The Taxation of Partnerships in Focus

In the medium-sized economy, partnerships such as the limited partnership (KG) or the civil law partnership (GbR) are very popular. Compared to corporations, they are less formalized and subject to fewer formal requirements. Additionally, there are no minimum capital requirements or reserve obligations. Partnerships can be used both for operating a business and for pure asset management.

Basic Types of Partnerships

Civil Law Partnership (GbR)

The GbR is the basic form of all partnerships and requires at least two partners. It is established through a partnership agreement, which can be concluded without formal requirements. The partners have personal and unlimited liability. Since 2024, it is possible to register the GbR in the partnership register.

General Partnership (OHG)

The OHG is a commercial partnership aimed at operating a trading business. Each partner has unlimited liability for the obligations of the partnership. Registration in the commercial register is necessary.

Limited Partnership (KG)

The KG is a commercial partnership that distinguishes between general partners and limited partners. General partners have unlimited liability, while limited partners are liable only up to the amount of their contribution. The partnership must be registered in the commercial register.

Taxation of Commercial Partnerships

Income Tax

For income tax purposes, partnerships are considered transparent. The profits are attributed to the partners and taxed at their level.

Trade Tax

A commercially active partnership is subject to trade tax. Special remunerations to partners are also subject to trade tax.

Trade Tax Infection

Trade tax infection can occur if a partnership engages in both asset management and commercial activities.

Taxation of Asset-Management Partnerships

Asset-management partnerships do not generate commercial income and are therefore not subject to trade tax.

Taxation of GmbH & Co. KG

Special tax rules apply to a GmbH & Co. KG. The GmbH as a general partner results in all income being classified as business income.

Conclusion

The taxation of partnerships depends on various factors, including the type of partnership and its activities. Careful tax planning and advice are crucial to avoid potential tax pitfalls and to optimize taxation.