Hofmann & Fertig advises German subsidiaries of a New York Stock exchange listed Fortune 500 company in relation to all tax related issues regarding the structuring and simplification of its German legal operations (German legal entity simplification).
In Germany the US-Group maintains a German holding company which is the majority shareholder of various subsidiaries (German Inbound investment). In order to simplify its German legal operations two German subsidiaries each in the legal form of a corporation (GmbH) were merged with each other. The merger was executed in a tax neutral manner at book value, i.e. without disclosing any built-in gains pursuant to sec. 11 et seq. of the German Reorganization Tax Act (tax neutral merger).
For statutory and tax purposes the merger was executed retroactively, pursuant to which all assets and liabilities as well as all profits and losses of the transferring entity incurred after the merger date are deemed to be allocated to the absorbing entity. On this basis the ordinary year-end balance sheet of the transferring entity could be used as closing balance sheet. Further no compliance obligations for income tax purposes exist for the transferring entity after the merger date.