Dr. Dr. Norbert Mueckl


With its judgment of November 28, 2016, the German Supreme Tax Court (Bundesfinanzhof; “BFH”) dismissed the application of the tax administration’s so-called restructuring decree (Sanierungserlass). The restructuring decree allowed, subject to certain conditions, a suspension and abatement of taxes on so-called cancellation-of-debt income (“COD-Income”) otherwise resulting from certain recapitalization measures such as the waiver of debt and “debt-to-equity swaps”. The BFH decision caused material problems to the restructuring practice because it is associated with increased legal uncertainty regarding the tax treatment of restructuring gains. A draft bill introduced by the German Bundesrat is now intended to establish a legal basis for the exemption from taxation of restructuring gains (section 3a EStG-E, section 3a GewStG-E).