Breach of blocking period pursuant to Sec. 6 (5) Sentence 6 EStG due to change of legal form of a parent company

According to the Federal Fiscal Court, the change of legal form of a parent partnership leads to a blocking period violation pursuant to Sec. 6 (5) Sentence 6 of the German Income Tax Act. The decision is likely to be of significance beyond the specific facts of the case for all partnerships that are considering opting for corporation tax pursuant to Sec. 1a KStG. This is because exercising the option represents a fictitious change of legal form of the partnership for tax purposes.