In its ruling of 28 September 2021 (case no. VIII R 25/19), the BFH made a welcome decision and created legal certainty in this respect.

According to the decision of the lower court (judgement of 4 July 2019, case no. 10 K 181/17), it was unclear whether a controlling shareholder can retain its profit share in a sub-account of the revenue reserve without this leading to a taxable inflow. In any case, a controlling shareholder should not effectively retain its share of profits at company level for tax purposes if other (minority) shareholders receive a distribution of their share of profits. As a result, it was necessary to revise the articles of association in certain constellations in order to prevent the negative tax effects of this judgement by the tax court.

We had met in a NWB contribution The court analysed this decision and used various scenarios to demonstrate the high practical relevance of the accounting treatment of shareholder-related / equity accounts for corporations. It was also pointed out that the justification of the Lower Saxony tax court is based on BFH rulings that have been issued in other situations and in particular on "distribution situations". Ultimately, there are undoubtedly economically justified concerns for shareholder accounts at the level of corporations as well.

In the opinion of the BFH, a shareholder resolution effective under civil law in which the profit shares of minority shareholders are distributed while the majority shareholder retains his profit share (so-called shareholder-related retained earnings) is to be recognised for tax purposes. Consequently, such retention does not lead to an inflow of investment income for the controlling shareholder either.

Tatjana Scheufler and Dr Tobias Stiegler are tax advisors at TAXGATE, a law firm specialising in transactions, investments and tax compliance

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