Excessive interest on a shareholder loan

In order for the tax office to assume a hidden profit distribution due to an excessive interest-bearing shareholder loan, it must take all interest-relevant factors into account appropriately.

Excessive interest on a shareholder's loan to the GmbH without a justifiable reason can lead to a hidden profit distribution. However, the tax office was unsuccessful with this argument before the Federal Fiscal Court when it wanted to compare a shareholder loan bearing interest of 8 % with a bank loan taken out for the same investment, which bore interest of only 5 %. Since the shareholder loan, unlike the bank loan, was not only unsecured but, due to the provisions of insolvency law, may also only be serviced on a subordinate basis in the event of insolvency, the Federal Fiscal Court considered a risk premium to be justified. In addition, the court once again confirmed that the burden of establishing that the agreed interest rate is not at arm's length generally lies with the tax office.