date | theme

6 August 2021 | Loss of contribution to a GmbH: Tax treatment § 17 EStG (this contribution)

7 April 2020 | Expiry of insolvency proceedings for companies – Opening steps Repeal

12. August 2020 | Deposit money in GmbH: which method is the optimal one?

June 9, 2021 | Liquidation of a GmbH – Better than the sale of a company?

Shareholders of a GmbH must make a contribution. Often, in the case of liquidation of a company, the shareholders can no longer be served and insolvency proceedings are opened. This can lead to the shareholders often losing their contribution. It seems questionable how the loss of a natural person’s deposit is to be assessed for tax purposes. This contribution clarifies this question. In this context, the norm of § 17 EStG is relevant, which applies to corporations, i.e. also to the GmbH, on the basis of the reference in § 8 (1) KStG.

The problem is that the loss of the deposit basically represents a loss in the area of private assets. Such losses are basically not tax relevant according to the so-called source theory. According to the source theory, only the current income from the source can be controlled. Consequently, § 17 EStG breaks this basic principle. Therefore, even if the conditions are met, profits from the sale of shares in a limited company are taxable. In principle, § 17 EStG applies only to the sale of shares. Nevertheless, § 17 (4) sentence 1 EStG stipulates that the dissolution of a limited liability company is also regarded as a sale. Therefore, the loss on the dissolution of a corporation must also be taken into account for tax purposes in accordance with §§ 17 (1) sentence 1, (4) sentence 1 EStG. The result is that the losses are regarded as commercial income within the meaning of § 15 (1) sentence 1 no. 1 EStG. Therefore, a loss deduction according to § 10d EStG is possible in principle.

§ 17(4), first sentence of the EStG, applies mutatis mutandis to § 17(1), first sentence of the EStG, which actually applies only to the sale of shares. Consequently, the conditions of § 17 (4) sentence 1 EStG must also be met. First of all, the shares must be shares in a limited company within the meaning of § 17 (1) sentence 3 EStG. Furthermore, according to § 17 (1) sentence 1 EStG, it is necessary that you have held more than one percent of this corporation in the last 5 years. § 17 (4) sentence 1 EStG replaces the characteristic of the sale by that of dissolution. The dissolution of a corporation occurs at the earliest at the time when it is dissolved under civil law under law or statutes. The company is terminated when its assets are distributed to the shareholders (§ 72 GmbHG). However, the mere cessation or cessation of the advertising activity is not yet a dissolution of the company.

For the calculation of the amount it corresponds to the loss of the parental contribution, § 17 paragraph 2 EStG is to be applied accordingly. According to § 17(2), first sentence, EStG, the gain on sale is the amount by which the sale price, after deduction of the sale costs, exceeds the acquisition costs. When a GmbH is dissolved, a shareholder does not receive such a sale price. Therefore, pursuant to the second sentence of Section 17(4) EStG, the sale price must be the common value of the capital of the limited liability company allocated or repaid to the taxable person. In the absence of a sale, the shareholder does not have to bear any costs of sale either. However, account must be taken of any charges incurred in connection with the dissolution. Furthermore, the common value of the share must be compared with the acquisition costs.

The loss on dissolution therefore includes the amount by which the acquisition costs and task costs exceed the common value of the assets allocated or repaid to the corporation.

The sale price shall be the common value of the capital of the limited liability company allocated or repaid to the taxable person. The common value is determined in accordance with § 9 (1), (2) BewG by the price which would be obtained in the ordinary course of business on the basis of the nature of the asset in the event of a sale. According to § 3 no. 40 lit. c EStG, however, only 60 % of the common value is taxable.

The acquisition costs according to § 17 paragraph 2a EStG include all expenses incurred by the acquirer to acquire the shares. This means that the acquisition price of the participation is to be taken into account as the acquisition cost. Furthermore, according to §17 paragraph 2a sentence 2 EStG, the acquisition costs are also the subsequent acquisition costs. According to § 17 paragraph 2a sentence 3 EStG, this also includes hidden deposits. All tangible and intangible assets may be the subject of open and discreet deposits. This also includes the repayment of open and hidden profit distributions. Subsequent acquisition costs are based on the common value of the deposited asset. Current uses, such as granting free use, are not eligible for deposit. In addition, other subsequent expenses also increase the loss.

In addition, ex post costs incurred after the dissolution of a corporation can be taken into account as a retroactive event in the determination of the dissolution gain. Consequently, they can also increase the loss. Therefore, according to § 175 (1) no. 2 AO, if the conditions are met, a correction of tax notices issued may also occur. However, it should be noted that according to §§ 3c paragraph 2, 3 sentence 1 no. 40 EStG only 60% of the expenses can be taken into account.

It may happen that the company is resumed at a time when the full distribution of the company’s assets has not yet been completed. If, in this case, the distribution has already begun, the continuation decision does not eliminate the economic significance of liquidation payments already made and thus their tax consequences. There is therefore no income from capital assets. The profits or losses are rather part of commercial income within the meaning of §§ 17, 15 (1) sentence 1 number 1 EStG.

§ 17 II 6 EStG contains a loss deduction restriction if shares were not held for the entire last five years. However, this does not apply if the shares were acquired in the last five years and the acquisition served to establish a shareholding within the meaning of § 17 (1) sentence 1 EStG. Consequently, you can also claim the loss of the deposit for tax purposes in this case.

The losses are taken into account by the loss deduction according to § 10d EStG. The priority is therefore the loss compensation within the affected loss arising year. Only when a negative amount still remains can this be taken into account in other investment periods. Priority is to bear the loss up to 10,000 €. If then negative income remains, these may be carried forward in accordance with § 10d paragraph 2 in principle in the coming investment period.