SNP Schlawien wins landmark ruling for the insurance industry before the BFH
The commercial law firm SNP Schlawien has won a landmark landmark ruling before the Federal Fiscal Court (Bundesfinanzhof, BFH) in Munich that is of great importance for many insurance companies.
In its ruling of 21 April 2021 (file no. XI R 42/20), the Federal Fiscal Court (Bundesfinanzhof, BFH) took the view that a partial write-down of the value of share certificates in a real estate fund is not blocked to the extent of the existence of a so-called passive adjustment item for tax purposes. Nor does the latter reduce the acquisition costs of the share certificates. The result is of particular importance for all insurance companies subject to income tax.
The mutual insurance association subject to income tax represented by SNP Schlawien had acquired share certificates from Commerzbank Real at an acquisition cost of € 8.5 million. In the course of the following years, the value of the share certificates had decreased, which caused the insurance company to make a tax-reducing partial value adjustment to the balance sheet value. However, the tax office denied this value adjustment.
In its above-mentioned ruling, the BFH took a position in favour of the insurance company represented by SNP Schlawien. The juxtaposition of tax-effective partial value adjustments and tax-neutral adjustment items was not contrary to the system, but in conformity with it. In times in which the value of shares in fund companies develops negatively, fund shareholders must continue to see themselves obliged to observe the principle of prudence and be allowed to reduce their tax burden anticipatorily - in accordance with the real development of value. This was preceded by a dispute of opinion between parts of the professional literature and the tax authorities in a similar context.
Advisor to SNP Schlawien, Düsseldorf: Friedrich Kötter-Boisserée (Tax)
Certified tax law attorney
Tel: +49 211 5375373-0