Federal Fiscal Court on Section 7(8) of the German Inheritance Tax Act: Gift in the case of payments to corporations even without awareness of gratuitousness?

In its ruling of September 23, 2025, the Federal Fiscal Court clarified that a gift may also exist in the case of payments to a corporation even if the parties were not aware that the payment was gratuitous. A subjective element, whether in the sense of an intention to make a donation or an awareness of the gratuitous nature of the payment, is not inherent in Section 7 (8) of the German Inheritance Tax Act (ErbStG). However, a gift is ruled out if, at the time the contract was concluded, the parties could reasonably assume that the payments were balanced on the basis of an arm’s length approach. 

Our professionals Dr. Marcel Duplois and Dr. Katharina Pichler examine the ruling and the requirements it imposes, particularly with regard to payments to a family corporation, in the tax board DER BETRIEB.