Germany: 207. Tax Authorities Reverse Position On Amortisation Of Licenses For The Sale Of Medications

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 cLooks@kpmg.com. You may also send an e-mail to KPMG Germany by clicking the Contract Contributor button on this screen.

This article treats the subjects covered in condensed form. It is intended to provide a general guide to the subject matter and should not be relied on as a basis for business decisions. Specialist advice must be sought with respect to your individual circumstances. We in particular insist that the tax law and other sources on which the article is based be consulted in the original, whether or not such sources are named in the article. Please note as well that later versions of this article or other articles on related topics may have since appeared on this database or elsewhere and should also be searched for and consulted. While our articles are carefully reviewed, we can accept no responsibility in the event of any inaccuracy or omission. Please note the date of each article and that subsequent related developments are not necessarily reported on in later articles. Any claims nevertheless raised on the basis of this article are subject to German substantive law and, to the extent permissible thereunder, to the exclusive jurisdiction of the courts in Frankfurt am Main, Germany. This article is the intellectual property of KPMG Deutsche Treuhand-Gesellschaft AG. Distribution to third persons is prohibited without our express written consent in advance.