According to the Hamburg tax court, the application of the exemption rules of Section 13b para. 1 no. 3 ErbStG is possible in the case of a disproportionate contribution

The Hamburg tax court (27.02.2024 3 K 117/22) has issued a rather remarkable ruling with regard to the applicability of the exemption regulation pursuant to Section 13b para. 1 no. 3 ErbStG.

In this case, the parties involved disputed the applicability of the exemption regulations pursuant to Sections 13a and 13b ErbStG in the case of the transfer of shares in a corporation by way of a disproportionate hidden contribution to a partnership. The plaintiff had transferred its shares in A GmbH without consideration to B Holding GmbH & Co. KG, in which it also held an interest, without consideration.

This contribution led to an increase in the value of her father's shareholding in the KG. The Hamburg Fiscal Court was confronted with the question of whether the acquisition of shares in a corporation via a partnership is subject to the tax exemption regulations, even though the father does not qualify as the direct owner of the shares under civil law.

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Result

▪ Section 13b para. 1 no. 3 ErbStG is applicable

▪ No ownership under civil law required for the application of the preferential treatment

▪ In view of the meaning and purpose of these provisions, it makes no difference whether the business assets are transferred to natural persons or to a partnership. The business assets do not appear less worthy of support if they are transferred to a partnership.

▪ The revision was withdrawn by the tax authorities.

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Consequences for practice

▪ The ruling opens up new possibilities for succession planning, particularly for the transfer of business assets via partnerships and the establishment of family companies.

▪ It is now possible to transfer shares in a corporation indirectly via a partnership and still benefit from the tax breaks.

▪ Despite the positive ruling, each case should be examined individually. The specific circumstances of the ruling could lead to different results in other constellations.