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Early retirement schemes are a widely used tool in personnel policy. But presentation in the accounts has always thrown up complex questions, particularly related to the recognition and measurement of provisions. In its judgement handed down on 5 February 2026 (IV R 11/24), the Federal Fiscal Court (Bundesfinanzhof) made significant clarifications, after the judgement from the lower court, Düsseldorf Fiscal Court, on 24 May 2024 (3 K 2044/18 F).

In its judgment of 27/11/2024 (case I R 23/21), the Federal Fiscal Court (Bundesfinanzhof – BFH) held that holding partnerships engaged purely with management may act as the controlling company within a consolidated corporation tax group, even if they do not provide any intra-group services for compensation. This decision constitutes a significant expansion of the understanding of commercial activity as defined by the Corporation Tax Act (KStG) (sections 14(1) no. 2 sentence 2) and the Income Tax Act (EStG) (section 15(1) sentence 1 no. 2).

Last year the Federal Fiscal Court (Bundesfinanzhof – BFH) decided that paying a pension and salary to an owner-director at the same time does not mean that in principle the pension is to be classified as a hidden profit distribution. The tax authorities only partially adopted the principles of the judgment in the latest amendment of its Federal Ministry of Finance (BMF) circular. Cases where directors work part-time are critical.