As a result of the 2008 financial crisis, many open-ended property funds had difficulties meeting their payment obligations from unit redemptions due to a lack of liquidity and therefore temporarily suspended the redemption of units. Nevertheless, a redemption price was also determined during this phase on the basis of a valuation of the property assets, although this could not be realised during the suspension phase. During this phase, units could only be sold on the stock exchange at significantly lower prices.
The Hesse tax court now had to decide on an inheritance case involving fund units in this phase. The question arose as to whether the (fictitious) redemption price or the (actually realisable) lower stock exchange price should be used as the valuation standard. The tax office assessed the inheritance tax on the basis of the redemption price and the corresponding regulation for fund units in Section 11 (4) of the German Valuation Act (BewG). The heir filed an action against this on the grounds that this was a fictitious value and could not be realised in reality, at least at the time of inheritance. Instead, the (lower) stock market value of the shares had to be used as the valuation; in this respect, the principle of valuation at fair market value pursuant to section 9 (1) of the Valuation Act took precedence over the special provision in section 11 (4) of the Valuation Act.
In its judgement of 17 February 2016 (1-K-1161/15), the Hesse tax court agreed with the plaintiff and confirmed that the lack of liquidity of the shares constitutes a price-influencing or reducing circumstance in accordance with Section 9 (2) sentence 2 BewG.
The judgement is also interesting insofar as the Münster tax court, in its earlier decision of 15 January 2015 (3 K 1997/14 Erb, rkr.), did not want to allow any exceptions to the valuation at the redemption price and, in doing so, referred to the Wording of Section 11 (4) BewG.
In contrast, in its recent judgement, the Hesse tax court recalled that, in order to 'implement the objectified will of the legislator', a court must not only consider the wording, but also Different and recognised methods of interpreting a law and should also use them.
It is expected that the Federal Fiscal Court will now have to decide which of the methods used by the two fiscal courts to interpret the law should be applied in this case.
