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In articles nos. 64 and 127, we reported on the position of the German tax authorities regarding the amortisation of purchased trademarks and purchased licenses for the sale of medications (Arzneimittelzulassungen).

The Federal Ministry of Finance issued a new directive dated 12 July 1999 (DB 1999, 1579) confirming that, for income tax purposes, purchased trademarks are regarded as having a limited useful life even if customer recognition of the trademark is continually reinforced by regular advertising. A useful life of 15 years is assumed; the taxpayer free to prove a shorter useful life. The position of the tax authorities on this issue is unchanged.

The new aspect of the directive relates not to trademarks, but to the amortisation of purchased licenses for the sale of medications. The tax authorities previously refused to permit scheduled amortisation of such licenses on the grounds that they are renewable without time limit. However, the new directive states that, as an economic matter, licenses for the sale of medications have limited useful lives and may, like trademarks, be amortised over a period of 15 years unless the taxpayer establishes that a shorter useful life is appropriate in a specific case.

For further information, please send a fax or an e-mail stating your inquiry to KPMG Frankfurt, attn. Christian Looks: Fax +49-(0)69-9587-2262, e-mail You may also send an e-mail to KPMG Germany by clicking the Contract Contributor button on this screen.

Disclaimer and Copyright

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