Generosity in cases of § 7 para. 8 sentence 1 ErbStG

In a ruling published today dated April 10, 2024 (II R 22/21), the BFH dealt with the characteristic of generosity in the context of Section 7 para. 8 sentence 1 ErbStG, i.e. the payment by a person to a company that leads to an indirect increase in the value of the shareholders' shares.

The Federal Fiscal Court confirmed that, unlike the basic gift tax situation under Section 7 para. 1 no. 1 ErbStG, Section 7 para. 8 sentence 1 ErbStG does not require a free gift; the decisive factor is whether an increase in the value of shares in the corporation has occurred on the reporting date. It does not depend on whether the increase in value has been realized. Accordingly, it is also irrelevant what income tax consequences a future sale of the shares would have, for example in accordance with Section 17 EStG.

It should also be noted in the present case that the exemption discount under Section 13b (1) ErbStG is not granted, as no shares are transferred.

In the case of disproportionate payments to a company, not only the income tax but also the gift tax consequences must therefore be taken into account.