In its ruling of 18 August 2016 (Az. VI R 18/13), the BFH held that, according to settled case law, the mere granting of a pension commitment does not yet result in an inflow of employment income, and that in the case at hand the buy-out payment made in the course of the assumption of debt did not change this from the employee's perspective.
Background:
The claimant had previously been granted a pension commitment by a GmbH in which he was the majority shareholder and sole managing director.
He planned to sell his shares and therefore established a further GmbH, of which he became the sole shareholder and managing director. The purchaser of the shares in the original GmbH did not want to assume the claimant's pension commitment. The new GmbH therefore agreed with the original GmbH to take over all rights and obligations arising from the pension commitment granted to the claimant in exchange for payment of a consideration. The tax office and the tax court took the position that the claimant had received employment income upon payment of the buy-out amount.
Decision of the BFH:
The BFH took a different view: it argued that, through the payment, the original GmbH had not satisfied a claim of the claimant but rather a claim of the new GmbH. Only the debtor of the obligation arising from the pension commitment had changed. Accordingly, there was no inflow of employment income, because the employee's entitlement to future pension payments was not satisfied in economic terms.
Note: However, a prerequisite for there being no inflow of employment income is that the employee has no option to have the buy-out amount paid out to himself instead.
This new BFH decision departs from the BFH ruling of 2007 (BFH of 12 April 2007, Az. VI R 6/03). The new BFH judgment may facilitate the transfer of pension commitments, as purchasers frequently do not wish to assume such commitments.
Frequently asked questions
Frequently asked questions
Does the transfer of a pension commitment against a settlement payment result in taxable wages?
No. According to the BFH ruling of 18.08.2016 (Az. VI R 18/13), the payment of a settlement amount in the context of an assumption of debt does not result in a wage inflow to the employee. Reasoning: The employee's claim to future pension payments is not economically fulfilled; only the debtor of the pension obligation changes.
What condition must be met so that no inflow of wages occurs?
The employee must not have an option to alternatively receive the buy-out amount as a payment to themselves. Only if the payment flows exclusively between the former and the new debtor (e.g. two GmbHs) does the transaction remain neutral for wage tax purposes.
When does granting a pension commitment result in taxable wages?
According to settled BFH case law, the mere granting of a pension commitment does not yet constitute an inflow of wages. An inflow only occurs when pension benefits are actually paid out or when the employee directly receives an economic benefit.
What is the practical significance of the BFH ruling for company sales?
The ruling considerably facilitates the transfer of pension commitments in share deals. Purchasers who do not wish to assume an existing pension commitment can transfer it to another company (e.g., a newly established GmbH of the seller) against a settlement amount without triggering wage tax for the beneficiary employee.
Does the BFH ruling deviate from prior case law?
Yes, the ruling of 18 August 2016 (VI R 18/13) deviates from the earlier BFH decision of 12 April 2007 (VI R 6/03). The new case law is more employee-friendly and creates greater structuring flexibility when transferring pension commitments.