Determination of the shareholding within the meaning of section 3c (2) sentence 2 of the Income Tax Act (EStG)

Muenster tax court 28.01.2025 - 2 K 3123/21 F: When calculating the participation ratio for the partial deduction prohibition for depreciation of loans to subsidiary corporations (Section 3c para. 2 sentence 2 EStG), the focus is not on the partnership itself, but on its natural partners. The final judgment is to be welcomed from a practical point of view, as the scope of application of Section 3c (2) sentence 2 EStG has been appropriately restricted. A clarification of the legal issue by the highest court was in the meantime on the cards, but the appeal was withdrawn.

In their article, Raphael Baumgartner and Bianca Disch summarize the facts on which the decision was based and why the tax court decided as it did.