Federal Tax Court judgement: Taxation of the takeover profit on upstream mergers doubtful under EU law
BFH-Insights“Transfer profit” [Übernahmegewinn] is one of the four types of profit concerning which reorganisation tax law provides rules on how they come about and on their income tax treatment. In the case of reorganisations into a partnership, the keyword “elimination of acquisition costs” (section 4(6) sentence 6 of the Reorganisation Tax Act [Umwandlungssteuergesetz–UmwStG]; section 18(2) sentence 1) is frequently discussed under section 4(4) and following of that Act (most recently Federal Fiscal Court [Bundesfinanzhof–BFH] judgement of 28 May 2026, file ref. IV R 3/23). Increasingly, however, doubts are also being raised about the income tax treatment of the takeover profit that arises when corporations are reorganised into other corporations (section 12(2); section 19(1)). The tenth chamber of the Federal Fiscal Court has now expressed doubts with regard to the EU Merger Directive (2009/133/EC; section 1(5) no. 1 of the Reorganisation Tax Act) in an order for reference to the European Court of Justice (Art. 267(3) TFEU; file ref. X R 27/22).
