Recent experiences with the refund of contributions under Section 27(8) of the Corporate Income Tax Act (KStG)

The tax treatment of capital refunds by foreign corporations has been a focus of tax advisory practice since the 1990s and has since been the subject of numerous decisions by the highest courts. While most issues had been clarified by 2023 and the tax authorities’ practical approach appeared workable and well-established, recent experiences have once again raised new doubts. This development is particularly significant because, without a successful application under Section 27(8) of the Corporate Income Tax Act (KStG), the repayment of previously made capital contributions would be subject to taxation. In his article, Raphael Baumgartner highlights the trends currently emerging and how these issues might be resolved.