Now the parliament has introduced an amendment to this law whereby the agreement is regarded as executed if the parties have followed accounting rules accurately. Therefore, minor errors in the annual accounts do not constitute a risk for refusal of group taxation anymore.
Furthermore, it is no longer necessary for the parent company to be domiciled in Germany. Also parent entities in EU/EEA countries are accepted. However, they are only able to enter into group taxation if they have a permanent establishment (PE) in Germany of which Germany has the right for taxation and the participation in the subsidiary belongs to the PE.
Despite the upcoming elections in autumn 2013 this law has passed the Federal Council of Germany. The new rules come into effect immediately.
