Hidden distributions of profits (vGA) pose a high risk for shareholders of corporations. If the tax office establishes a vGA, it adds the declared operating expenses to the profit. At the same time, the shareholder must tax the vGA as capital gains (§ 20 (1) no. 1 EStG). The vGA to related persons is particularly risky, because it is sometimes much harder to recognize than the “regular” hidden profit distribution.
1st principle of hidden profit distribution
A hidden distribution of profits within the meaning of § 8 (3) sentence 3 KStG exists if a limited liability company:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.