Federal Fiscal Court ruling: Hidden profit distributions - section 32a of the Corporation Tax Act also covers indirect con-sequences
Where a hidden profit distribution [verdeckte Gewinnausschüttung–vGA] is recognised at the level of a limited liability company [GmbH], a final tax assessment notice issued to the shareholder may also be amended under section 32a(1) of the Corporation Tax Act [Körperschaftsteuergesetz–KStG]. The Federal Fiscal Court [Bundesfinanzhof–BFH] interprets the provision broadly: it covers not only the capital income arising from the hidden profit distribution but also its indirect consequences – for instance a hidden contribution [verdeckte Einlage] to a sister company which, as subsequent acquisition costs, increases a liquidation loss under section 17(4) of the Income Tax Act [Einkommensteuergesetz–EStG]. In substantive terms, however, the Federal Fiscal Court draws clear limits: the hidden contribution is to be recognised only at the going-concern value [Teilwert] of the receivable (Federal Fiscal Court judgement of 8 Sep 2026, file ref. IX R 16/25).
