Subsequent acquisition costs and equity replacement law

Whether expenses incurred by a shareholder to secure the capitalization of the GmbH are deductible as subsequent acquisition costs has changed fundamentally in recent years.

The MoMiG deregulated the law on equity substitution. Therefore, the Federal Fiscal Court has ruled that the basis for considering equity-replacing financing assistance (loans or guarantees) provided by the shareholder as subsequent acquisition costs no longer applies. However, for reasons of protection of legitimate expectations, the new case law only applies to financing assistance provided as of the publication of the ruling on September 27, 2017 or which has become equity-replacing as of this date.

The tax authorities have now adopted this case law, including the reliance clause. Only expenses that lead to an open and hidden contribution to the Company's capital in accordance with the principles of commercial law are now deemed to be subsequent acquisition costs. These include, in particular, additional contributions and other additional payments, such as payments into the capital reserve, cash contributions or the waiver of a receivable of value. On the other hand, expenses from external capital assistance, such as the default on a loan or a guarantee recourse claim, generally no longer lead to subsequent acquisition costs of the shares in the company. The situation is different only if the debt assistance granted by the shareholder is economically comparable to a contribution to the company's assets due to contractual agreements (subordination, etc.).