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In articles nos. 72 and 72, we reported on comprehensive directives issued by the tax authorities in draft form dealing with the tax reorganisation act and the so-called "exchange opinion." The final versions of these directives have now been issued (tax reorganisation act = directive of 25 March 1998; exchange opinion = directive of 9 February 1998 - DB 1998, 394).

The "exchange opinion" is a 1958 ruling by an en banc panel (Grosser Senat) of Germany's highest tax court that the exchange of shares in one corporation for shares in a second corporation will, by way of exception, not result in realisation of gain or loss by either party if the shares exchanged are economically equivalent in value, type, and function.

We will comment in more detail on the final text of both directives in forthcoming articles.

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