Reversal of share transfer due to loss of the basis of the transaction
- Patricia Lederer
- Aug 29
- 2 min read
Updated: Sep 4
New Federal Fiscal Court ruling on 21 August 2025: Rescission in case of incorrect tax advice
Frankfurt am Main
August 29, 2025
The IX Senate of the Federal Fiscal Court (BFH) ruled on May 9, 2025 – IX R 4/23 – published on August 21, 2025 : The transfer of GmbH shares as part of an equalization of accrued gains between spouses generally represents a taxable disposal transaction according to Section 17 of the Income Tax Act . However, the capital gain can be retroactively canceled if the transfer is reversed due to an error regarding the tax consequences – for example, because both spouses relied on incorrect tax advice .
Background of the case
The plaintiffs – married couple filing jointly – agreed to a separation of property. This resulted in the wife's claim for equalization of accrued gains, which the husband fulfilled by transferring shares in the GmbH . Both spouses – based on the recommendation of their tax advisor – assumed that this transfer would not trigger income tax .
However, the tax office saw things differently: It treated the transfer as a taxable sale according to Section 17 of the Income Tax Act and assessed income tax on the capital gain.
In response, the couple changed their notarial agreement: instead of transferring the shares, they agreed to a cash payment and deferred the remainder of the compensation claim.
Decision of the FG and the BFH
The Lower Saxony Finance Court (judgment of May 24, 2023 – 9 K 162/21) recognized the reversal of the marriage contract and determined: The capital gain is retroactively eliminated.
The Federal Fiscal Court confirmed this view:
A reversal can be treated for tax purposes as if the share transfer had never taken place.
The prerequisite is that both parties had the same mistake about the tax consequences.
This error must have already existed at the time the contract was concluded and fall within the risk sphere of both contracting parties .
Particularly important: It is sufficient that both spouses have relied on the joint tax advice .
An explicit reference in the original contract text is not required .
Significance for practice
The judgment makes it clear:
Contractual arrangements in family and corporate law should always be carefully reviewed from a tax perspective.
If spouses or business partners rely on incorrect tax advice , this may affect the basis of the contract .
In this case, a retroactive tax correction is possible – with the result that the capital gain is eliminated.
For entrepreneurs and shareholders, this means that incorrect advice can make contracts vulnerable – but can also offer an opportunity for correction.
Conclusion
The Federal Fiscal Court ruling of May 9, 2025 (IX R 4/23) shows: Even if Section 17 of the Income Tax Act generally treats share transfers as taxable, contracts can be corrected retroactively if a joint error resulting from incorrect tax advice formed the basis of the transaction.
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