Debt financing for employee stock ownership plans - Current income is classified as investment income

With its decisions of October 21, 2025, regarding the taxation of debt instruments held by employees, the Eighth Chamber of the Federal Fiscal Court (BFH) closes a gap in its case law. It explicitly clarifies that not only income from equity instruments but also from debt instruments is to be classified as income from capital assets, regardless of the amount. At the same time, it makes it clear that the provision of capital by employees is not part of the employment relationship, thereby departing from its previous case law on the distinction between types of income.