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Income can also be adjusted according to Sec. 4 para. 1 Income Tax Code in conjunction with Sec. 8 para. 1 and 3 of the Corporation Tax Code. Again, as for the definition of a hidden capital contribution, the regulation itself does not provide further explanation. Thus, definition and further requirements for the interpretation of a hidden capital contribution was defined by judgements: Where a shareholder or a related party of the shareholder makes a contribution to the corporation based on the shareholder relationship only, a hidden capital contribution can be assumed. If a hidden capital contribution takes place, the income of the parties involved are to be adjusted. It should be emphasized that the valuation of the contribution is based on the so-called partial value (Teilwert) according to Sec. 8 para. 1 Corporation Tax Code in conjunction with Sec. 6 para. 1 no. 5, para 6 sent. 2 Income Tax Code. According to judgements, the partial value is generally equal to the market value and means the value an asset purchaser would pay when buying the enterprise as a whole.

Only tangible assets or intangibles can be subject to a contribution, thus, the use of property or rendering services without remuneration for instance is not considered a contribution in this regard. Imbalances arise where the decreased income of the shareholder is not compensated and cannot be adjusted by the tax auditors by taking into account a hidden capital contribution.