§ 7 (8) ErbStG 2026: BFH on the GmbH Gift Fiction

What § 7 (8) ErbStG actually says: the gift fiction in practice

§ 7 (8) sentence 1 ErbStG provides that "the increase in value of shares in a corporation that a natural person or foundation (the beneficiary) directly or indirectly holding an interest in the company obtains through a contribution by another person (the donor) to the company is also deemed to be a Schenkung." The legislator introduced the rule with the Tax Recovery Implementation Act of 7 December 2011 (BGBl. I 2011, 2592).

The background is a reaction to structuring practice. The older case law had required that a Schenkung had to take place directly between shareholders. A popular avoidance technique was to make a contribution into the company's assets that economically benefited only one or several co-shareholders. § 7 (8) ErbStG closes that gap by way of a fiction. What economically lands with the co-shareholder is treated for tax purposes as if it had been given directly to them. The full statutory text is available at gesetze-im-internet.de.

Who is the donor, who is the beneficiary?

The donor is the person making the value-increasing contribution to the company. That can be a co-shareholder, but also an outside third party such as a family member or another group company. The beneficiary is every shareholder whose stake rises in value as a result of the contribution.

The value increase is determined under the general rules. In practice that means: a valuation report under IDW S 1, or at least a substantiated combination of asset and earnings value, is needed to determine the scope of the deemed Schenkung. For unlisted shares the simplified income-capitalisation method under §§ 199 ff. BewG applies.

The BFH rulings of 10 April 2024: what is changing for GmbH shareholders

With two parallel revision decisions on 10 April 2024, the Second Senate of the BFH clarified central application questions. Both proceedings concerned situations in which a shareholder, or a person close to them, had made contributions to the assets of a GmbH that economically benefited other shareholders. The full texts of the decisions are available in the database of the Federal Fiscal Court.

The core findings boil down to four points:

What the BFH clarifications mean for structuring

Before the rulings, advisers often tried to argue that there had been no gift intent. After the BFH decisions, this line of defence is gone. The objective shift in value is enough, as long as it was caused by a relationship between donor and beneficiary.

That makes family constellations in particular risky. A father who makes a contribution into the child's GmbH that, with several shareholders, economically benefits all of them, triggers Schenkungsteuer even for the co-shareholders who are not related. They benefit tax-wise from the relationship between father and child without themselves having any relationship to the donor. An unpleasant situation for everyone involved and a frequent reason for later conflicts inside the shareholder group.

Typical case constellations: where the Schenkungsteuer trap snaps shut

From my advisory practice, four constellations are where § 7 (8) ErbStG most often bites. In each case the underlying issue is an economic shift in value via the company's assets.

1. Disquotal contribution into the family GmbH: the father holds 30 per cent, the child 70 per cent. The father makes a contribution of EUR 500,000 into the capital reserve, without the child making a corresponding contribution. The value increase of the child's stake is EUR 350,000 (70 per cent of EUR 500,000). That value increase is treated as a Schenkung by the father to the child.

2. Capital increase with waiver of subscription rights: at a capital increase the senior waives their subscription right so the successor can subscribe new shares at nominal value. The difference between the fair market value of the new shares and the subscription price is the deemed Schenkung.

3. Hidden contribution by a related party: a group sister company waives a receivable against the operating GmbH in which a family member holds shares. The increase in value at the family member's level is attributed to the group sister as a Schenkung.

4. Transfer of shares below value inside a Familienpool: transferring shares of a family GmbH to the successor below fair market value triggers a classic direct Schenkung under § 7 (1) No. 1 ErbStG. If the transfer happens as part of a multi-step structuring, § 7 (8) ErbStG can apply on top whenever other shareholders benefit. Structurings via a Familienpool as a GmbH und Co. KG therefore have to be checked carefully for disquotal effects.

Legal consequences and retroactive assessment: up to ten years of limitation

The biggest practical problem with § 7 (8) ErbStG is the assessment limitation period. Under § 170 (5) No. 2 AO, the four-year assessment period for lifetime Schenkungen only starts when the tax office becomes aware of the Schenkung. For death-event gifts the death of the Erblasser (testator) is the relevant date.

In practice that means: a disquotal contribution from 2018 which the tax office only discovers in 2026 during a tax audit can still be assessed. On top of that, § 169 (2) sentence 2 AO extends the assessment period to ten years in cases of tax evasion.

A worked example: what an overlooked disquotal contribution can cost

In 2020 a father makes a contribution of EUR 1,000,000 into his son's GmbH. The son holds 80 per cent, the father 20 per cent. The value increase at the son's level is EUR 800,000. For gift tax purposes that is treated like a direct Schenkung from father to son.

Had the contribution been declared as a Schenkung in good time, the father could have used the son's Freibetrag optimally and reopened further allowances over the ten-year window later on. Without declaration what arises is Schenkungsteuer, evasion interest and, if the situation repeats, the loss of the ten-year allowance advantages.

Anyone wanting to combine this with the Verschonungsabschlag under § 13a ErbStG needs to structure the disquotal contribution from the outset. A later cure via the relief rules is regularly impossible, because the deemed Schenkung as an acquisition of shares below value does not qualify as a privileged substance transfer within the meaning of §§ 13a, 13b ErbStG.

Avoidance strategies: how to defuse the gift fiction

From my work with entrepreneurial families, three lines of defence have proven themselves. They are no silver bullet, because every GmbH structure raises its own valuation questions. But they form the basis of any serious structuring.

First line of defence: clean valuation before any capital measure. Before a contribution is made, a subscription right is exercised or a share is transferred, the fair market value should be determined under IDW S 1 or the simplified income-capitalisation method under §§ 199 ff. BewG. Without a valuation it is impossible to prove later that no increase in value occurred. That holds in particular for strongly earnings-dependent companies whose value is volatile.

Second line of defence: quota-compliant structuring. When one shareholder contributes capital, the co-shareholders should contribute in proportion, or the subscription right should be structured so that no shift in value occurs. In family constellations an accompanying agreement makes sense in which the economic relationships are disclosed and any deliberate gift component is consciously documented.

Third line of defence: early declaration on a valuation foundation. Anyone planning a deliberate Schenkung through the company's assets should declare it as such. § 30 ErbStG already requires notification within three months. With the notification the assessment period under § 170 (5) No. 2 AO starts to run, the gift scope is documented and the Freibetrag under § 16 ErbStG can be planned for.

For internationally positioned families, the Wegzugsbesteuerung under § 6 AStG (exit taxation when leaving Germany with substantial corporate shareholdings) also matters. A disquotal contribution before a planned Wegzug (relocation away from Germany) can trigger a double burden which has to be avoided by carefully sequencing the steps. Whoever first makes the contribution and then leaves the country can trigger both tax events at the same time.

Frequently asked questions

From what value increase does § 7 (8) ErbStG apply?

The statute does not set an explicit threshold. In practice, value increases below EUR 20,000 often do not produce taxable amounts because of the personal Freibetrag. For shareholders outside the family the Steuerklasse III Freibetrag is only EUR 20,000, so Schenkungsteuer arises even on small shifts in value.

Does the donor need to have a gift intent?

No. The BFH rulings of 10 April 2024 make it clear that a subjective intent to enrich the other party is not required. What counts is the objective increase in value at the beneficiary level and the causal context with the donor's contribution.

How is the value increase calculated?

What matters is the difference between the fair market value of the share before and after the value-increasing contribution. The valuation follows §§ 11, 199 ff. BewG. For unlisted shares the simplified income-capitalisation method or an IDW S 1 report applies. In strong earnings years the fair market value often clearly exceeds the book value.

How far back can the tax office assess?

The regular assessment period is four years. It starts, however, only when the tax office becomes aware of the Schenkung. For unreported Schenkungen the tax office can therefore still assess many years later. In cases of tax evasion the period extends to ten years under § 169 (2) sentence 2 AO.

What is a disquotal contribution?

A disquotal contribution is where one shareholder makes a contribution into the company's assets without the co-shareholders making a corresponding counter-contribution or the participation quotas being adjusted. The economic benefit is shared proportionally among all shareholders, which triggers § 7 (8) ErbStG.

Does § 7 (8) ErbStG also apply to foreign companies?

Yes, where German tax liability exists. That is the case where either the donor or the beneficiary is subject to unlimited German tax liability (§ 2 ErbStG). A domestic situs of assets can also trigger limited tax liability. For Holding (German tax-optimised holding company structure) arrangements with foreign elements, the provision is especially tricky.

What should I do if I discover an old disquotal contribution?

A voluntary disclosure under § 153 AO or § 371 AO has to be considered depending on the situation. Before any disclosure the value increase should be valued cleanly and the Schenkungsteuer calculated, so that the disclosure is complete and provides immunity from criminal sanctions. A blanket disclosure without valuation is risky because it can jeopardise the criminal-law immunity.

Advice on the gift fiction for GmbH shares

If you are restructuring a GmbH, transferring shares or have spotted a disquotal contribution, you should check the consequences under § 7 (8) ErbStG before any further step. In my practice I work with valuation reports, a risk analysis per shareholder and a structuring recommendation that looks at Schenkungsteuer, income tax and corporate-law consequences in an integrated way.

Book a non-binding first meeting via the contact form on florian-enders.de. For the meeting, please bring the most recent annual accounts of the GmbH, the articles of association and an overview of planned or completed capital measures. With those documents we can deliver a solid risk assessment already in the first meeting.