Usufruct - Tax liability in the case of a redemption for consideration
Usufructuary rights are common in estate and business succession planning. However, the tax consequences of an early redemption against payment remain complex and fraught with risk.
The Federal Fiscal Court (Bundesfinanzhof, BFH), in its ruling of 10.10.2025 (case reference: IX R 4/24) decided that the waiver of a usufructuary right for consideration may constitute a taxable transaction. In the case in question, in the course of the sale of a usufruct-encumbered property, the usufructuary received a financial settlement in return for waiving her right.
Contrary to the lower court, the BFH treated the payment not as a taxable restructuring of assets, but instead as a waiver of free-standing property rights for consideration. The determining criterion was that the usufructuary right constituted a stand-alone economic item whose transfer or waiver for consideration is generally taxable.
