# Agricultural Land Not Harmful Administrative Assets

> FG Düsseldorf: leased farmland is not administrative assets under § 13b ErbStG despite being held by a corporation.

Source: https://www.mtrlegal.com/en/agricultural-land-not-harmful-administrative-assets/ · Language: en · Updated: 2026-10-24

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## Agriculturally Used Land and Administrative Assets

By judgment of 2 June 2026, the Finanzgericht Düsseldorf (Fiscal Court Düsseldorf) held that real property held as business assets of a corporation does not constitute harmful administrative assets within the meaning of [§ 13b para. 4 ErbStG (German Inheritance Tax and Gift Tax Act)](https://www.gesetze-im-internet.de/erbstg_1974/__13b.html) insofar as it is made available to third parties for agricultural use. The decision was issued under case no. 4 K 384/24 F and is not yet final. Due to its fundamental importance, the court allowed an appeal on points of law to the Bundesfinanzhof (BFH, Federal Fiscal Court); a BFH case number is not yet known.

The 4th Senate of the Finanzgericht Düsseldorf, which has jurisdiction over inheritance and gift tax matters, released the decision for publication on 30 June 2026 and entered it into the case law database of North Rhine-Westphalia. The judgment was also communicated publicly via the court’s July 2026 newsletter; the official notice is dated 14 July 2026.

## Background to the Proceedings

### Shareholding Structure and Transfer of Limited Partnership Interests

In the case in dispute, the joined party held a 100 percent limited partner interest in the assets of the claimant. The claimant was a GmbH & Co. KG deemed to carry on a commercial business. In turn, it held a one-third interest in a corporation under U.S. law with its registered office and place of management in the United States.

On 20 December 2020, the joined party transferred 33 percent of her limited partnership interests to each of her three children without consideration. According to the official headnote, the subject matter of the proceedings was the separate and uniform determination of the value of the share in the business assets and of the aggregate fair market values of the assets constituting administrative assets within the meaning of § 13b para. 4 nos. 1 to 4 ErbStG.

### Use of the Properties by Local Farmers

For years, the U.S. corporation had made farmland, including farm buildings and operating equipment, available to local farmers for consideration. The operating equipment made available included, among other things, silo facilities, multi-purpose halls and irrigation systems. The use was for agricultural cultivation.

In addition, the corporation made four single-family houses available to the farmers for residential purposes. The parties disputed whether the farmland was also to be classified as administrative assets.

The claimant took the view that only the following items belonged to administrative assets:

- the properties made available for residential purposes,
- interests held by the U.S. corporation in other corporations,
- but not the farmland made available for agricultural use.

## View of the Tax Authorities

The Finanzamt (German tax office) classified the farmland as administrative assets. It assumed that the U.S. corporation leased out its business as a whole. In this context, each farm constituted an independent leased business.

In the view of the Finanzamt, only the exception to the exception under § 13b para. 4 no. 1 sentence 2 letter b ErbStG came into consideration in this respect. However, the Finanzamt did not consider its requirements to be met. It did not regard the exception to the exception under § 13b para. 4 no. 1 sentence 2 letter f ErbStG as applicable because the land constituted business assets.

The Finanzamt relied on the Erbschaftsteuer-Richtlinien 2019 (Inheritance Tax Guidelines 2019). According to R E 13b.19 para. 2 sentence 4 ErbStR 2019 (Inheritance Tax Guidelines 2019), where a corporation leases out a business as a whole, only § 13b para. 4 no. 1 sentence 2 letter b ErbStG is to be applied. It also took the view that the exceptions to the exception must be examined in the statutory order; an earlier exception to the exception precludes the application of a subsequent exception to the exception.

## Decision of the Finanzgericht Düsseldorf

### Farmland Does Not Fall Under Harmful Administrative Assets

The Finanzgericht Düsseldorf upheld the claim in the principal application. According to its decision, the farmland of the U.S. corporation is not administrative assets pursuant to § 13b para. 4 no. 1 sentence 2 letter f ErbStG.

According to the decision, only the single-family houses and the interests held by the U.S. corporation in other corporations remained administrative assets. The court therefore followed the claimant’s view on the point relevant to the farmland.

Under § 13b para. 4 no. 1 sentence 1 ErbStG, real property, parts of real property, rights equivalent to real property and buildings generally belong to administrative assets if they are made available to third parties for use. However, § 13b para. 4 no. 1 sentence 2 letter f ErbStG contains an exception to this exception: Under that provision, making property available for use by third parties is not deemed to exist if the relevant real property, parts of real property, rights equivalent to real property or buildings are made available to third parties for agricultural and forestry use.

The Finanzgericht considered this requirement to be satisfied because the farmland had been leased to the farmers for agricultural use.

### No Restriction Due to Business Assets of a Corporation

The court expressly rejected any restriction based on legal form. In the Senate’s view, the fact that the land made available belonged to the business assets of a corporation under U.S. law did not lead to a different assessment.

In its reasoning, the Finanzgericht relied on the fact that § 13b para. 4 no. 1 sentence 2 letter f ErbStG contains no limitation based on the type of assets eligible for relief. The provision does not turn on whether the real property made available is attributable to agricultural and forestry assets within the meaning of § 13b para. 1 no. 1 ErbStG. According to the decision, real property that belongs to the business assets of a corporation within the meaning of § 13b para. 1 no. 3 ErbStG can therefore also fall within the exception to the exception.

In this respect, the Finanzgericht also relied on the case law of the Bundesfinanzhof, according to which the exceptions to the exception in § 13b para. 4 no. 1 sentence 2 ErbStG must be interpreted narrowly and in line with the wording.

## Significance of a Possible Lease of a Business as a Whole

### Exceptions to the Exception Stand Side by Side in the Court’s View

The Finanzgericht expressly left open whether, in the case in dispute, there was in fact a lease of a business as a whole. In its view, this was not relevant to the decision.

Even if the U.S. corporation had made the farmland available to the farmers as part of a lease of a business as a whole, the application of § 13b para. 4 no. 1 sentence 2 letter f ErbStG would not be precluded according to the wording of the statute. The official guiding principle correspondingly clarifies that real property does not belong to administrative assets even where it is made available as part of a lease of a business as a whole.

The Senate assumed that the exceptions to the exception in § 13b para. 4 no. 1 sentence 2 ErbStG stand independently side by side. In the court’s view, there is no statutory rule under which one exception to the exception displaces another. Nor could such displacement be derived from the order of the letters in the provision.

### No Exclusion by § 13b para. 4 no. 1 sentence 2 letter b ErbStG

According to the Finanzgericht’s decision, the possible fulfilment of a criterion under § 13b para. 4 no. 1 sentence 2 letter b ErbStG does not preclude the application of § 13b para. 4 no. 1 sentence 2 letter f ErbStG. The Senate thereby contradicted the view taken by the tax authorities, according to which, where a corporation leases out a business as a whole, only letter b is to be decisive.

For the assessment of the farmland, the decision therefore did not depend on whether the requirements for a lease of a business as a whole were met in the specific case in dispute. What was decisive instead was that the land was made available to third parties for agricultural use.

## Classification Within the Case Law of the Bundesfinanzhof

In its judgment of 28 February 2024, the Bundesfinanzhof had already clarified that the exceptions to the exception in § 13b para. 4 no. 1 sentence 2 letters a to f ErbStG are not merely standard examples. Rather, they constitute an exhaustive catalogue by which the legislature determines the circumstances under which administrative assets are brought back within the scope of the tax relief.

The Finanzgericht Düsseldorf follows this wording-based approach. Accordingly, for the exception to the exception in § 13b para. 4 no. 1 sentence 2 letter f ErbStG, the decisive factor is whether the real property is made available for agricultural and forestry use. According to the Finanzgericht’s decision, no additional requirement that the land itself must be allocated to agricultural and forestry assets can be derived from the statute.

## Practical Relevance of the Decision

The judgment concerns the inheritance and gift tax treatment of real property made available to third parties for agricultural use. It makes clear that, in the view of the Finanzgericht Düsseldorf, classification as business assets of a corporation does not preclude the exception to the exception under § 13b para. 4 no. 1 sentence 2 letter f ErbStG.

At the same time, the decision clarifies that a possible lease of a business as a whole does not result in the exception to the exception for agricultural and forestry use being displaced. According to the judgment, only the agricultural use of the land made available is relevant in this respect.

The decision has already been discussed in specialist literature. Since the judgment is not yet final and an appeal on points of law to the Bundesfinanzhof has been allowed, further developments remain to be seen. It has not yet been reported whether the tax authorities will actually lodge an appeal on points of law.

## Advice in Tax Law for Business and Asset Succession

The inheritance and gift tax classification of business assets, administrative assets and exceptions to the exception can be of considerable importance, particularly in the case of corporate shareholdings, real estate structures and cross-border assets. MTR Legal Rechtsanwälte advises companies, investors and high-net-worth individuals on tax law issues in connection with asset and business succession. Further information can be found at [Legal advice in tax law](https://www.mtrlegal.com/rechtsberatung/steuerrecht/).