Is it feasible to plan an acquisition of a German business on the assumption of being able to obtain over time a German deduction for the costs of acquisition?

Yes, if the assets of an existing business (including the off-balance sheet intangibles) are acquired, but not if the object of the transaction are the shares in a company.

If the business is currently unincorporated, that is it is either directly owned by a natural person, or is a partnership, or is a business segment of a company, the acquirer will purchase assets from the seller and will be able to allocate the purchase price paid over the assets actually purchased up to their respective market values. These stepped-up values will then be depreciated as appropriate to the type of asset. However, the gain will be taxable to the seller, whereas the gain of a seller from the sale of shares would either be tax-free altogether (if the seller is incorporated) or would only be taxable by him as to one-half (the seller is a natural person). Consequently, the seller will not usually have an interest in selling assets rather than shares, although, on the other hand, he will in most cases not be able to avoid or reduce an otherwise taxable gain by hurriedly incorporating a business immediately before or during negotiations for its sale.

On the last two occasions of major changes to German tax law, it was the avowed intent of the government to prevent acquirers of a German company from obtaining a tax-free step-up of its assets to the purchase price and so therefore obtain a full deduction over the useful lives of the assets concerned. The first attempt was successful in most instances, although it did leave open a back-door of acquisition through a partnership. This has now been closed, with the consequence that remaining possibilities open to acquirers are too specific to be of relevance to a general discussion.