German biotech calls for tax reforms following EC blocking of MoRaKG

The European Commission has blocked parts of a German law known as MoRaKG, the legislation on the modernization of the legal framework for venture capital and private equity investments.

The MoRaKG would have seen venture capital firms receive some tax breaks and was designed to temper the heavy burden of the 2008 corporate tax reform on small- and medium-sized enterprises (SMEs). Thanks to the withholding tax and stricter rules on carrying forward tax losses, the 2008 reform put SMEs, which require more investment, at a disadvantage against big corporations.

'The decision of the Commission shows that last year's corporate tax reform has nothing to offer us,' said Peter Heinrich, chairman of the country's biotechnology trade group the Biodeutschland. He is urging the new government to start anew and rescind all parts of the corporate tax reform that undermine SMEs.