversion Tax Act

The conversion tax law applies to a number of different conversion operations. These are: