The awareness of gratuitousness as a subjective constituent element of Section 7 (8) Inheritance Tax Act

The Muenster Fiscal Court has ruled that the taxable event of an “increase in the value of shares” in corporations pursuant to Section 7 (8) of the German Inheritance Tax Act (ErbStG) requires a subjective characteristic in the sense of an awareness of the (partial) gratuitousness of the payment to the corporation as a corrective to the overly broad wording of the law. The clear ruling by the court is very pleasing in view of the legal uncertainty that has prevailed to date in many everyday corporate law transactions. It remains to be seen how the Federal Fiscal Court will position itself on this.