Loss of a foreign investment reducing profit?
January 10, 2019 | 40,00 EUR | answered by Steuerberater Knut Christiansen
Dear expert,
My German GmbH had a participation in an Austrian GmbH & Co. KG (tax consolidation model).
The Austrian GmbH & Co. KG has gone bankrupt. Is the loss of this participation tax deductible for the German GmbH?
Best regards from Lengdorf
Panmax GmbH
Andy M. Paulus
Email: apaulus@panmax.de
Good day,
Thank you for your inquiry at frag-einen.com.
I would like to answer your question as part of an initial consultation. Missing information about the circumstances can affect the legal outcome.
From a tax perspective, participation is not considered a separate asset (unlike in commercial balance sheets).
In tax law, there is the so-called mirror image theory regarding the valuation of participations in partnerships. The valuation in the balance sheet is always carried out in the amount corresponding to the capital share (including possible special and supplementary balance sheets) at the level of the partnership. The ongoing losses of the participation are therefore already taken into account annually. If there is now another ongoing loss as a result of insolvency, you can claim this as a tax deduction up to the amount of your acquisition costs.
I hope this answers your question, if not, please feel free to ask a follow-up question.
Best regards,
Knut Christiansen
Tax consultant
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