Economic Ownership of GmbH Shares Subject to a Reserved Usufruct – New Insights from German Tax Court Case Law

Who is the economic owner of GmbH shares subject to a reserved usufruct within the meaning of section 39 of the German Fiscal Code (Abgabenordnung): the transferee or, as before, the usufructuary? This question is not only relevant for the taxation of a subsequent sale but, according to recent case law and the latest statements of the German tax authorities, also determines the attribution of current income. Two recent decisions of the Tax Courts of Düsseldorf and Münster demonstrate that voting arrangements, restrictions on disposal and participation in the appreciation of the shares may be structured and weighted differently. At the same time, the decisions show that key questions remain unresolved. Maximilian Steger analyses the details of the decisions and their practical implications in his article.