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Tax-privileged transfer of shares in corporations – requirements to be met by a “pool agreement”

also note on Federal Fiscal Court, judgement of February 20, 2019 – II R 25/16

According to the Inheritance Tax Act in its current version as amended on July 01, 2016, when assets are transferred, e.g. due to inheritance, a distinction has to be made between preferential assets and non-preferential or “harmful” management assets. While administrative assets are subject to “full” taxation in accordance with the Inheritance Tax Act, tax privileges of up to 100% exemption may be claimed for preferential assets. A limit to the privileges is laid down in Section 13b(2) sentence 2 Inheritance Tax Act, according to which no more preferential treatment is granted for a share of at least 90% overall of management assets.

The case before the Federal Fiscal Court concerned the allocation of shares in corporations (here: shares in a GmbH) as preferential assets or management assets. In the case at issue, the heir’s one-person business to be bequeathed held a 12% interest in a GmbH where the value of the GmbH share accounted for a total of 91% of the value of the sole proprietorship, thus already exceeding the aforementioned “90% limit.” The question was therefore whether the shares of the sole proprietorship in the limited liability company (with a value of 91%) should be considered preferential assets or management assets.

The legal basis is found in Section 13b(4)(2) Inheritance Tax Act. Accordingly, shares in corporations are in principle management assets if the participation in the nominal capital is 25% or less. Thus, the 12% participation in the Federal Fiscal Court case would not have been sufficient to presume the existence of preferential assets. Additionally, however, sentence 2 of the provision must be observed, according to which the shares of all shareholders in the corporation are added together to determine the 25% threshold, if the shareholders are obligated to each other to (1.) dispose of their shares only uniformly (= restriction on disposal) and (2.) exercise the voting right in the corporation only uniformly (= voting commitment). This is to be stipulated in a “pool agreement” between the shareholders. The GmbH shares to be bequeathed are then regarded as preferential assets and no longer as “harmful” management assets.

According to the above-mentioned decision of the Federal Finance Court, the pool agreement must meet the following requirements:

  • The necessary restriction on disposal requires at least a provision according to which the GmbH shares may only be transferred to a limited circle of persons, such as spouses or relatives, or where the consent of the majority of the shareholders is necessary for any transfer. The voting commitment must be provided for such that the individual shareholder has a legally enforceable right against the other shareholders to exercise the voting right uniformly.
  • According to the Federal Fiscal Court, a mere moral obligation to uniform voting, such as arising from a family or kinship relationship, is not sufficient. Any “de facto” voting commitment, governed by provisions in the articles of association according to which one shareholder as majority shareholder may in any case pass all resolutions with that majority is equally inadequate.
  • The provisions of the pool agreement do not have to be contained in a single contract. They may also be included in the GmbH articles of association, which are to be notarized. It is also permissible for the shareholders to enter into a separate agreement outside the articles of association. Such an agreement is possible without any formal requirements and may therefore also be made verbally. Such verbal agreements are discouraged, however, since usually their existence and the exact contents cannot be proven to the fiscal authorities.


In the case of assets that include shares in corporations, the conclusion of a pool agreement provides the option of generating preferential assets. For tax recognition, however, the requirements decided by the Federal Fiscal Court must be strictly observed. In addition, the pool agreement must already be in place at the time the tax is incurred. Subsequent agreements are not possible. In this event, shares in corporations of 25% or less would continue to be considered “harmful” management assets. It is therefore advisable to make plans for the transfer of assets, including shares in corporations, as early as possible and to examine in the specific case whether the conditions for a tax-privileged transfer are met or which other structuring options are possible.


Christian Becker

Dr. Christian Becker


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