Requirements of a tax deferral model

Because the examination of the prerequisites of a tax deferral model takes place at the investor level and not at the provider level, a tax deferral model may exist in individual cases even if the projected losses are attributable solely to statutory depreciation.

Since 2005, there has been a provision in tax law according to which losses from tax deferral models may only be offset against future profits from the same source of income. However, the law only roughly defines what exactly constitutes a tax deferral model. The Federal Fiscal Court has now ruled in this regard that a tax deferral model may also exist if the projected losses are based solely on depreciation methods regulated by law (declining balance depreciation and special depreciation).

In such a case, the Federal Fiscal Court sees no contradiction between the incentive effect for investments created by the legislator through special depreciation allowances and the loss compensation restriction for tax deferral models. The investment decision for the investor is not made any easier by the additional finding of the judges that the question of whether a tax deferral model exists must be examined on an investor-specific basis and thus cannot be globally decided in advance for a specific capital investment.