Organschaft purposes the controlling entity
For Organschaft purposes, the controlling entity can be a corpo-
ration or a partnership if it engages in trading activities. Neither
the registered offce nor the management headquarters of the
controlling company must be in Germany.
For this purpose, the
controlling company must have a German permanent establish-
ment to which the holding in the controlled company is to be
allocated throughout the entire duration of the fiscal entity.
A German permanent establishment for the purposes of the fscal
entity exists only if the income attributable to this permanent
establishment is subject to domestic taxation under both Ger-
man tax law and an applicable double tax treaty.
companies must be corporations with their registered offce in
a Member State of the EU or in a contracting state of the EEA
Agreement and with their principal place of management within
Germany. If the controlled company is a limited liability company
(GmbH), then the recognition of the fscal entity is also subject to
the requirement that a loss transfer must be agreed by reference
to the provisions of § 30
The Organschaft system also applies to the trade tax. The
requirements are the same as described above for corporate
income tax purposes. The controlled company is treated as a
permanent establishment of the controlling entity. The trade
income of controlled and controlling entities is combined. The
trade tax is assessed at the level of the controlling entity and
levied by the relevant municipalities. This treatment does not ap-
ply to a non-resident controlling entity unless it has a permanent
establishment in Germany.