The so-called sham business is insignificant for taxation. This means that the tax office does not have to draw or observe the legal consequences from corresponding transactions. But what exactly is a sham business and what are the concrete consequences of the taxation process?
1. Definition: The pseudo-business according to § 41 AO
The sham business is defined in § 117 BGB. This definition also applies to the application of § 41 AO:
"If a declaration of intent to be given to another is only made for appearance with the consent of the other, it is null and void."
In concrete terms, the following criteria apply here:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.