GRP Rainer LLP

Federal Fiscal Court: Prohibition of Set-off Payments in Bankruptcy and Insolvency Proceedings

The German Federal Fiscal Court, Bundesfinanzhof (BFH), has changed its opinion on allowing set-off payments in bankruptcy proceedings in its judgment from July 25th 2012.


Cologne, NRW -- (SBWIRE) -- 07/03/2013 -- GRP Rainer Attorneys and Tax Accountants in Cologne, Berlin, Bonn, Bremen, Düsseldorf, Essen, Frankfurt, Hamburg, Hanover, Munich, Nuremberg, Stuttgart and London explain: In establishing the grounds for their decision, the judges in Karlsruhe explained that it is essential that the adjustment of the facts of the case are to be undertaken ahead of the opening of insolvency proceedings. Only at that point in time before the opening of insolvency proceedings could a set-off be undertaken as part of bankruptcy proceedings which is presented so as to be undertaken without hesitation. In addition, the Federal Fiscal Court established that the prohibition of set-off payments contained in the German insolvency code (InsO) may not be used in the case that claims and counterclaims would arise in the same chronological sequence.

The opportunity will be given to the internal revenue tax office to assert any sales tax receivables in the case that those owing taxes enter into insolvency proceedings. There is a condition that only suggests that this must take place before the point in time of the opening of insolvency proceedings.

Still, it is required that the internal revenue tax office may offset its claims against claims for payment of the company. The basis for permissibility of a set-off is specified in general in insolvency law, but just as well there may also be relevant prohibitions on set-offs contained in insolvency law.

Due to the scope and complexity of the regulations concerned, attorneys experienced in insolvency law should be consulted. An attorney can advise companies and entrepreneurs, shareholders, executives, and creditors in regard to non-managed bankruptcy in the event of insolvency.

It is also possible for entrepreneurs in the context of restructuring and insolvency consulting who wish to avert a crisis situation to develop solutions in case of imminent insolvency. Also, proceedings involving insolvency disputes, creditor disputes, and administrator liability should not be conducted without previous legal advice and counsel.

About GRP Rainer LLp
GRP Rainer LLP is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Essen, Frankfurt, Hamburg, Hannover, Munich, Stuttgart, Bremen, Nuremberg and London UK.
Contact Michael Rainer
Lawyer, Managing Partner

GRP Rainer LLP
Hohenzollernring 21-23
50672 Cologne

Phone: +49 221-27 22 75-0 click my link