German Federal Fiscal Court: Dividend inflow to the controlling shareholder

Dividends from a solvent corporation do not accrue to the controlling shareholder only once the dividend amount has been credited to the shareholder’s account, but usually as soon as the resolution on the distribution of profits has been adopted. This is the case even if the shareholders’ meeting has decided that the claim does not become payable until a later date. The Federal Fiscal Court regularly argues that a controlling shareholder is typically able to have the owed amounts paid out to it.

The distributing corporation’s solvency is the decisive criterion with respect to the dividend inflow to the controlling shareholder at the time the resolution is adopted. The Federal Fiscal Court held in its judgment of 2 December 2014 (VIII R 2/12) that such solvency exists even if, at the time of the shareholder resolution, the distributing corporation has insufficient liquidity of its own to make the distribution. The Court stated that solvency already exists where the distributing corporation, as the controlling shareholder of a subsidiary limited liability company (GmbH) with high liquidity of its own, is able to procure from such subsidiary the funds required for its distribution.

In the case at hand, the distributing corporation was in fact solvent because, at the time of its resolution on profit distribution, it was entitled, as the controlling shareholder of its subsidiary GmbH, to dividends from its subsidiary GmbH on the basis of a previously passed resolution on profit distribution and because the subsidiary GmbH was solvent at all times due to its own high liquidity.