In a more recent decision, the Federal Court of Justice (ruling of 26. January 2021, case no. II ZR 391/18) has once again dealt with the so-called negative legitimation effect of the list of shareholders pursuant to sec. 16 para. 1 sentence 1 GmbHG within a short period of time. According to this, only the person who is entered as a shareholder in the list of shareholders included in the commercial register is deemed to be a shareholder vis-à-vis the GmbH. An exception applies to cases involving the exclusion of the shareholder from the company.
As attractive as management participation programs may be as a financial incentive to increase the willingness of executives to provide high performance, a certain dissatisfaction quickly arises due to the uncertain tax consequences. This is because it is often difficult to give a legally sound answer due to difficulties in the qualification of income. The question is whether subsequent income from the sale of the shares constitutes fully taxable income from employment or income from capital investment. In two further decisions, the Federal Fiscal Court (Bundesfinanzhof – BFH) confirms its legal opinion and for the first time also comments on so-called sweet equity structures.
Commercial partnerships now have the option of having profits taxed in accordance with the provisions of corporate income tax law. This puts them on an equal level with a GmbH or AG. This so-called option is useful, among other things, if the company’s profits are not to be distributed. On the other hand, the conversion entails a large number of requirements and obligations and also requires precise planning from an entrepreneurial perspective.
For income tax purposes, supervisory board members generate income from self-employment with their activities. Previously, the tax authorities followed this assessment and classified supervisory board members as entrepreneurs, with the result that the remuneration was generally subject to VAT. However, due to recent case law, this view is partly outdated. In the future, it will have to be examined on a case-by-case basis whether supervisory board remuneration is subject to VAT or not.