December 27, 2021
In the present case, a private sale transaction was involved, as a property was resold after only about one year of holding. However, it was disputed whether the profit from this private sale transaction was taxable for the mother as the original owner of the property or for the children, to whom the property was donated shortly before the sale. The mother acquired the property by notarized contract in 2011 and transferred it in 2012 free of charge to her son of full age and her daughter of full age, each in equal shares. By notarized contract of the same date, the daughter and the son sold the property to Z. Half of the purchase price was paid to the daughter and half to the son. The sales negotiations with Z had been conducted solely by the mother. It was now disputed whether a private sale transaction should be recognized for the mother or for the children (which was more favorable from a tax point of view in the present case and was therefore sought).
In its ruling dated April 23, 2021 (file no. IX R 8/20), the BFH confirms the arrangement made and the existence of a private sale transaction for the children. The decisive factor is that the legislator has expressly regulated (as a reaction to earlier case law) that in the case of a gratuitous acquisition the acquirer assumes the legal position of the transferor and thus realizes a private sale transaction to be recognized for tax purposes if the property is sold within the “speculation period” of ten years set in motion by the predecessor in title. The legislator has thus indicated that the taxation as a private sale transaction is not to be circumvented by the gratuitous transfer, e.g. by transferring the asset concerned to a related person prior to a sale, who then realizes the sale transaction.
Nor was there any abuse of legal structuring options that would have led to the private disposal transaction being recognized for tax purposes by the parent company. There were no indications that the contractual arrangements for the gift of the property to the children and the sale of the property to Z contained inappropriate agreements. The children were free to dispose of the donated property after the transfer. In particular, they were not contractually bound to sell to the purchasers with whom exclusively the mother had previously conducted sales negotiations. The children were also not obliged to transfer the proceeds of the sale to the taxpayer. Moreover, as a result of the transfer to both children, the occurrence of a taxable capital gain was not avoided and a tax advantage not provided for by law was not achieved. Rather, the capital gain accrued to the children and is also to be recognized there.