Abusive Bond Stripping

If the sole purpose of bond stripping is to achieve a tax advantage, this constitutes an abusive arrangement that the tax office does not have to recognize.

In the case of so-called bond stripping, after the purchase of an interest-bearing bond, the interest coupons are separated from the bond shell, turning the bond into two independent assets to which the acquisition costs are to be allocated. These can then be sold separately. However, according to the Düsseldorf Fiscal Court, a structure in which bond stripping serves the sole purpose of exploiting the difference between the flat tax rate and the individual income tax rate to reduce tax is an abuse of structuring opportunities.