If a wife has bought shares of a tax office does the husband have a claim to them during divorce?

This particular decision is interesting for several reasons, but first things first:

What had happened previously?

The parties' marriage, which was concluded in 2013, was divorced in 2022 due to the culpability of both parties. At the time of the divorce, the wife was an Austrian citizen and the husband was a Greek citizen. In the division proceedings, the former spouses agreed that the wife should receive the matrimonial home and the husband the yacht. The amount of the equalization payment to be made by the wife to the husband was disputed.

What were the assets involved?

The spouses had purchased a condominium in 2017 for around EUR 650,000; it was at the time of the divorce proceedings currently worth EUR 751,330. Around EUR 450,000 of the purchase price was financed by a bank loan and a further EUR 100,000 by a loan from the wife's parents. The remainder came from the marital savings of around EUR 61,000 as well as the husband's pre-marital savings of around EUR 38,200. The bank loan was outstanding at around EUR 398,500 when the marriage was dissolved and most recently (as on 1. 11. 2022) was estimated at a value of EUR 374,963.66. The parents' loan was at this point fully outstanding.

The yacht purchased by the husband for around EUR 50,000 before the marriage, was last valued at EUR 12,500. It was financed in full by a loan taken out by him, which had since been repaid. The loan was repaid partly before the marriage and partly afterwards.

In 2019, the wife acquired shares in the auditing firm in which she was working as an employee, to the value of EUR 162,750, in order to promote herself from being an employee to a hybrid role of being both employee as well as partner; that is, she was able to "buy herself into the firm as a partner". The financing for these shares and this consequent hybrid status (and consequent income) was (partly) provided by a bank loan; which the wife subsequently repaid from her hybrid income as both partner and (also) employee of this company in monthly installments of EUR 560.

How did the Supreme Court assess the case?

1. Firstly, considering that, at the time of the divorce, the wife was an Austrian citizen and the husband was a Greek citizen, the Supreme Court referred to Section 20 (1) IPRG regarding applicable law. This led to the application of Austrian law. The EuEheGüVO was not yet applicable because the marriage took place before 30.1.2019.

2. Secondly, regarding division of assets,  the Supreme Court calculated the equalization of the value of the matrimonial home as follows:

The bank debts of EUR 398,500, which were existing at the time of the dissolution of the marital union, and the outstanding loan from the wife's parents of EUR 100,000, are both to be deducted from the current value of the home (EUR 751,330). Of the difference (EUR 252,830) which then remains, the amount with which the apartment was financed from his pre-marital funds is to be allocated to the husband in advance, whereby this is to be increased to the current value of the apartment (EUR 751,330) - i.e. to around EUR 44,200 - in accordance with the contribution ratio of around 5.88% (ratio of the pre-marital funds of EUR 38,200 to the purchase price of the apartment of around EUR 650,000). The (thus remaining) marital value added is then to be divided 1:1; in other words, this being an amount of around EUR 208,630, of which EUR 104,315 is attributable to each spouse. As the husband is to be allocated an amount of EUR 44,200 of the value of the home in advance, he is entitled to a total share of EUR 148,515 of the value of the home. The loan repayments for the apartment assumed by the husband on a pro rata basis after the dissolution of the marital union must be added to this amount. These were paid jointly by both parties in equal shares until the end of 2021, so that with the monthly installments of EUR 1,892, the amount attributable to the husband is EUR 8,514. The total compensation to be paid by the wife "for the house" is therefore EUR 157,029.

Note at this point: the Supreme Court has unfortunately overlooked the fact that loan repayments consist of interest and capital, so it should not simply have based its decision on the absolute amount of the loan repayments.

3. Thirdly with regard to the yacht, the Supreme Court has made the following considerations: The husband purchased the yacht before the marriage for around EUR 50,000, with the purchase price being financed entirely on credit. The loan was repaid with EUR 27,087.54 from marital funds. Around 40% of the purchase price was repaid by the husband before the marriage. The "predominant value creation" therefore took place during the marriage, which is why the yacht was included in the division. The compensation payment to be made by the husband (who is to keep the yacht) is to be calculated on the basis of the current market value of the yacht which is EUR 12,500. The added value created by the husband's loan repayments prior to the marriage is to be allocated to him in advance as a contributed asset within the meaning of § 82 para. 1 no. 1 EheG, insofar as it still exists in terms of value. A share of 40% (EUR 5,000) is therefore to be allocated to the husband in advance. Of the remaining value of the yacht (EUR 7,500), the wife is entitled to half (i.e. EUR 3,750) as compensation.

Note: this makes little sense. In effect, the husband was able to repay a pre-marital loan with marital funds amounting to EUR 27,087!  If the loan had not been for a yacht, but a simple consumer loan, the wife might have been entitled to half the loan installments.

4. Finally, and most interestingly, the Supreme Court has established the following principle for the wife's participation in the company:

The acquisition of shares in an entrepreneurial company that do not merely serve as an investment is covered by § 91 para. 2 sentence 1 EheG. This provision is also to be applied to the repayment of company-related debts from marital funds. The repayments of the loan taken out for the acquisition of the wife's shares from her current income - and thus from marital assets - made during the marriage are therefore to be assessed in accordance with § 91 para. 2 EheG. This provision stipulates that marital assets contributed to a spouse's business or otherwise used for such a business are to be "included" in the division in terms of value. The extent to which each spouse has benefited from the contribution or use of marital assets in or for a business and the marital assets contributed or used originated from the profits of the business must be taken into account.

Result: the Supreme Court has referred the case back to the Court of First Instance in order to clarify the extent to which the husband had benefited from the fact that the wife had acquired the shares in the tax firm during marriage. The loan repayments made for this from marital funds are to be divided in principle.

SUPREME COURT 23.10.2023