Stückmann Podcast Episode 24: Taxes to go – The midnight business
Juliette Gill and Oliver Middendorf explain what the so-called midnight deal is all about – a tax-relevant arrangement relating to the extended trade tax reduction for corporations. They shed light on the requirements for trade tax exemption on rental income and capital gains, and why the timing of a property sale plays a decisive role. Using practical examples, they show how clever planning can secure significant tax advantages. 15 minutes of tax to go!
to go
Important topics:
Extended trade tax property reduction
Corporations in particular can benefit from the extended trade tax reduction on real estate, provided that they exclusively manage their own real estate, among other things. In this respect, the income may be exempt from trade tax.
Midnight business
According to the case law of the Federal Finance Court, trade tax can be avoided by means of a so-called midnight transaction. The midnight transaction stipulates that the beneficial ownership of the last remaining property of the corporation is transferred at 11:59 p.m. on 31 December if the assessment period corresponds to the calendar year. This means that the conditions for the extended trade tax reduction should be met throughout the entire assessment period.
Fulfilment of requirements throughout the entire survey period
The extended trade tax reduction can only be claimed if the necessary conditions are met throughout the entire assessment period. The sale of the only or last remaining property during the year may result in the entire income for the assessment period being subject to trade tax.
Alternative approaches
In our podcast, we also discuss alternative approaches
