Inflow of royalties to the controlling shareholder-managing director

Oct 30, 2025

In its ruling of June 5, 2024, the Federal Fiscal Court (BFH) clarified its case law on the timing of taxation of unpaid bonuses to controlling GmbH managing directors. The BFH clarified that bonuses can accrue to a controlling shareholder-managing director as soon as they become due. Contrary to the BMF letter dated May 12, 2024, however, this deemed inflow does not apply to bonus claims that have not been paid out or recognized as liabilities in the annual financial statements, even if this would have been in accordance with generally accepted accounting principles.

In the present case, the sole shareholder and managing director of a limited liability company (GmbH) was entitled to an annual bonus in addition to his monthly fixed salary, which was dependent on the company's profits and was due one month after the annual financial statements had been approved by the shareholders' meeting.

However, the bonus was not paid to the shareholder-managing director and no liability item was created for this purpose. The tax office took the view that the calculated, unpaid bonus was nevertheless taxable for the managing director. However, the tax court (FG) agreed with the managing director's view that taxation would only apply if the bonus had actually been paid to him, which was indisputably not the case here.

However, the Federal Fiscal Court overturned the decision of the Fiscal Court and referred it back to the latter for a new hearing and decision. In principle, it is true that royalties are only taxable when they are received by the recipient. This is the case when the royalty is credited to the recipient's account or a cash payment is made.

Even if the controlling shareholder-managing director waives payment after the annual results have been determined, taxation still applies, as this then constitutes a hidden contribution by the beneficiary managing director. In the case in question, however, contrary to the principles of proper accounting, the bonus was not recognized as a liability in the annual financial statements, even though it had been determined. In this case, however, no inflow had taken place, as it was not known whether, for example, there had been an accounting error or a contractual change to the bonus entitlement.

The BFH clarified that a deemed inflow for the controlling shareholder-managing director and
taxation of this could only apply if it had been determined why the bonus had not been recognized as a liability despite the contractual agreement and the approval of the annual financial statements. The case was therefore referred back.

Source: BFH, judgment of June 5, 2024 - Ref. VI R 20/22