Obligation of disclosure and due diligence in the focus of the BGH
A so-called due diligence review is probably indispensable in connection with company acquisitions and sales and has long since established itself as the market standard in the run-up to M&A transactions. However, due diligence reviews are also a regular occurrence in other areas of law – including real estate transactions. A recent decision by the […]
Purchase price with earn-out – advantageous taxation or not?
In its ruling dated 9 November 2023 (case no. IV R 9/21), the BFH decided on the taxation of so-called earn-out payments that these purchase price components are (only) taxable as subsequent business income at the time of receipt. This raises the further question of whether the agreement of earn-out payments as a whole jeopardizes […]
Dependent employment of the shareholder-managing director of a GmbH, status procedure and change in actual circumstances
The Federal Social Court ruled on 29 March 2022 (case reference: B 12 KR 1/20 R) that the status determination notice is an administrative act with permanent effect that can be revoked with retroactive effect in the event of a significant change in factual or legal circumstances.
Future financing act – new tax benefits for employee participation programs
From 1 January 2024, employee participation programs may fall more frequently under the benefits of § 19a German Fiscal Code (Einkommensteuergesetz – EStG) (special provision for income from employment in the case of asset participations –Sondervorschrift für Einkünfte aus nichtselbständiger Arbeit bei Vermögensbeteiligungen) and therefore benefit from the associated tax advantages.
BFH: Bequest concerning a domestic property is not subject to limited inheritance tax liability
In its ruling of 23 November 2022 – II R 37/19, the Federal Fiscal Court (Bundesfinanzhof – BFH) decided in favour of the foreign claimant that – unlike the direct acquisition of a domestic property – the bequest concerning the acquisition of a domestic property is not subject to limited inheritance tax liability.
Effectiveness of majority resolutions in partnerships
A clause in a partnership agreement of a partnership (Personengesellschaft) which provides for a simple majority of votes for all shareholder resolutions may be interpreted as giving formal legitimation that all matters subject to a resolution by the shareholders are subject to the majority principle (Mehrheitsprinzip). This also includes so-called fundamental transactions (Grundlagengeschäfte) and interventions […]
ESOP taxation – German federal fiscal court opens up scope for the taxation of stock options in connection with a change of residence
In the “War for Talents”, start-ups often rely on employee stock option plans (ESOPs) to attract motivated and highly qualified employees and retain them in the long term, as salaries are usually not competitive. An ESOP usually runs for several years and the employee’s circumstances can change during this period. Such a change in circumstances […]
BFH recognizes incongruent resolution on advance profit distribution breaching articles of association
Contrary to the view of the tax authorities, the Federal Fiscal Court (Bundesfinanzhof – BFH) recognizes the validity under civil law of a unanimous resolution on an incongruent advance distribution, requiring the distribution resolution to be used as the basis for taxation. In contrast to the tax authorities, the BFH, in its ruling of 28 […]
No discharge of the managing director of a GmbH by merely approving the annual financial statements
The adoption of the approval of the annual financial statements of a GmbH by its shareholders does not mean that the amount of the salary paid to the managing director was appropriate. A claim for repayment by the Company in this respect is therefore not excluded. However, the salary payment for the years for which […]
Electronic signatures and executions in legal transactions
Digital solutions are increasingly being used in practice to sign contracts and other binding declarations. The method to date of printing out a declaration, signing it, scanning it and then sending it has proven to be too time-consuming. Electronically generated documents and signatures can simplify the signing process. However, public administration has so far been […]