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Why 31 August is a key date for corporate reorganisations

In the case of mergers and demergers, the relevant closing balance sheet must generally be dated no more than eight months before the filing with the Commercial Register. If an entity with a calendar financial year intends to use its annual financial statements as at 31 December of the previous year, the reorganisation must therefore generally be filed for registration no later than 31 August (section 17(2), fourth sentence, UmwG).

A comparable time limit applies to changes of legal form. Although a change of legal form does not involve a transfer of assets under German civil law and does not necessarily require a closing balance sheet in the traditional corporate reorganisation sense, it may qualify for retroactive tax treatment of up to eight months. Subject to the applicable tax requirements, the timely filing with the Commercial Register is decisive in this context as well (sections 9 and 25 UmwStG).

The frequently overlooked bottleneck: the power of attorney

Particularly during the final days before the deadline, it may become apparent that not all persons required to make the Commercial Register filing are able to appear before the notary in person. If the filing is signed by an authorised representative, section 12(1), third sentence, HGB generally requires the power of attorney itself to bear a notarial certification of signature.

In many cases, however, this formal requirement does not arise under substantive corporate or reorganisation law. Instead, it serves solely as formal evidence of the representative’s authority for the purposes of the Commercial Register. A distinction must therefore be made between authority to participate in the underlying reorganisation and authority merely to make the register filing.

The solution: filing by the notary

Under section 378(2) FamFG, a notary who has notarised or certified a declaration required for an entry in a public register is deemed authorised to apply for that entry on behalf of the person entitled to make the filing. Subject to the statutory requirements, the notary can therefore make the Commercial Register filing directly.

If the notary files the application on this basis, a separate power of attorney bearing a notarial certification of signature generally does not have to be submitted to the Commercial Register. A private written instruction or authorisation may be sufficient for the internal relationship, provided that substantive law does not require a stricter form.

The practical benefit can be considerable: a power of attorney does not have to be notarised at short notice – and potentially obtained from abroad – solely because the Commercial Register filing must be submitted before the expiry of the 31 August deadline.

The limitation: substantive formal requirements continue to apply

Section 378(2) FamFG facilitates only the application for registration. If substantive law requires a notarised or signature-certified power of attorney for participation in the underlying reorganisation itself, the notary’s statutory filing authority cannot remedy a failure to comply with that requirement.

Particular care is required where the incorporation provisions applicable to a German limited liability company (GmbH) or stock corporation (AG) apply to the reorganisation. This is especially relevant to:

• a merger by formation of a new legal entity;
• a demerger by formation of one or more new legal entities; and
• a change of legal form into a GmbH or an AG.

In these cases, the incorporation provisions governing the relevant target legal form may require a formally compliant power of attorney for participation in the reorganisation itself. A private written power of attorney will then not be sufficient. The applicable formal requirements depend on the type of reorganisation, the target legal form and the specific representation structure.

What should be clarified at an early stage?

To ensure that the reorganisation can be implemented within the required timeframe, the representation arrangements should not be reviewed only shortly before 31 August. In particular, the following questions should be addressed:

• Who must participate in the underlying reorganisation?
• Who is entitled or required to make the Commercial Register filing?
• Does substantive law already require the power of attorney to comply with a particular form?
• Can the notary make the filing directly under section 378(2) FamFG?
• Do powers of attorney need to be obtained from abroad, notarised or provided with an apostille?

Conclusion: not every filing power of attorney requires notarisation

In many corporate reorganisations, a separately notarised power of attorney for the Commercial Register filing is unnecessary if the notary who recorded the relevant transaction makes the filing directly. Particularly in the final days before 31 August, this can prevent avoidable delays and help secure timely submission.

This procedural relief must not, however, be confused with the formal requirements applying to the underlying reorganisation itself. Early coordination between the company, its tax advisers and the notary therefore remains essential to align the corporate, registration and tax aspects of the transaction.

We advise on mergers, demergers and changes of legal form from the initial structuring stage through to the timely Commercial Register filing. For individual advice or questions regarding a proposed reorganisation, please feel free to contact us directly.

Key statutory provisions: section 17(2), fourth sentence, UmwG; sections 9 and 25 UmwStG; section 12(1), third sentence, HGB; section 378(2) FamFG; sections 36, 135 and 197 UmwG; section 2(2) GmbHG; and section 23(1) AktG.

The starting point: the ten-year period as a key factor

Lifetime gifts are notionally added back to the estate when calculating the compulsory portion. Only after ten years do they fall out of the calculation entirely (tapering by one tenth per year). For family businesses in particular, the commencement of this period is existential: claims to supplement the compulsory portion asserted by non-succeeding descendants can trigger substantial outflows of liquidity – up to and including a threat to the business as a whole.

Under the settled case law of the Federal Court of Justice, however, this period does not begin as long as the transferor retains the “enjoyment” (Genuss) of the transferred asset – classically through a usufruct (Nießbrauch) or a right of residence (Wohnungsrecht). Anyone seeking continued provision therefore often unwittingly blocks the very period that is intended to “lock out” the person entitled to the compulsory portion in economic terms.

The Court’s decision: relationship of control rather than economic analysis

The Federal Court of Justice firmly rejects a purely economic approach. What is decisive is not whether the income of the asset continues to flow to the transferor in economic terms, but whether an ongoing owner-like relationship of control (eigentümerähnliche Herrschaftsbeziehung) over the transferred asset persists. A life annuity precisely does not confer such a relationship:

• The life annuity is a contractual payment claim that is independent of the asset’s economic performance – it continues to exist even if the income falls or ceases entirely.
• The recipient is not obliged to pay the annuity specifically out of the asset’s income; it may be paid from any assets.
• The annuity flows to the transferor not as continued income, but as consideration for having completely and unreservedly relinquished ownership.
• The real charge (Reallast) created as security is a mere right of realisation and confers no right of use – it therefore does not give rise to continued “enjoyment”.

As a result, in the case of a transfer against a life annuity the period under Section 2325(3) BGB – unlike in the case of a usufruct – begins to run as soon as the transfer is completed.

Transferability to business succession

The Federal Court of Justice decided the case in the context of real estate. Its guiding principles, however, are not specific to land, but are oriented solely towards the concepts of “performance” (Leistung) and “relationship of control” (Herrschaftsbeziehung). In our assessment, they can therefore in principle be applied to the transfer of shares in companies:

• Anyone transferring a GmbH or KG interest against a provision/life annuity likewise renders a period-triggering performance – the tapering begins.
• Rights of realisation in rem – structurally equivalent to the real charge, for example the pledging of company shares – do not change this, because a pledge, too, confers no control over the interest.
• Conversely, the reservation of voting and management rights is likely to suspend the running of the period – as with a usufruct; the mere entitlement to profits is not sufficient for this under the new line of authority.

What matters in the structuring

As attractive as the instrument is, two key decisions determine its success:

• Consideration or condition: The period-triggering character depends decisively on the annuity being synallagmatic consideration for a (partly onerous) transfer. If it is structured as a mere condition (Auflage) attached to an otherwise gratuitous grant, the commencement of the period must be established solely via the criterion of control. The contractual classification must therefore be precise.
• No “generous” waiver: If the transferor later waives the life annuity, this in itself constitutes a fresh gift that independently triggers a new ten-year period. Anyone deliberately setting the period in motion should plan any later waiver carefully.

Strategic advantages of this structure:

• Protection against compulsory-portion claims: Effective commencement of the ten-year period despite continued provision for the transferor.
• Liquidity protection for the business: Reduction of claims to supplement the compulsory portion and of the associated liquidity risks.
• Security of provision: Protection of the transferor through a payment claim that is secured in rem and independent of the asset’s income.
• Legal certainty and new scope: The decision not only creates clarity but also broadens the range of structuring tools available for anticipated succession.

Notarial practice shows once again: viable succession solutions arise where the law of the compulsory portion, property law and company law are carefully interlinked. We would be pleased to advise you on using the life annuity as a building block of a compulsory-portion-proof business and wealth succession.

For individual advice or any questions regarding implementation, please feel free to contact us directly.

Reference: Federal Court of Justice (BGH), judgment of 24 June 2026 – IV ZR 141/25 (lower court: Higher Regional Court (OLG) Nuremberg, judgment of 27 June 2025 – 1 U 1335/24)

In notarial practice, the same pattern appears time and again: the classic Berlin Will often reflects exactly what spouses want from a civil law and family perspective, yet produces tax results that are far from ideal. Upon the first death, the children inherit nothing, meaning that their personal inheritance tax allowances remain unused. At the same time, the family assets become concentrated in the hands of the surviving spouse, often leading to a significantly higher tax burden upon the second death.

The structural weakness of the classic Berlin Will

Under a typical Berlin Will, each spouse appoints the other as sole heir, while the children are designated as final heirs only after the death of the surviving spouse. From a family perspective, this is often entirely sensible. From an inheritance tax perspective, however, it can be doubly disadvantageous: first, the children’s tax allowances are not used on the first death; second, the concentration of assets in the estate of the surviving spouse may trigger higher taxable acquisitions and greater progression on the second death.

Few areas of succession planning illustrate the tension between the testators’ wishes and inheritance tax law more clearly. What is often emotionally and practically right for the family is not necessarily the most efficient structure from a tax perspective.

What is a super legacy?

The super legacy addresses precisely this issue. It leaves intact the core idea of the Berlin Will: the surviving spouse remains protected and initially inherits the estate. At the same time, however, the surviving spouse is granted the power to decide only after the first death whether, to whom, in what amount and at what time legacies from the estate of the first deceased spouse are to be granted to the children.

Put simply: the detailed distribution of the estate is not fixed once and for all when the will is signed. Instead, part of that decision is postponed until a later point in time, when the actual financial and family situation is known. It is precisely this deferred flexibility that makes the super legacy such a powerful tool in modern succession planning.

Civil law basis and legal boundaries

The structure does not operate outside the statutory system. Rather, it makes use of the flexibility already provided by German legacy law. The circle of potential beneficiaries and the purpose of the legacy must be defined with sufficient precision, while the surviving spouse may be given a power of determination within that predefined framework.

Careful drafting of the purpose is particularly important. The super legacy should not appear to be nothing more than a tax-saving mechanism. It becomes legally persuasive when several legitimate objectives are combined: protecting the surviving spouse, compensating the children who are not initially provided for on the first death, and at the same time enabling a sensible and efficient allocation of family wealth.

Why is this flexibility so valuable in practice?

There are often many years between the signing of a will and the first death. During that time, asset structures, liquidity needs, family relationships and tax considerations may all change substantially. Many wills are executed early but are never fully adjusted to reflect later developments.

This is exactly where the super legacy creates a valuable degree of flexibility. After the first death, it becomes clear

• which assets are actually available,
• what level of financial protection the surviving spouse requires,
• what the personal and economic circumstances of the children are, and
• which inheritance tax allowances and progression effects can sensibly be used in the specific case.

The result is not a vague or arbitrary succession plan, but a more realistic and more precise one. The structure can be aligned with the actual circumstances at the time of the first death rather than with assumptions made many years earlier.

Tax opportunities and drafting safeguards

The tax advantage of the super legacy lies in the fact that assets can still be allocated to the first death, allowing the children’s tax allowances to be used without depriving the surviving spouse of a strong legal and economic position from the outset. In this way, the inheritance tax disadvantages of the classic Berlin Will can often be reduced considerably.

That said, the structure requires precision. In particular, the exercise and maturity mechanics must not be drafted in a way that effectively shifts the legacy to the death of the surviving spouse. If the civil law and tax law parameters are not aligned carefully, the intended tax effect may be lost in whole or in part.

Practical advantages of the super legacy

• Protection: the surviving spouse remains economically secure and legally strong.
• Flexibility: the actual distribution can be adapted to the real situation after the first death.
• Tax planning: the children’s inheritance tax allowances can be used more effectively and progression disadvantages may be reduced.
• Practical relevance: the structure is particularly useful where wills are signed long before the inheritance event and should remain adaptable to later developments.

Precise drafting is essential

The super legacy is therefore not an exotic instrument for exceptional cases. In many family constellations, it is becoming a sensible standard component of a modern Berlin Will. Precisely because it combines civil law stability with tax-sensitive fine-tuning, it is gaining increasing importance in notarial practice.

As so often in succession planning, however, the true quality of the structure lies in the details. Only a carefully coordinated testamentary arrangement ensures that the instrument will actually deliver its full benefits in the individual case.

More information about our notarial services relating to Wills & Contracts of Inheritance and the key elements of forward-looking succession planning can be found on our service page.

For individual advice or questions regarding a Berlin Will including a super legacy, please feel free to contact us directly.

Cascade incorporation is particularly attractive for holding structures. Multi-tier corporate structures can be implemented without time-consuming intermediate steps; tax-efficient models, including structures designed to benefit from participation exemptions, can also be put in place quickly. At the same time, this is a legally demanding structuring tool and requires precise coordination of the articles of association, shareholder resolutions and commercial register filings.

Authority of the Holding GmbH before Registration

Upon execution of the notarial incorporation deed, the holding GmbH already acquires legal capacity and can in principle itself become the founding shareholder of a subsidiary GmbH. Before registration with the commercial register, however, the managing director’s authority of representation is, according to the prevailing view, limited to those acts required for the registration of the company.

If the holding is intended to incorporate a subsidiary at this stage, the managing director will therefore generally require a specific authorization by shareholder resolution. If this point is overlooked, the result may be legal uncertainty and delays in the registration process.

Underbalance Liability and Formation Costs

A further key issue concerns capital contribution and capital maintenance. Where the holding’s share capital is used to incorporate the subsidiary, there are strong grounds for treating this initially as a mere exchange of assets. According to the prevailing view, an impermissible concealed contribution in kind is therefore generally not assumed in cascade incorporations.

The more sensitive issue is the formation costs of the subsidiary GmbH. Although there are good arguments for capitalizing these as ancillary acquisition costs under Sections 253 and 255 of the German Commercial Code (HGB), the prevailing view departs at this point from the otherwise applicable balance-sheet approach to capital maintenance principles. In practice, this is often where registration obstacles arise.

To avoid such obstacles, the formation costs of the subsidiary should therefore either be borne by the shareholder of the holding or covered by additional contributions to the holding’s free capital reserve. What matters is a precise alignment of the articles of association and the commercial register application.

Practical Advantages of Cascade Incorporation

• Efficiency: The holding and the subsidiary can be established in one coordinated process.
• Capital efficiency: The share capital does not need to be provided afresh in full at each level of the structure.
• Speed: Multi-tier structures can often be implemented in a single notarial appointment.
• Flexibility: More sophisticated corporate and tax structuring can be put in place at an early stage.

Careful Structuring is Essential

Cascade incorporation is therefore much more than a mere acceleration tool. It is a powerful, but legally demanding, instrument for the swift implementation of holding structures. If prepared carefully, it is a highly practical way to establish multi-tier corporate structures efficiently and with legal certainty.

More on GmbH Incorporation, the incorporation process and our digital incorporation workflows can be found in our further guidance.

If you are planning a holding structure or a multi-tier incorporation, you may also provide the key information in advance through our online incorporation form. In cascade incorporations, we then tailor the structure, the required resolutions and the commercial register filings to your particular case.

For individual advice or questions regarding the implementation of a holding structure, please feel free to contact us directly.

The family home is often the most valuable asset in a private estate. Lifetime transfers offer immense tax advantages. However, the true art of drafting lies not in tax law, but in a legally sound civil law structure to protect the transferor.

Innovative Control: Section 745 German Civil Code (BGB) instead of Classic Usufruct

Classically, a usufruct (Nießbrauch) is often reserved in lifetime transfers. However, this has a serious side effect in inheritance law: According to established German Federal Court of Justice (BGH) rulings, it prevents the start of the ten-year "clawback" period for compulsory portion supplement claims (Section 2325 (3) BGB). The gift thus remains permanently relevant for the calculation of the compulsory portion.

A modern drafting approach utilizes the instruments of co-ownership law (Bruchteilsgemeinschaft) instead:

• Casting Vote Right: By modifying the management and use regulations under Section 745 (1) BGB, the transferor is granted the deciding vote in the event of a tie.
• Control without "Freeze": The transferor retains de facto control and dominance without a registered right of use blocking the ten-year period in inheritance law.
• In-Rem Security: These agreements can be secured by entry in the Land Register under Section 1010 BGB, making them effective against future successors.

Reversionary Rights as the Strategic Backbone

Regardless of tax incentives: Few transferors are willing to relinquish control entirely. Therefore, we flank the transfer with a precise regime of clawback/reversionary rights for critical life events:

• Predecease of the transferee or separation/divorce of the spouses.
• Insolvency of the transferee or third-party enforcement measures against the property.
• Endangerment of the tax privilege under Section 13 (1) No. 4a ErbStG.

These rights are secured by a priority notice (Vormerkung) in the Land Register and allow for a tax-neutral reversal in the event of a crisis under Section 29 ErbStG.

Strategic Advantages:

• Tax Optimization: Tax-free shifting of assets between spouses to prepare for a later utilization of allowances by the next generation.
• Protection against Compulsory Portions: Effectively initiating the 10-year period to reduce supplementary claims of other heirs.
• Flexibility: Preserving the transferor's ability to act without the rigidity of classic reserved rights.

Notarial practice consistently shows that the most exciting solutions arise where tax law and civil law are creatively intertwined. We are happy to advise you on positioning the family home as a central and secure component of your succession planning.

For individual advice or questions regarding the implementation of the "Family Home Swing": Please feel free to contact us directly.

Historically, German civil law followed a strict dogma: for a formal declaration (e.g., a consent or power of attorney) to be effectively received, the medium of transmission had to match the required form. Anyone requiring a notarized document was forced to wait for a physical courier – often a time-consuming process at the final stage of complex transactions.

New Statutory Regulation: Section 130 (2) BGB

With the new version of Section 130 (2) BGB, the legislator has broken this "congruence of form and medium." A declaration is now deemed effectively received even if the recipient receives an electronically certified copy instead of the physical original.

While the benefits for declarations of consent are immediately apparent, a more significant lever for practice lies in the structuring of powers of attorney.

The Challenge: Apparent Authority under Section 172 BGB

In transaction practice, original documents are still regularly dispatched by courier. The reason lies in ensuring the protection of good faith: To create the "apparent authority" (Rechtsscheinsvollmacht) of a power of attorney pursuant to Section 172 (2) BGB, the original document or an official engrossment must be presented. A simple scan or copy is insufficient for this purpose.

The Solution: Digital Notification under Section 171 (1) BGB

Thanks to the statutory amendment, the physical circulation of documents can now be legally halted. The key approach is the combination of Section 130 (2) BGB with a specific drafting of the power of attorney:

• Specific Notification: The principal stipulates within the power of attorney that the transmission of an electronically certified copy by the notary to the business partner simultaneously constitutes a "specific notification" of authorization within the meaning of Section 171 (1) BGB.
• Digital Apparent Authority: In effect, this digital transmission triggers a legal status comparable to the traditional handover of a paper original. The power of attorney is deemed to continue in force toward the third party, guaranteeing the necessary legal certainty for the closing.

Advantages for Transaction Practice:

• Speed: Immediate access to documents without postal delays or courier interruptions.
• Security: Electronically certified copies are tamper-proof, and receipt is documented by the transmitting notary.
• Process Efficiency: Fully digital preparation and execution of transactions without media disruption.

Through this statutory adjustment, the world of transactions is becoming significantly more digital – without compromising legal certainty or evidentiary function.

Innovation through Digital Structuring

We have already updated our standard powers of attorney to reflect the new legal situation and would be pleased to advise you on implementing these efficient workflows in your transaction processes.

For individual advice or questions regarding the implementation of this new digital process, please feel free to contact us directly.

This procedure is now available at our notarial office in Holzhausenstrasse, located in Frankfurt’s Nordend district (Holzhausenviertel).

The notarization continues to take place in person before the notary – however, the deed itself is created and executed entirely in electronic form.

What does “electronic in-person notarization” mean in practice?

• The deed is created exclusively in electronic form.
• The parties sign using a signature pad.
• The notary finalises the deed with a qualified electronic signature, replacing the handwritten signature and official seal.
• No paper version is required for legal validity.
• The legal basis lies in the amended provisions of the German Notarization Act (Beurkundungsgesetz).

Advantages of electronic notarization:

• Seamless digital process without printing and subsequent scanning
• Immediate and transparent incorporation of amendments during the appointment
• No subsequent clean copy required
• Faster electronic submission to the commercial register, land registry and public authorities

The established core principles of German notarial law remain untouched: identity verification, impartial legal advice, neutrality and the full evidentiary value of the notarial deed.

Scope of application

Electronic in-person notarization is available for numerous notarial matters, particularly in corporate law, commercial register and land register matters, as well as real estate transactions.

We will be pleased to assess whether your specific matter is suitable for this electronic procedure.

The digital transformation of the notarial profession thus continues consistently – without compromising legal certainty or evidentiary reliability.

Reference: Federal Law Gazette (BGBl.) 2025 I No. 320 of 12 December 2025

The publication deals with a key question of commercial register law: Under which conditions may a notary file a commercial register entry independently, without submitting a separately notarized power of attorney (§ 378 para. 2 FamFG)?

The Higher Regional Court reinforces the practical role of the notary in the registration process. It clarifies that merely notarizing a declaration relevant for the register – such as a shareholder resolution of a GmbH – is sufficient for the notary to make the registration. This also applies to frequent transactions like a change of business address.

The comment explains the decision in a clear manner and shows that § 378 para. 2 FamFG primarily serves to simplify and accelerate commercial register filings. It also clarifies that the facilitation of proof does not depend on corporate governance questions but on the notary’s special position as an independent officer of preventive legal administration.

For companies and shareholders, this means that register filings can be processed more efficiently, securely, and without unnecessary formalities – especially for standardized changes under GmbH law.

Reference: DNotZ 2026, 71