Press Release: State aid: Commission finds German rule on carry forward of losses for fiscal purposes (Sanierungsklausel) by ailing companies is incompatible under EU State aid rules

A so-called reorganisation clause, or "Sanierungsklausel", under German corporate tax law that enables an ailing company to offset losses in a given year against profits in future years despite changes in its shareholder structure amounts to State aid, the European Commission has decided. This is because the corporate tax law does not generally allow for losses to be offset when there has been a significant change in the ownership structure, giving a clear financial advantage to ailing firms and possibly their acquirers. The Commission has ordered Germany to recover any aid granted this way since 1 January 2008 as of when the clause came into force.

Deutsche Welle, 26.1.11: EU warns Germany that special tax breaks for troubled firms are illegal http://www.dw-world.de/dw/article/0,,14797732,00.html

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