Germany Eyes Breaks for Takeovers of Startups

September 14, 2016 Taxation in Germany

BERLIN – Start-ups in Germany may soon have an easier time trying to find investors, as new rules look to allow tax breaks following major restructuring.

The Cabinet of Germany is currently considering draft legislation to allow businesses to utilize tax breaks following a major change in shareholding for losses incurred prior to the shift in shareholding.

Under current regulations businesses in Germany are not able to claim tax breaks for losses following a major change in shareholding, such as a buyout or takeover.

The present legislation is aimed at stopping a situation where a company is purchased solely to take advantage of tax breaks from losses.

The new rules are aimed at encouraging greater activity and investment in start-ups and small businesses, as previously the new owners and investors into a business could not make use of the losses incurred by the business in its initial years of operation, a situation which is common among start-ups.

It has been noted that aside from start-up firms and venture investors, the new tax break could be utilized by small and family-owned businesses, which will now find it easier to restructure.
The law is expected to be approved later this week, and, will apply retroactively from January 1st 2016.

Photo By: NeoSpire