German Rules on Loss Forfeiture Ruled Partly Unconstitutional

This note describes a recent decision of the German Constitutional Court regarding the German rules on loss forfeiture applicable to corporations and its consequences for the German direct tax system. The decision has upended the entire German regime for loss forfeitures since a vital aspect of the rules governing loss utilization has been declared unconstitutional. The German legislature must amend the rules, according to the decision, by the end of 2018 or they will be invalid from the date of their introduction in 2008.