A rule in German corporate tax law, the so called ‘reorganisation clause’ that allows an ailing company to offset losses in one year against profits in future years, despite changes in its shareholder structure, amounts to state aid. This was the European Commission’s finding following a year-long in-depth investigation. Generally, German corporate tax law does not permit losses to be offset where there is a significant change to ownership structure, so this rule favours ailing companies (and in some instances, the companies that acquire them). Since the provision is a departure from the general principle of corporate tax law this benefit is selective and is therefore state aid. The Commission has indicated that aid designed to benefit ailing companies should be granted in accordance with the Rescue and Restructuring Guidelines. Germany has two months to identify the companies that have benefited and the amount of aid which they will now have to repay.