German Government agrees on draft bill introducing “check-the-box” elections for partnerships and further changes

Executive summary

On 24 March 2021, the German Government agreed on a bill implementing a “check-the-box” system for entity classification for tax purposes. With this bill, commercial partnerships (in Germany a KG or an OHG, but not a de-facto partnership) may elect to be treated as corporations for income tax purposes.

The bill also includes further measures. If enacted, the German Reorganization Tax Act would be further globalized. Also, a so-called “contribution solution” would be introduced to…