Due to the transfer of assets, the departure of companies or cross-border conversions, assets are removed from German tax jurisdiction and assigned to a foreign permanent establishment. The elaboration shows that in the light of the case law of the BFH of 17. July 2008 (reference I R 77/06) the German taxation law is regularly maintained despite such cases of unencumberment and early taxation by the regulatory examples introduced in 2010 (§ 4 para. 1 S. 4 EStG and § 12 para 1 S. 2 KStG cannot be justified under European law, which is why the standards are not compliant with European law. In addition, cross-border contributions must not be measured against the requirements of the freedom of establishment, but against those of the freedom of movement of capital, so that third-country contributions must also be granted tax neutrality.

The transfer of assets to corporations is a form of transfer of assets privileged by the legislature. With the aim of not hindering transformation processes desired for business purposes by tax obstacles, the transfer to corporations can therefore be made in accordance with §§ 20 ff. UmwStG tax neutral. [1] Within the framework of the SEStEG, the requirements of the FRL have been transformed into national law, which also favours contributions with an EU foreign reference since 2006. This enables, for example, internationally active companies to bring independent subsidiaries into local national subsidiaries in a tax-neutral manner. [] 2]

1.1. Tax easing in view of EU law

According to the explanatory memorandum, the Europeanization of the UmwStG must “not, however, lead to the German tax revenue being endangered”[3]. Therefore, in § 20 para. 2 S. 2 No. 3 UmwStG incorporated a special de-involvement provision, according to which the tax neutrality of the transfer operation is denied, insofar as the right of the Federal Republic of Germany with regard to the taxation of the profit from the sale of an economic good is excluded or limited in the course of the transfer. In addition, a taxation of de-knitting may also apply in accordance with the general de-knitting provision of § 12 Abs. 1 KStG if an actual transaction at the level of the acquiring limited liability company following the transfer triggers the de-engagement.

Despite these two provisions on de-integrating, the tax neutrality of the transfer process at national level can already result from the changed understanding of the BFH[4] agreement, according to which the mere transfer of assets of the fixed assets to a DTA permanent establishment does not trigger an exclusion of the taxation right to the capital gains that have arisen until then.

1.2. Scope of the investigation of tax derelictions (contributions & conversions)

As part of this work, it will be examined whether the new understanding of the agreement can also be transferred to current assets, to accounting premises and, in particular, to cross-border untaking operations. It also critically analyses the significance of the regulatory example introduced in 2010 for the general and special deregulation regulations, which should trigger a deregulation tax even if the German taxation law in transfer cases is maintained.