An organization is an association of companies. In order to establish an organisation, four conditions must be met. On the one hand, you need a commercial organ carrier. Furthermore, a subordinated corporation is necessary as an organ company. The third criterion requires that the organ carrier controls the organ company. Finally, a profit transfer agreement between the organ carrier and the organ company must regulate the transfer of the result before tax. Because in this way, the taxes of the organ company only accrue when the organ carrier is taxed. This in turn allows the offsetting of profits and losses of the two companies. However, this is at the expense of limiting the liability of the organ company. Because of this, the organ carrier is ultimately liable.
First of all, a distinction between an income tax and a sales tax organization is necessary. The VAT organization is focused on the consideration of aspects related to the sales tax of affiliated companies. Similarly, the income tax organization is linked to the income taxes of related companies. The latter are the subject of our contribution.
The legal provisions on income tax organs have been incorporated into § 14 KStG and § 17 KStG. In doing so, § 17 KStG extends the range of corporate forms which are listed very restrictively in § 14 KStG and which come into question as an organ company. In this way, it is also possible for a GmbH to assume the function of an organ company.
Structure and function of an organ
The structure of an organization is in principle like a holding company. A parent shall have at least one subsidiary in which it participates. However, the difference to a holding company lies in the special requirements for an organization. They concern various aspects of the characteristics and connections between the undertakings involved, such as the types of undertakings permitted and the contractual obligations, as well as the framework conditions between the organ carrier and the organ company.
The real highlight of an organization is that the taxes of the affiliated companies are paid by the organization alone, but jointly. This consistently solidarity-based approach then also establishes the many advantages of the organization, which we place at the center of our information offer.
3. The Four Requirements for Forming an Organization
3.1. Definition of organ carrier
An organ carrier is a commercial company. For example, the following corporate forms are permitted as organ carriers:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.