Law on the reduction of barriers to investment in the German Democratic Republic including Berlin (East) (DDR-Investment Act-GDR-IG)

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GDR-IG

Date of completion: 26.06.1990

Full quote:

" DDR Investment Act of 26 June 1990 (BGBl. 1143), which has been amended by Annex I Cape Ider Regulation B II, point 22 EinigVtr of 31 August 1990 "

Status:

Amended by Annex I Kap IV B II No. 22 EinigVtr v. 31.8.1990 iVm Art. 1 G v. 23.9.1990 II 885, 978

For more details, please refer to the menu under Notes

Footnote

(+ + + Text evidence from: 29.6.1990 + + +)
(+ + + For application cf. § 7 + + +) Unofficial table of contents

Input formula

With the approval of the Federal Council, the Bundestag has adopted the following law: Unofficial table of contents

§ 1 Tax-free reserve on the transfer of certain economic goods to a capital company or acquisition or economic cooperative in the German Democratic Republic including Berlin (East)

(1) taxable persons who determine the profit pursuant to § 4 (1) or (5) of the Income Tax Act and the deductible assets belonging to the fixed assets of a domestic holding in a capital company with a registered office and a management board in the German Democratic Republic, including Berlin (East), against the granting of new shares in the company, may in the marketing year of the transfer up to the amount of the profit incurred by the transfer, a tax profit may be reducing back-up. If there is already a holding in a capital company with its registered office and management in the German Democratic Republic, including Berlin (East), and in such a case, it will be part of the assets of a domestic holding company. economic goods which can be used in the company without the granting of new shares and without any other consideration corresponding to the value of the goods transferred shall be subject to the provisions of the first sentence, subject to the proviso that during the marketing year the Transfer up to the level of the free or non-remunerated Transfer of the resulting profits can be formed by a reserve. The reserve shall be dissoled at the latest from the tenth marketing year following its formation to at least one tenth of a year of increase in profits. (2) The formation of the reserve shall require that:

1.

the capital company shall exclusively or almost exclusively carry out the following activities in the German Democratic Republic including Berlin (East): the manufacture or supply, including exports of goods, except Weapons of a different nature other than sports and hunting weapons, the extraction of natural resources or the effect of other industrial or agricultural or forestry or professional activities or the holding of a participation of at least one A quarter of the nominal capital of a capital company with a registered office and Management in the German Democratic Republic, including Berlin (East), which has exclusively or almost exclusively the aforementioned activities in the German Democratic Republic, including Berlin (East), and

2.

the formation and dissolution of the reserve in the accountancy of the taxpayer can be pursued.

At the end of the marketing year in which the conditions set out in point 1 or 2 are no longer met, the full amount of the reserve shall be disburdened at the full rate. (3) Where a participation referred to in the first or second sentences of paragraph 1 is applied, wholly or in part. shall be sold or transferred to private property in the course of the marketing year of the sale or transfer to the private property as a whole or in proportion of the share of the person who has been sold or transferred to the private property. Participation in the overall participation within the meaning of the first or second sentences of 1 or 2 prematurely increasing to be resolved. The same applies in the cases referred to in the second sentence of paragraph 1, in so far as the transferred assets are excluded from the assets of the capital company in the German Democratic Republic, including Berlin (East). (4) Paragraphs 1 to 3 in the case of transferable assets belonging to the assets of a domestic holding, are included in an acquisition or economic cooperative with the head office and management in the German Democratic Republic, including: Berlin (East) shall apply mutatily. Unofficial table of contents

§ 2 Tax-free reserve for losses of a subsidiary in the German Democratic Republic including Berlin (East)

(1) Unrestricted taxable persons who determine the profit in accordance with § 4 (1) or § 5 of the Income Tax Act may be liable for losses of a capital company with head office and management in the German Democratic Republic including Berlin (East), in whose nominal capital the taxable person is directly involved in at least 10% of the hundred (subsidiary), constitute a reserve which reduces the tax profit. The formation of the reserve shall be for the marketing year in which the taxable person acquires shares in the subsidiary to an extent which, for the first time, leads to the taxpayer's participation in the volume referred to in the first sentence, or-if: the taxable person in the subsidiary has already been involved in the extent referred to in the first sentence, in which he acquires further shares in that company, and shall be allowed in the four following marketing years; the newly acquired shares must be shall be at least 5 per cent of the nominal capital of the subsidiary. The reserve may be constituted for the marketing year of the taxable person in which the loss of the subsidiary is incurred, up to the amount of the part of the loss, which shall be the ratio of the newly acquired shares to the nominal capital of the company; it is to be reduced by the amount in which the taxable person carries out a partial depreciation in the marketing year of its formation on the newly acquired shares in the subsidiary. The reserve may not exceed the amount with which the newly acquired shares are placed in the tax balance. (2) The condition for the formation of the reserve is that:

1.

the new share acquisition within the meaning of the second sentence of paragraph 1 was taken after 31 December 1989;

2.

the subsidiary is exclusively or almost exclusively the subject of the following activities in the German Democratic Republic including Berlin (East): the manufacture or supply, including exports of goods, except Weapons of a different nature other than sports and hunting weapons, the extraction of natural resources or the effect of other industrial or agricultural or forestry or professional activities or the holding of a participation of at least one A quarter of the nominal capital of a capital company with a registered office and Management in the German Democratic Republic, including Berlin (East), which has exclusively or almost exclusively the aforementioned activities in the German Democratic Republic, including Berlin (East), and

3.

the conditions set out in point 2 are provided by the submission of relevant documents, in particular balance sheets and results, and any annual reports of the subsidiary; on request, these documents shall be accompanied by the required to submit the examination note to an auditor or a comparable body,

4.

the taxable person and the subsidiary undertake to submit documents of the type referred to in point 3 also for the marketing years following the loss year, as long as a reserve is shown within the meaning of paragraph 1; The results of the operating results of the subsidiary in these marketing years shall be subject to no doubt as to the level of the operating results of the subsidiary

5.

the subsidiary declares that it agrees to the granting of information by the tax authorities of the German Democratic Republic, including Berlin (East), to the domestic financial authorities; and

6.

the formation and dissolution of the reserve in the accountancy of the taxpayer can be pursued.

(3) The reserve is to be resolved in a way that is eroding.

1.

if the subsidiary achieves a profit in a marketing year following the loss year,

in the amount of the part of the profit which corresponds to the ratio of the newly acquired shares within the meaning of the second sentence of paragraph 1 to the nominal capital of the subsidiary, to the extent that it provides the loss shares which are the second sentence of the second sentence of paragraph 1 in the case of the formation of the reserve the half-sentence and the sentence 4 have not been taken into account or exceed the amount of the resolution referred to in paragraph 2,

2.

if, in a marketing year following its formation, the newly acquired shares within the meaning of the second sentence of paragraph 1 shall be subject to a partial depreciation on the subsidiary,

in the amount of the part-value depreciation,

3.

if the taxable person sells shares in the subsidiary or is transferred to the private property,

at the level of the part of the reserve, which corresponds to the share of the shares sold or transferred to the private property in the newly acquired shares within the meaning of the second sentence of paragraph 1,

4.

if the verification obligations referred to in paragraph 2 (4) and (6) are not fulfilled,

in full height,

at the latest, however, at the end of the fifth marketing year following their formation. (4) Paragraphs 1 to 3 shall apply to the losses of an acquisition or economic cooperative with its registered office and management in the German Democratic Republic including Berlin (East), as appropriate. Unofficial table of contents

§ 3 Trade tax

The provisions of § § 1 and 2 shall also apply to the determination of the business contract in accordance with § 7 of the Trade Tax Act. Unofficial table of contents

§ § 4 and 5 ----

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§ 6 Berlin clause

This law shall also apply in the Land of Berlin in accordance with the provisions of Section 12 (1) of the Third Transfer Act. Unofficial table of contents

§ 7 Entry into force, period of application

(1) This Act shall enter into force on the day after the announcement. It is to be applied for the first time for marketing years ending in 1990. (2) A reserve in accordance with § 1 can only be formed if the assets are transferred before 1 January 1992. (3) A reserve pursuant to § 2 may only be formed where the acquisition of new shares within the meaning of section 2 (1) sentence 2 has taken place before 1 January 1992. The formation of the reserve is excluded, insofar as the loss of the subsidiary

1.

In accordance with § § 14 to 17 of the Corporate Tax Act, an organ carrier is to be attributed or

2.

has been deducted in connection with the income determination of the subsidiary pursuant to Section 10d (1) of the Income Tax Act in conjunction with Section 8 (1) and (5) of the Corporate Tax Law.