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: 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.
New real estate transfer tax pitfalls in share deal transactions
If the signing and the closing of the share deal occur at different times, the tax authorities consider that there are two transactions that are each subject to real estate transfer tax. As a result, real estate transfer tax may be assessed more than once for one and the same transaction. According to a new […]
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 […]
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 […]
Consequences of non-compliance from a company perspective
“If you think compliance is expensive, try non-compliance” – this much-quoted statement by former U.S. Attorney Paul McNulty makes it clear why it pays off to establish an appropriate compliance system as a preventive measure, even from a company’s point of view. This article deals with the potentially disastrous legal consequences of failing to implement […]
Changes in real estate valuation for the purposes of inheritance and gift tax
The Annual Tax Act 2022 includes adjustments of the methods for valuing domestic real estate, which may lead to significantly higher real estate values. Real estate gifts will be particularly affected by this. From 1 January 2023, higher gift tax charges are to be expected in many cases. However, whether action is required shortly before […]
Changes in foundation law – “Update” or mere unification?
The foundation law currently in force urgently needs to be reformed. German foundations pursue almost exclusively charitable purposes and have often existed for several hundred years. Currently more than 23,000 foundations exist in Germany. The following article deals with the adopted changes in foundation law with a special focus on the actual innovations, which go […]