The Federal Fiscal Court clarifies the requirements for classifying GmbH shares as Special Business Assets II

In a recent decision dated September 25, 2025 (IV R 12/23), the Federal Fiscal Court (BFH) addressed the question of under what conditions equity investments may be classified as Special Business Assets II. The decision contains various indications of how strictly the functional connection to the partnership should be assessed—particularly in cases of smaller ownership stakes and unusual acquisition cost scenarios.

The Federal Fiscal Court’s remarks on the ability to exert influence and on assets prone to losses clarify which considerations should be taken into account when making a legal assessment of such cases. Overall, it appears that the doctrinal boundaries of special business assets—both for necessary and discretionary business assets—remain narrow, and a careful assessment of each individual case is essential.