Question

what is the aim of the consolidation cost setting rules?

Answer 1

Under consolidation, assets are brought into a consolidated group by a subsidiary member according to the cost setting rules. It means that when an entity joins a consolidated group, the total value of the entity’s assets for tax purposes is based on the cost of acquiring the entity – the tax values of the entity’s assets are aligned with the tax values of the membership interests in the entity.

Application of Cost Setting Rules: When a consolidated group is formed, no changes are made in relation to the assets of the head company (except that intra group membership interests and debts are ignored after formation). The cost setting rules establish the tax cost setting amounts for assets of subsidiaries.