If shares in a corporation of at least 1 %, held as private assets, are sold, any capital gain or loss constitutes business income. By selling shares whose value has fallen below the acquisition cost, the taxpayer may offset the capital loss against other types of income. In this context, shareholders of a corporation may also sell shares to each other in order to each generate capital losses that reduce taxable income (so-called share rotation).
However, according to a ruling of the BFH published in 2023, an abusive arrangement may be assumed if the respective purchase price in the transactions between the shareholders is grossly disproportionate to the actual value of the shares. This is regularly the case when the shares are sold at a particularly low price in order to generate the highest possible loss from the disposal. An actual reduction in the value of the shares must be substantiated. If this can be demonstrated, the share rotation and the resulting losses are recognised for tax purposes.