§ 12 para 4 was repealed in 2021. At the same time, the following changes were introduced:

§ 34 para 3c KStG
§ 8 para 1 in the version of Article 3 of the Act of June 25, 2021 (Federal Law Gazette I p. 2056) is also to be applied to assessment periods before 2021

§ 34 para 6d KStG
§ 12 para 4 in the version applicable on June 30, 2021, is to be applied for the last time for the assessment period 2020.

§ 8 para 1 sentence 4 KStG
For corporations as defined in § 1 para 1 with headquarters abroad, whose place of management is located domestically and which are not to be treated as legal persons under domestic corporate law due to lack of legal capacity, services and promises of services between the corporation and persons who earn income as defined in § 20 para 1 number 1 and 9 of the Income Tax Act from this corporation, are to be treated for the purposes of implementing taxation with income taxes like services and promises of services between a legal corporation and its shareholders.

In the previous post, we reported on the information letters from the tax offices regarding the Federal Ministry of Finance's letter dated December 30, 2020.

These letters are currently being supplemented by letters informing the LTD shareholder personally of a VAT number, or announcing the allocation of VAT numbers. Usually, these letters refer to the Federal Ministry of Finance's letter dated December 30, 2020, and additionally note that the LTD will continue to be treated as a subject of corporate tax due to the Brexit Tax Accompanying Act.

As a result, the tax offices assume that taxes for LTDs will be declared using two tax numbers in the future. The existing tax number of the LTD will continue to be used for the corporate tax declaration. A VAT number assigned personally to the entrepreneur will be used for VAT declarations.

These letters typically do not come with legal remedy instructions but are likely to have regulatory content and thus represent an administrative act against which legal remedies are permissible.

You can download a non-binding sample of a corresponding objection further below. Before possibly initiating legal action, you should ...  

The Federal Council approved the Brexit Tax Accompanying Act on March 15, 2019. This clears the way for it to come into effect at the end of March. From a tax perspective, this law is intended to provide legal certainty for Ltd companies in Germany. In particular, a potential Brexit will not trigger any hidden reserves or real estate transfer taxes. The business assets of the Limited will also remain entangled in corporate income tax.

To ensure that the departure of the United Kingdom of Great Britain and Northern Ireland from the European Union does not lead to a real estate transfer tax burden solely due to an English Limited owning property in Germany, an exemption provision will be added to the Real Estate Transfer Tax Act. To this end, § 4 of the Real Estate Transfer Tax Act is being amended. A new number 6 will be inserted, which reads as follows:

"6. Acquisitions solely based on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union."

Thus, Brexit will become a special exception from real estate transfer tax.

On February 20, 2019, the Finance Committee presented its recommendation for approval and report on the draft legislation for the Brexit Tax Accompaniment Law. The draft includes, among other things, an amendment to § 12 of the Corporation Tax Act. A new paragraph 4 is to be added, which reads as follows:

"(4) A corporation with unlimited tax liability located in the United Kingdom of Great Britain and Northern Ireland shall continue to have the business assets attributed to it that were attributed to it before the withdrawal from the European Union."

According to the literal wording of this provision, this would be limited to limited liability companies that were established before Brexit. However, the explanation to the amendment explicitly references the supreme court jurisprudence of the Federal Finance Court on the type comparison for companies from third countries (judgments of June 23, 1992, BStBl II p. 972, and of September 8, 2010, BStBl II 2013 p. 186), suggesting that this regulation might be interpreted broadly and that the last half-sentence of § 12 para. 4 KStG should be understood as clarifying that Brexit itself is not a triggering event.