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In its recently published decision dated 22 April 2016, the Fiscal Court Dusseldorf ruled that, contrary to the German tax authorities' view, the downstream merger of a German corporation with non-resident shareholders into its corporate subsidiary, (the Surviving Entity) does not result in the realization of the undisclosed reserves in the shares of the Surviving Entity, even if Germany is deprived of its taxation right with respect to the shares in the Surviving Entity as a result of the merger. The Fiscal Court admitted an appeal to the Federal Tax Court, and it is to be expected that the German tax relevance for the taxpayers.

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