Breach of the blocking period following a reorganisation - Tax concessions despite Section 22 of the Reorganisation Tax Act?
The legal consequences of breaching the blocking period within the first year following a contribution in accordance with the Reorganisation Tax Act (Umwandlungssteuergesetz, UmwStG) have been the subject of dispute for a long time. In particular, it is questionable whether, besides the taxation of the contribution gain, other privileges are excluded.
The tax court of Lower Saxony, in its ruling of 2.4.2025 (case reference: 9 K 147/22), decided that in the event of a breach in the first year of the blocking period, the ‘Contribution Gain I’ must admittedly be taxed, however no reduction of one-seventh needs to be made. Furthermore, the tax concessions under Section 16(4) and Section 34 of the German Income Tax Act are not excluded from a teleological point of view.
The court based its decision primarily on the wording and systematics of Section 22 UmwStG. Any further sanctions cannot be inferred from this provision. The appeal is pending before the Federal Fiscal Court under the reference: X R 14/25.
