§ 8c KStG (loss-carryforward forfeiture on share transfer)

§ 8c of the German Corporate Income Tax Act (KStG) provides: if more than 50% of a corporation's shares transfer to an acquirer (or a group of related acquirers) within 5 years, accumulated corporate tax loss carryforwards are forfeited in full; between more than 25% and 50%, proportionally. For insolvent targets, which often carry substantial losses from their crisis years, this can destroy significant economic value if the share transfer isn't structured carefully.

Two practically important exceptions: the restructuring clause (§ 8c(1a) KStG) preserves the carryforward if the acquisition serves to restructure the business and certain conditions are met (preservation of essential operating structures, no unrelated-industry repurposing); the continuation-linked loss carryforward (§ 8d KStG) allows preservation on request if the business continues unchanged.

For buyers in an insolvency-plan (share-deal) transaction, § 8c KStG is therefore worth checking early: whether and to what extent loss carryforwards survive can materially shape the deal structure (timing of the share transfer, continuation commitments in the plan). The question doesn't arise in a pure asset deal — the loss carryforwards stay with the (typically liquidated) old legal entity.