Anyo\u00adne who gifts shares in a limi\u00adt\u00aded lia\u00adbi\u00adli\u00adty com\u00adpa\u00adny (GmbH) must have their value asses\u00adsed for gift tax pur\u00adpo\u00adses. The so-cal\u00adled sim\u00adpli\u00adfied inco\u00adme-based valua\u00adti\u00adon method is fre\u00adquent\u00adly used for this pur\u00adpo\u00adse. In a recent jud\u00adge\u00adment, the Fede\u00adral Fis\u00adcal Court has now cla\u00adri\u00adfied which expen\u00adses are con\u00adside\u00adred extra\u00ador\u00addi\u00adna\u00adry under this valua\u00adti\u00adon method and may the\u00adr\u00ade\u00adfo\u00adre increase the value of the shares.<\/p>\n\n\n\n
If shares in a com\u00adpa\u00adny are gifted and the\u00adre is no cur\u00adrent mar\u00adket pri\u00adce available, the tax office deter\u00admi\u00adnes the value on the basis of the company\u2019s future ear\u00adning capa\u00adci\u00adty. This is based on the avera\u00adge annu\u00adal pro\u00adfit of pre\u00advious years. To ensu\u00adre that this value reflects the future ear\u00adnings situa\u00adti\u00adon as rea\u00adli\u00adsti\u00adcal\u00adly as pos\u00adsi\u00adble, the Valua\u00adti\u00adon Act pro\u00advi\u00addes for cer\u00adtain adjus\u00adt\u00adments: one-off or unu\u00adsu\u00adal expen\u00adse items are added back to the pro\u00adfit, as they are not expec\u00adted to affect future results.<\/p>\n\n\n\n
In the case in ques\u00adti\u00adon, a share\u00adhol\u00adder in a freight for\u00adwar\u00adding limi\u00adt\u00aded lia\u00adbi\u00adli\u00adty com\u00adpa\u00adny (GmbH) had gifted half of his shares to ano\u00adther par\u00adty in 2017. The tax office deter\u00admi\u00adned the value of the shares using the sim\u00adpli\u00adfied inco\u00adme approach, adding inte\u00adrest on cus\u00adtoms duties as extra\u00ador\u00addi\u00adna\u00adry expen\u00adses. This inte\u00adrest had ari\u00adsen becau\u00adse the GmbH had been held lia\u00adble for cus\u00adtoms debts that were lar\u00adge\u00adly cau\u00adsed by frau\u00addu\u00adlent acts on the part of third par\u00adties. The pro\u00adcee\u00addings had drag\u00adged on for years, caus\u00ading the inte\u00adrest bur\u00adden to rise significantly.<\/p>\n\n\n\n
The GmbH con\u00adtes\u00adted this, arguing that the\u00adse inte\u00adrest expen\u00adses should be deduc\u00adted in full from its inco\u00adme. The Finan\u00adce Court dis\u00admissed the cla\u00adim, and the Fede\u00adral Fis\u00adcal Court (BFH) upheld this decis\u00adi\u00adon in its jud\u00adge\u00adment of 6 May 2026 (case num\u00adber II R 2\/24, published on 16 July 2026).<\/p>\n\n\n\n
The Fede\u00adral Fis\u00adcal Court (BFH) cla\u00adri\u00adfied that extra\u00ador\u00addi\u00adna\u00adry expen\u00adses within the mea\u00adning of the Valua\u00adti\u00adon Act are tho\u00adse which are not expec\u00adted to affect the annu\u00adal inco\u00adme that can be sus\u00adtain\u00adab\u00adly gene\u00adra\u00adted in the future. It is irrele\u00advant whe\u00adther or not the cos\u00adts were incur\u00adred in the cour\u00adse of nor\u00admal busi\u00adness operations.<\/p>\n\n\n\n
Whe\u00adther expen\u00adses are to be clas\u00adsi\u00adfied as extra\u00ador\u00addi\u00adna\u00adry must always be asses\u00adsed on the basis of an over\u00adall assess\u00adment of the indi\u00advi\u00addu\u00adal case. Three cri\u00adte\u00adria are decisi\u00adve in this regard:<\/p>\n\n\n\n
In this spe\u00adci\u00adfic case, the Fede\u00adral Fis\u00adcal Court (BFH) reco\u00adg\u00adnis\u00aded the extra\u00ador\u00addi\u00adna\u00adry natu\u00adre of the cus\u00adtoms inte\u00adrest. The limi\u00adt\u00aded lia\u00adbi\u00adli\u00adty com\u00adpa\u00adny (GmbH) had not demons\u00adtra\u00adted that com\u00adpa\u00adra\u00adble cos\u00adts were to be expec\u00adted in the future. The fact that the cos\u00adts aro\u00adse from frau\u00addu\u00adlent acts com\u00admit\u00adted by third par\u00adties, com\u00adbi\u00adned with the unu\u00adsual\u00adly long dura\u00adti\u00adon of the pro\u00adcee\u00addings, meant that the expen\u00adses con\u00adsti\u00adtu\u00adted a one-off excep\u00adtio\u00adnal case which was not repre\u00adsen\u00adta\u00adti\u00adve of the freight for\u00adwar\u00adding company\u2019s nor\u00admal pro\u00adfit situation.<\/p>\n\n\n\n
The ruling has prac\u00adti\u00adcal impli\u00adca\u00adti\u00adons for anyo\u00adne who gifts or bequeaths shares in a com\u00adpa\u00adny. One-off, extra\u00ador\u00addi\u00adna\u00adry cos\u00adts may increase the company\u2019s value as deter\u00admi\u00adned for tax pur\u00adpo\u00adses, which in turn affects gift or inhe\u00adri\u00adtance tax. At the same time, howe\u00adver, the ruling also opens up the pos\u00adsi\u00adbi\u00adli\u00adty of appro\u00adpria\u00adte\u00adly exclu\u00adding unu\u00adsu\u00adal expen\u00adses from the pro\u00adfit base, pro\u00advi\u00added that the\u00adse do not in fact place a per\u00adma\u00adnent bur\u00adden on the company\u2019s future earnings.<\/p>\n\n\n\n
Anyo\u00adne plan\u00adning busi\u00adness suc\u00adces\u00adsi\u00adon or nee\u00adding to have the value of shares asses\u00adsed for tax pur\u00adpo\u00adses should careful\u00adly review and docu\u00adment the break\u00addown of results from pre\u00advious years. Expert tax advice is high\u00adly recom\u00admen\u00added in all such cases.<\/p>\n\n\n\n