Incongruent distribution of profits
Profit distributions from corporations, e.g. GmbHs or AGs, are generally made in such a way that the profit to be distributed is allocated and distributed to the shareholders in proportion to their shares.
In the past the BFH has already decided that, under certain conditions, it is possible to distribute the distribution disproportionately among the shareholders, and thus to allocate dividends to individual shareholders within the framework of the profit distribution that deviate from their shareholding in the company.
An important prerequisite for this is a regulation in the articles of association that allows such a deviation in the distribution of profit distributions.
In the current judgment of the BFH of September 28, 2021 VIII R 25/19, the BFH is now going one step further. According to this ruling, there is no tax objection if individual shareholders do not immediately receive their percentage share of the distribution to which they are entitled in the context of a distributed dividend pay out, but do so at a later date.
This opens a completely new scope for designing shareholder distributions , making it possible to take a much better account of the interests of individual shareholders and also of the liquidity of the company.
Especially in companies with a manageable group of shareholders, it should now be much easier to meet the wishes of individual shareholders for a distribution, even if other shareholders currently do not want any dividends paid to them, and the company’s liquidity may not be sufficient to make corresponding distributions to all shareholders at the same time. One situation to think about here is, for example, upcoming changes in shareholders, where the departing shareholder would like to have his proportion of the retained earnings distributed to him before a share sale or a donation.
Here, too, the prerequisite is a corresponding provision in the articles of incorporation that in principle declares such an approach to be permissible, as well as a coordinated distribution resolution by the general meeting.
Distribution amounts that are attributable to shareholders who do not currently want a distribution are separated within the company’s retained earnings and allocated to these shareholders as their distribution volume that has yet to be exhausted.
Munich tax consultants, Alexia Huber & Partner Steuerberatungsgesellschaft mbB, provides comprehensive and holistic tax advice to corporations and their shareholders.