With § 32a KStG, corporate tax law contains an independent amendment provision for tax assessments of shareholders. It goes beyond the amending rules of the Tax Code (AO) and ensures that hidden distributions of profits (vGA) and hidden deposits (vE) are also correctly recorded at the level of the shareholder. § 32a KStG applies equally to natural and legal persons.

1st Amendment according to § 32a KStG in the case of a hidden distribution of profits

Hidden distributions of profits, or vGA for short, are regularly noted by the tax office until a later external audit is carried out for the respective marketing year. In these cases, the legal consequences of § 8 (3) sentence 2 KStG occur. The vGA is added outside the balance sheet to the company’s income with its common value corresponding to the amount of the benefit to the shareholder.

For the marketing year of the vGA, therefore, an amended corporate tax notice is issued in accordance with the provisions of the tax law, usually § 164 paragraph 2 AO.

With § 32a KStG, the legislature links directly to this amendment decision. According to § 32a (1) KStG, the fixing period for the determination of income tax or corporation tax at shareholder level ends at the earliest one year after the corporation’s amendment notice has become incontestable. This enables the tax office to take the vGA into account also with the shareholder.

Example: After an external audit, the tax office issued a change notice to the A-GmbH, in which a vGA was found. The appeal period for this decision ended on 01.06.2024. Now the income tax assessment of the A, which holds the shares in the A-GmbH, can also be changed. In this respect, the deadline for fixing shall not end earlier than 31.05.2025.

2nd amendment of the determination in cases of hidden deposit

If the tax office has detected a hidden contribution to a limited liability company at the level of the shareholder, it regularly takes into account the tax consequences immediately when determining it. The contribution of the respective asset is equivalent to a sale of the same at the common value.

With § 32a paragraph 2 KStG, there is now also an amendment provision for the corporate tax assessment. The tax office can now also take into account the hidden contribution, which may not increase the income according to § 8 (3) sentence 3 KStG, at this level. The fixing period shall also end at the earliest one year after the indisputability of the fixing at shareholder level.

Especially hidden deposits bring tax advantages for the persons involved if cleverly used, for example to avoid the real estate transfer tax. § 32a KStG therefore also benefits the shareholder, depending on the individual case, since the standard allows a corresponding recording of the transaction.