When spinning off a sole proprietorship as a Sachagio, the contributor must formally waive the granting of shares

According to the KG, structuring this via a minor cash capital increase combined with the obligation to contribute the sole proprietorship as a contribution premium in kind (Sachagio) does not meet the transformation-law requirements at least where the granting of shares has not been waived by a notarised declaration.

The legal background

The KG’s decision must be seen against the backdrop of various (tax) law considerations and, in part, competing structuring targets that must always be taken into account in structuring advice for restructurings and balanced in the best possible way for the specific case – for example, the common desire for tax neutrality of the restructuring measure. Liquidity burdens caused by dry income – taxable (hidden-reserve) gains without compensating cash inflows – should generally be avoided. In this respect, transformation tax law provides, among other things, ways to do so, in the case at hand for example under section 20 UmwStG.

Another target is usually (partial) universal succession. Compared with the transfer of individual assets, this has the advantage that existing legal and contractual relationships can generally be continued without the consent of affected third parties. In the case at hand, to achieve universal succession, the transformation-law route of a spin-off under sections 123 and 152 UmwG had to be taken.

In addition, there was the common motive of avoiding the applicability of the strict rules on contributions in kind: specifically, a cash capital increase with a contribution premium in kind (Sachagio), instead of a capital increase by contribution in kind, was intended to avoid the need for a valuation report. The background is that the stricter rules for contributions in kind generally do not apply to a Sachagio, meaning that, in particular, proof of value is usually not required in the commercial register proceedings.

The specific case

The KG’s decision is based on the following facts: The managing director and sole shareholder of a GmbH had a spin-off agreement notarised, providing for the spin-off of the managing director’s sole-trader business for absorption by the GmbH in return for a small cash capital increase plus a contribution premium in kind (Sachagio) in the form of the sole-trader business. The spin-off was to be carried out at book value, tax-neutral, under section 20 UmwStG.

In response to the corresponding commercial register filing, the competent register court issued an interim order. In the court’s view, this structure constituted an impermissible mixing of a capital increase for the purpose of a spin-off under transformation law with an ordinary cash capital increase. The register court did not grant the appeal lodged against the interim order, so the KG was called upon to decide.

The court’s decision

In its order of 16 June 2025 (ref.: 22 W 11/25), the KG upheld the register court’s decision on the grounds that the filing could not be implemented. In the case of a spin-off of a business operated by a sole trader for absorption by a GmbH under sections 123 and 152 UmwG, the GmbH must generally increase its capital and, under the mandatory provisions of spin-off law, grant the resulting shareholding to the sole trader carrying out the spin-off as consideration.

The KG argued in particular on the basis of the transformation-law principle of strict compliance with the law. While a waiver of the granting of shares is possible, it requires a notarised waiver declaration. However, the appellants could not submit such a waiver declaration without simultaneously risking the intended tax privilege for the restructuring, because section 20 UmwStG expressly requires, among other things, the granting of new shares in the acquiring company.

Practical tip: Structuring options should be carefully reviewed and weighed for each specific case.

The KG has put a stop to the structure used here, which – at least for transformation tax purposes – has become established since a 2010 decision of the Federal Fiscal Court (Bundesfinanzhof) (I R 55/09). Previously, the Higher Regional Court of Celle had already taken a similar position in an obiter dictum in its order of 13 June 2024 (ref.: 9 W 37/24). Subject to a ruling by the highest court, it is therefore advisable not to choose structures comparable to the case at hand.

In light of the KG’s decision, there are concerns about the effectiveness of combining the advantages of a transformation-law spin-off in the form of universal succession with the transformation tax law book-value privileges and avoiding the rules on contributions in kind by using a Sachagio. As things stand, from a tax perspective it should still be possible to meet the requirements of section 20 UmwStG even for contributions via Sachagio, as the tax authorities recently reaffirmed in the 2025 Transformation Tax Decree (Umwandlungssteuererlass 2025).

However, the approach that the KG considers necessary under transformation law for this structuring route – submitting a notarised waiver declaration regarding new shares in the acquiring company – is likely to preclude the application of section 20 UmwStG under current case law. The structuring options that may be considered for a planned restructuring in the specific case should therefore be carefully reviewed and weighed in light of current case law for any effectiveness risks and the individual pros and cons, in order to identify the ideal structuring route.

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