BIO Deutschland gives expert testimony at hearing on loss carry-forward legislation
On 21 November, at a public hearing of the Bundestag’s Finance Committee on a draft bill to update the tax loss carry-forward rules for corporations (18/9986), BIO Deutschland gave an overall positive assessment of the Federal Government’s legislative proposal for loss carry-forwards after a change in corporate ownership. In the future, companies whose financing relies on the new entry or substitution of controlling shareholders will be able to use unused losses provided that the same business is maintained after the change in ownership. The draft bill stipulates, however, that companies must fulfil certain requirements to take advantage of this provision.
Viola Bronsema, Managing Director of BIO Deutschland, welcomed the proposed legislation. She stated that the current law puts the industry’s small and medium-sized enterprises at a competitive disadvantage to large companies, because changes in the shareholder structure cause tax loss carry-forwards to be proportionally or completely forfeited, forcing private investors to then use part of the company’s financial substance to meet tax obligations. “This increases private investors’ entrepreneurial risk and makes it more difficult for young technology companies to attract the equity capital needed to finance development and growth,” concluded the association in its official statement, while at the same time calling for revisions to the draft bill.