The Finanzgericht Münster (Finance Court of Münster) has ruled on the inheritance tax retention period for privileged business assets, holding that, for the element of disposal within the meaning of § 13a Abs. 5 ErbStG (German Inheritance Tax and Gift Tax Act) old version, the contractual obligation transaction is not already decisive. In the court’s view, what matters instead is the in rem transaction or the transfer of beneficial ownership. The decision therefore particularly concerns cases in which the signing and completion of a share purchase agreement occur at different times.
The judgment of the 3rd Senate of the Finanzgericht Münster dated 12.12.2025 bears the case number 3 K 695/24 Erb and the ECLI identifier ECLI:DE:FGMS:2025:1212.3K695.24ERB.00. An appeal on points of law has been lodged against the decision with the Bundesfinanzhof (BFH, Federal Fiscal Court); the proceedings there are being conducted under case number II R 1/26. The decision was published by notification of the Finanzgericht Münster dated 15.01.2026.
Dispute over the retention period for business assets privileged for inheritance tax purposes
At the heart of the proceedings was the question of the point in time at which a disposal within the meaning of the inheritance tax retention rules is to be assumed. This question is of considerable significance for the relief for business assets, because a breach of the retention period may lead to proportionate subsequent taxation.
The case concerned a sub-participation in a limited partner’s interest in a KG (Kommanditgesellschaft, German limited partnership). The claimant had received increases in this sub-participation by way of gift in October 2013 and in March 2015. A seven-year retention period applies to the optional relief, while a five-year retention period is decisive for the standard relief.
Amendments to the gift tax assessments by the tax office
The tax office had amended the gift tax assessment as of 01.10.2013 on 01.03.2023. It amended the gift tax assessment as of 01.03.2015 on 20.06.2023. In the prior objection proceedings, the claimant had applied for optional relief for both gifts.
In the tax office’s view, the privileged assets had already been disposed of in March 2020. From this, it concluded that the seven-year retention period for the optional relief had been proportionately fallen short of.
Signing and closing as the starting point of the legal dispute
The dispute exhibits a structure typical of corporate acquisitions: the contractual share purchase agreement was concluded in March 2020. However, the in rem assignment of the limited partnership interests did not take place until September 2021, after approval by the European Central Bank had been obtained.
This raised the decisive question of whether the so-called signing, i.e. the conclusion of the contractual obligation transaction, is already to be regarded as a disposal within the meaning of the retention rule. Alternatively, the relevant point was the later closing, i.e. the in rem completion or the transfer of beneficial ownership.
Distinction between the contractual obligation transaction and in rem completion
For § 13a Abs. 5 ErbStG old version, the Finanzgericht Münster focused on the in rem transaction or the transfer of beneficial ownership. According to this view, the mere conclusion of the contractual agreement is not sufficient to trigger a disposal within the meaning of the retention period.
The court thereby expressly opposed the administrative view set out in R E 13a.13 Abs. 1 Satz 2 ErbStR 2019 (German Inheritance Tax Guidelines 2019). According to this administrative instruction, the contractual transaction is already supposed to be decisive. The Finanzgericht did not follow this classification in the case decided.
Continued existence of the sub-participation after conclusion of the agreement
A further aspect of the decision concerned the question of whether the claimant’s sub-participation had already been terminated by the father’s conclusion of the agreement concerning his limited partnership interest. The Finanzgericht answered this in the negative. In the Senate’s view, the claimant’s sub-participation initially continued to exist.
In the specific dispute, the contested sub-participation in the KG interest therefore did not already transfer with the contractual agreement. Rather, according to the decision, the later assignment of the interest was decisive.
Consequence for the relief deduction
The operative part of the decision amended exclusively the gift tax assessment as of 01.03.2015 dated 20.06.2023 in the form of the objection decision dated 08.03.2024. The amendment was made to the effect that the relief deduction for the acquisition of the sub-participation in X. KG is granted proportionately for six years instead of for five years. The calculation of the tax was assigned to the tax office.
The claimant therefore prevailed on this point. The operative part does not contain any statement going beyond this for other case constellations.
Classification of the decision of the Finanzgericht Münster
The decision is significant for cases in which, in the transfer or disposal of company shares or partnership interests, the conclusion of the agreement and the in rem completion occur at different times. Particularly in the case of regulated companies or transactions requiring official approvals, a longer period may elapse between signing and closing.
According to the decision of the Finanzgericht Münster, the inheritance tax retention period does not depend on the earliest point at which the parties become contractually bound. In the court’s view, the decisive point is instead when the in rem transaction is completed or beneficial ownership is transferred.
- Conclusion of the contractual share purchase agreement in March 2020,
- in rem assignment of the limited partnership interests only in September 2021,
- prior approval by the European Central Bank,
- disputed application of the retention period in the context of optional relief.
Pending appeal on points of law before the Bundesfinanzhof
The judgment has not been finally clarified because an appeal on points of law has been lodged with the Bundesfinanzhof. The appeal proceedings are pending under case number II R 1/26. The Finanzgericht Münster lists the decision in its official overview of judgments with pending appeal proceedings before the Bundesfinanzhof.
Until the Bundesfinanzhof issues a decision, it remains open whether the view of the Finanzgericht Münster will be confirmed. According to the reported procedural status, there has not yet been a final and binding clarification by the highest court on this specific question.
Frequently Asked Questions
FG Münster retention period for business assets: Does signing or closing count?
According to the judgment of the Finanzgericht Münster dated 12.12.2025, the contractual signing is not decisive for the disposal within the meaning of § 13a Abs. 5 ErbStG old version. The court focuses on the in rem transaction or the transfer of beneficial ownership.
§ 13a ErbStG retention period: What role does optional relief play?
The dispute concerned the seven-year retention period for optional relief. The tax office assumed a proportionate shortfall because it proceeded on the basis of a disposal as early as March 2020.
FG Münster 3 K 695/24 Erb: What practical consequences does the judgment have for companies?
The decision particularly concerns corporate acquisitions in which signing and closing occur at different times. For companies and stakeholders, the timing of the disposal can be of considerable importance for the inheritance tax relief applicable to business assets.
Tax law assessment by MTR Legal
The decision of the Finanzgericht Münster shows how closely the inheritance tax relief for business assets can be linked to corporate law transfer processes and the completion of corporate transactions. In matters concerning the retention period, relief for business assets, or the tax treatment of transfers of shareholdings or partnership interests, MTR Legal Rechtsanwälte advises companies, investors and high-net-worth individuals on tax law. Further information can be found at Legal advice in tax law.
