Germany: restriction of fiscal unity (Organschaft) regime to domestic companies
A company set up in accordance with the company law of another member state which has its registered office outside Germany under German law and place of effective management in Germany cannot benefit from the fiscal unity regime called Organschaft which is available to German companies, although this company is fully taxable in Germany. As a consequence the company cannot enjoy the tax benefits resulting from the allocation of the group company's income to the parent company (offsetting of profits and losses within the fiscal unity). Such provisions are considered to be discriminatory in comparison to domestic competitors and may restrict the freedom of establishment of businesses in Germany. The EU Commission underlines that this case does not deal with cross-border loss compensation.
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