Liquidation in tax law

Liquidation is a component of genetic taxation, it is the last tax period in the “life cycle” of a company. The EStG describes the liquidation of a partnership as an operational discontinuation, the KStG uses the terms liquidation and dissolution (liquidation, cf. § 11 KStG). The liquidation taxation aims in particular to ensure the tax burden on the hidden reserves.
The liquidation profit is calculated according to the general principles of Determination of profits detected. According to § 11 I KStG, the taxation period should not exceed three years. According to § 11 II KStG, the profit results from the comparison of final settlement assets and initial settlement assets (business assets at the end of the previous financial year); it is subject to the corporation tax rate.

In the case of the shareholders, the liquidation shares are subject to income tax as income from capital assets (Section 20 I No. 2 EStG). If there is a substantial investment, a sale is faked in accordance with Section 17 IV of the Income Tax Act. Accordingly, the common value of the property as income from commercial operations is subject to income tax. The corporation remains the tax addressee until the end of the liquidation, consequently the liquidation profit is subject to trade tax.

A liquidation i. S. d. Section 11 of the KStG also applies in accordance with Section 12 of the KStG if the management and headquarters of a corporation with unlimited tax liability are relocated abroad. This is controversial under European law. The sale of individual assets as well as the transfer to the private assets of the shareholders solve one value added taxObligatory (sales tax, personal consumption), unless an exemption from § 4 UStG is given. the genetic taxation is becoming increasingly important in the new bankruptcy law.

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