On 7 March 2018, the BFH published an important ruling (BFH of 6 December 2017, IX R 7/17) on the tax treatment of the acquisition of treasury shares at the level of the selling shareholder.
Following a change in commercial law as a result of the BilMoG in 2009, according to which the acquisition of treasury shares was to be treated as a partial liquidation/capital reduction at the level of the acquiring company, the tax consequences were unclear.
In particular, it was questionable whether the change in treatment under commercial law at company level must result in a corresponding, mirror-image treatment at the level of the selling shareholder for tax purposes. This would have meant that the sale proceeds would have had to be reclassified as a liquidation instalment/dividend for tax purposes, with corresponding consequences for the capital gains tax deduction and for the tax exemption pursuant to Section 8b KStG if only a so-called free float shareholding (<10%) is held.
The BFH has now ruled that the amended legal situation under commercial law does not result in any changes with regard to the tax treatment of the acquisition of treasury shares at the level of the selling shareholder. The selling shareholder continues to realise a capital gain within the meaning of sec. § Section 17 para. 1 EStG.
This is a welcome legal development, especially as the instrument of acquiring treasury shares is often considered as part of the structuring of corporate transactions.
Yours TAXGATE team will be happy to answer your questions at any time.
