Losses from the withdrawal of shares without compensation

The withdrawal of shares without compensation in the context of insolvency proceedings of the stock corporation results in a loss to be recognized for tax purposes.

Contrary to the view of the tax authorities, the Federal Fiscal Court has recognized the loss from the withdrawal of shares without compensation as a result of a capital reduction to zero regulated in the insolvency plan together with an exclusion of subscription rights for the subsequent capital increase. The withdrawal of the shares was to be treated as a loss from the sale of the shares. It is true that the withdrawal is not a sale and is not otherwise covered by the tax law. However, the judges consider this fact to be an unplanned regulatory gap which must be closed by analogy.