Provisional tax approval for simplified sibling merger ahead of legislation

Sometimes it is good to remove redundant BVs from a BV structure by disposing of them. In this regard, legal merger can be a useful method, as the assets of the disappearing BV(s) are transferred to the acquiring BV and the shareholders of the disappearing BV become shareholders of the acquiring BV. If the disappearing and acquiring BV have the same shareholders, the procedure is even simpler because the acquiring BV does not have to issue shares: the (simplified) sister merger.

Tax-wise, from the perspective of the substantial interest regime, a problem arises with this simplified sibling merger. Passing on the tax claim (DSR) to the acquiring shareholder is not possible, due to the fact that no shares are issued. With the exception of abusive situations, this should be the intention, given the parliamentary history, which explicitly states that the starting point for a regulation on the tax supervision of legal demergers and legal mergers should be that a demerger or merger motivated by business considerations should not be impeded by taxation.

In the Policy Decree amending the Decree on Substantial Interest in Advance of Legislation, dated March 11, 2024 (MoF 2024-0000167459), it was announced that the Decree on Substantial Interest of March 9, 2018 (No. 2018-27139) will be temporarily supplemented with an approval to apply the DSR in situations where the simplified sibling merger route is used.