The Federal Council permitted the bill on amendments to the change-in-ownership rules on 16 December 2016. The bill will enter into force after its publication in the Official Gazette.
According to the section 8c of the Corporate Income Tax Act and under the change-in-ownership rules, a company is not allowed to carry over losses if, within 5 years, more than 50% of the capital or participating interest, membership or voting rights in that company are transferred, directly or indirectly, to a purchaser or a person related to the purchaser. The loss carry-forward will be disallowed pro rata for transfers of shares or voting rights between 25% and 50% within 5 years.
The bill provides for an exception to the application of the change-in-ownership rules in cases where the loss-making company’s business operations are continued unchanged from the time of incorporation, or at least during the 3 fiscal years prior to the change in ownership. If the conditions are met, taxpayers may avoid application of the change-in-ownership rules and subsequent forfeiture of loss carry-forward by filing a respective application with the tax authorities.
However, the forfeiture of loss carry-forward will still apply if, in subsequent years, one of the following events occurs:
a temporary or final discontinuation of the business operations; a change to the purpose of the business operations; takeover of an additional business operation; participation as a partner in a partnership; becoming a controlling parent of a group of companies under the group taxation regime; or assets being transferred to the loss-making company and recorded below fair market value for tax purposes.