News on the taxation of a holiday home held through a corporation

In many cases, holiday homes and other self-used properties are not held directly, but through a corporation. This is particularly the case in Spain, which is very popular with Germans, but also in many other regions of the world, such as the United Arab Emirates (Dubai) or South Africa. However, in a much-publicized decision in 2013, the German Federal Fiscal Court (Bundesfinanzhof, BFH) ruled that the private use of the property by the shareholders, either free of charge or at a reduced rate, constitutes a so-called hidden profit distribution, which leads to taxable income from capital gains for the shareholders in Germany. In a new decision dated October 1, 2024, the BFH once again confirmed its legal opinion and specified when a hidden profit distribution can be assumed and how it should be calculated.