Shell company

from Wikipedia, the free encyclopedia

A shell company , also shell company or - if an essential property of the shell company is a tax loss carry forward - loss coat called, is a particular manifestation of a corporation , such as a GmbH or a limited company . A corporate shell is created when an active corporation ceases its operative business, but remains as a legal person in the commercial register . The term “shell” refers to the intended use of the shell company. The corporation is a “mere coat” that can be used for a new business purpose, the company itself has no significant assets and does not have any business operations. Company shells are not infrequently traded high and offer the buyer and the seller various advantages.

General

The term shell company is often used synonymously with shelf company . However, the two manifestations are very different. The fundamental difference is that the shell company has already been economically active. The shelf company, on the other hand, has never developed any business activity. It was set up to be used or sold later by the founders. The shelf company is often cheaper than the shell company. The fundamental advantage of a shelf company is that it is not burdened with liabilities . In addition, there is less need for advice with a shelf company than with a shell company.

Company shells are traded and held by specialized law firms. A well-known company name can be of great advantage. Some shell companies are burdened with liabilities or have high losses. Buyers are to be informed about the exact finances of a shell company. You may have to assume debts, but you have the option to claim losses for tax purposes. In addition, the creditworthiness of an existing shell company is usually very high. This has participated in business life for many years and has developed its creditworthiness positively. When taking over a shelf or shell company, the process is the same. Both forms of company have already been established, entered in the commercial register and provided with share capital . All the buyer has to do is update the data in the commercial register.

Coat recovery

Entrepreneurs who want to sell a company benefit from various advantages. They avoid costly liquidation of their company by selling it. In addition, a dissolution requires an entry in the commercial register and other extensive processes. Liquidation of the company is also associated with high costs and time. By selling a company shell, entrepreneurs can benefit - according to the motto: "Better to sell profitably than liquidate expensive".

Buyers can use a shell company for a new business purpose. The basically "empty" company, which has no more capital and no longer has any business operations, is provided with new capital and continued - often for a completely different business purpose, if desired under a different name. Advantages over a complete start-up can be:

  • Time: The establishment of a GmbH and especially an AG is bureaucratic and can take weeks or even months, the listing of an AG even longer. Rededicating an existing society saves time and money.
  • Tax utilization of loss carryforwards: Companies that are no longer active have mostly made more business losses recently. These losses can be offset against future company profits in such a way that taxes on company profits are reduced.

Possible future shell disposals are often the reason why bankrupt and liquidated stock corporations continue to be traded on the stock exchange.

Tax consideration of the shell company

In the case of a shell company, buyers must assume any existing liabilities of the company. In return, you have the option of using existing loss carryforwards for tax purposes. The loss deduction is tied to the taxpayer who suffered it - this also applies to legal entities. The sale of shares therefore not only transfers liabilities, but also loss carryforwards. The assertion of loss carryforwards is linked to various requirements.

Germany

Shell purchase regulation (until 2007)

A shell purchase within the meaning of Section 8 (4) KStG exists if the shares in a corporation with existing loss carryforwards are acquired with the aim of making the losses available to the purchaser to reduce taxes. The legislator pursues the goal of preventing this "trade in losses" as far as possible. Legal identity and economic identity are therefore required in order to allow the use of the lecture. If both prerequisites are met, loss use within the meaning of Section 10d EStG is permissible.

The continuation of the legal identity is to be judged under civil law. The economic identity will not be accepted if more than 50% of the shares are transferred and the business operations of the company with predominantly new operating assets is continued or resumed.

A special rule applies to the restructuring of companies. The use of the losses is permitted here, even if the criteria per se are violated. In the event of restructuring, the existing business operations must be continued on a comparable scale for another five years.

The legislative requirements for the purchase of coats have been supplemented and specified more precisely in numerous judgments. As an example, reference is made to several decisions by the BFH in connection with the addition of new business assets .

The tax authorities regularly refer to the BMF letter of April 16, 1999, which provides for a period of 5 years for the period in which the addition of new business assets is to be checked, also and without a legal basis. According to the more recent BFH jurisprudence, this is outdated; an examination is required in individual cases with regard to a previously planned course of action by the transferee (so-called overall plan consideration).

The shell purchase regulation of § 8 Abs. 4 KStG will be repealed with the corporate tax reform 2008 and will apply for the last time if more than half of the shares in a corporation are transferred within a period of five years beginning before January 1, 2008, and the economic identity of the corporation before January 1, 2013 no longer applies.

Loss deduction restriction (from 2008)

With the corporate tax reform 2008, the shell purchase regulation will be replaced by a new loss deduction restriction for corporations in a separate § 8c KStG. The decisive criterion for the loss deduction restriction in future will only be a qualified change of shareholder. The addition of mainly new business assets (see above) no longer matters:

  • In the case of direct or indirect share transfers to an acquirer or "acquiring hand" of more than 25% and of up to 50% within a five-year period, unused losses that arose up to the damaging acquisition of the shares do not apply proportionally to the transfer quota
  • If more than half of the company rights are transferred within 5 years, this leads to the complete extinction of the losses that were not used until the transfer.

The provision applies for the first time for the 2008 assessment period and for share transfers after December 31, 2007.

At the initiative of the Finance Committee of the Federal Council on April 3, 2009, the corporate tax reform was eased as part of the Citizens Relief Act. Among other things, a clause was inserted in § 8c KStG, according to which the loss carryforwards are temporarily retained in the event of restructuring under certain circumstances.

However, the European Commission sees this regulation as a violation of European state aid law. It therefore initiated a formal investigation procedure by resolution of February 24, 2010. In the event of incompatibility with European state aid law, the tax concessions according to Art. 14 of the EU State Aid Procedure Regulation must also be repaid retrospectively by the respective company. The regulations on the validity of tax assessments or binding information do not apply here according to Section 1 (1) sentence 2 of the Tax Code (AO).

In a decision of March 29, 2017, the Federal Constitutional Court declared the loss deduction restriction for share acquisitions between 25% and 50% unconstitutional and set the legislature a deadline for constitutional design until December 31, 2018. With the introduction of the so-called “continuation-related loss carryforward” on application ( Section 8d KStG), the loss deduction restriction has already been legislatively relaxed with effect from January 1, 2016.

Switzerland

First of all, it must be noted that, in contrast to part of the legal doctrine, the Federal Supreme Court regards a legal transaction for the transfer of a shell company as void. The commercial register manager would therefore have to refuse to register an amendment to the articles of association regularly associated with the purchase of a share shell.

From a tax point of view, the buyer cannot avoid the costs of a start-up by buying a shell, because from a tax perspective, buying a shell is viewed as a liquidation and a subsequent start-up. The same duties and taxes are subsequently levied as in the case of liquidation and formation. Therefore, the difference between the purchase price of the participation rights and their nominal value is subject to withholding tax and, for the selling shareholder, also to income tax .

Acquisition of a listed shell company

What is meant here is the takeover of a dormant publicly listed company (an empty shell company with no economic content) by a non-listed company for the purpose of circumventing the numerous obligations in the context of a regular IPO . Shareholders in the dormant company can be compensated with shares in the merged company, which means that there are no liquidity problems. The share shell is replenished with money by the buyer through a capital contribution , the purpose and seat of the company are changed and a new supervisory board is appointed.

Web links

literature

Individual evidence

  1. ↑ shell company Gabler Bank Lexikon , accessed on May 29, 2019
  2. ↑ Shell company HDB Beteiligungsgesellschaft, accessed on May 29, 2019
  3. ↑ shell company Gabler Bank Lexikon , accessed on May 29, 2019
  4. ↑ Shell company HDB Beteiligungsgesellschaft, accessed on May 29, 2019
  5. ↑ BFH, judgment of March 14, 2006 , Az.IR 8/05, DB 2006, 1349; BFH, judgment of December 15, 2004 , Az. IB 115/04, BStBl II (2005), 528; BFH, judgment of May 26, 2004 , Az.IR 112/03, DB 2004, 2346; BFH, judgment of August 8, 2001 , Az.IR 29/00, DB 2001, 2380; BFH, judgment of August 13, 1997 , Az.IR 89/96, DB 1997, 2411.
  6. ↑ BMF letter of April 16, 1999 - IV C 6 - S 2745 - 12/99 (PDF; 128 kB)
  7. ↑ BR-Drucks. 168/1/09.
  8. ↑ Press release of the European Commission of February 24, 2010 . Retrieved June 12, 2010.
  9. ↑ Regulation (EC) No. 659/99 (PDF) of the Council of March 22, 1999 on special provisions for the application of Article 93 of the EC Treaty.
  10. ↑ BVerfG 2 BvL 6/11, press release of May 12, 2017.