News from the Federal Fiscal Court on incongruent profit distributions

Incongruent profit distributions are generally accepted by the tax authorities if there is a provision in the Articles of Association that is effective under civil law and there is no abuse of structure within the meaning of Section 42 of the German Fiscal Code (AO). However, contrary to the view of the tax authorities, the BFH recently ruled that under certain circumstances a provision in the articles of association is not required. The article summarizes the BFH decision and presents its practical implications.