Recent Changes to the German Fiscal Unity Regime Affecting Inbound Investors

This article describes the German fiscal unity regime for corporate and trade tax purposes (Organschaft). For inbound investors in particular, the German fiscal unity regime used to offer a straightforward opportunity to debt finance acquisitions of German operating companies. Recent legislative changes, however, have made base erosion in Germany via debt push-downs substantially more difficult in this context. With a German partnership as a top holding company, withholding tax issues may still be avoided.