Losses of an Organschaft
Under a provision in the Corporation Tax Act, the losses of an Organschaft
parent or subsidiary may not be offset against present or future German income
if they taken into account for taxation abroad by any entity.
Caution is therefore advised, both for dual resident companies and for those seen as part of another
entity under foreign law (such as under the US “check-the-box” rules).
It should be emphasised that an Organschaft is usually necessary for German
groups or sub-groups with centralised financing arrangements.
Interest charged within the Organschaft is ignored. Outside interest, as well as the trading
profits, are concentrated on the parent for the purposes of calculating the
interest limitation.
EU Forecast
euf:ba18e:169/nws-01