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EU Commission finds German rule on carry forward of losses for fiscal purposes by ailing companies does not constitute State aid

Brussels, 2020-01-22

The European Commission has concluded that a German reorganisation tax measure, the so-called "Sanierungsklausel", does not constitute State aid within the meaning of EU rules. The Sanierungsklausel enables an ailing company to offset losses in a given year against profits in future years, despite changes in its shareholder structure.

The decision follows judgments by the European Court of Justice, which in 2018 annulled a Commission State aid decision from 2011. In order to put these judgments into effect, the Commission has assessed the measure against a broader reference framework, including the rules under German law generally allowing companies to carry forward losses for fiscal purposes. It found that the "Sanierungsklausel" does not derogate from these general rules and therefore does not provide a selective advantage to ailing companies vis-à-vis other companies. Therefore, the Commission concluded that the "Sanierungsklausel" does not amount to State aid.

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