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Subparticipation in a Limited Partnership Interest Is Subject to Tax as a Co entrepreneurship

07.12.2022

(updated on

07.04.2026

)

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The claimant was a GmbH and co limited partnership which was also a family business. Individual family members who were not themselves limited partners in the family business were involved through subparticipations in the limited partnership interests. This was made possible by special provisions in the partnership agreement. One of the limited partners sold his entire limited partnership interest to a third party, which also gave rise to a capital gain at the level of the claimant.The tax office subjected this capital gain in full to trade tax, arguing that both the limited partner and the subparticipant, an investment company, were only indirectly involved in the limited partnership interest in the company.The claimant challenged this before the tax court of Münster, arguing that the transfer of the interest had been carried out solely by the natural person in the form of the limited partner and that in such a case no trade tax was payable. Under section 7 sentence 2 number 2 of the Trade Tax Act, no trade tax is payable if the transfer of a partnership interest is exclusively attributable to a natural person. In the claimant’s view this was precisely such a case. The defendant tax office took a different view. Since part of the limited partnership interest was held by an investment company, the transfer of the entire limited partnership interest was not exclusively attributable to a natural person, with the result that the entire capital gain was subject to trade tax.The tax court of Münster rejected this view in its judgment. The court split the trade tax liability in the same way as the limited partnership interest had been split. The transfer of the part of the limited partnership interest held by the natural person was not subject to trade tax. By contrast, the transfer of the encumbered part, that is, the part of the limited partnership interest held by an investment company, was indeed subject to trade tax because it was to be regarded as a co entrepreneurship. The claimant therefore had partial success.Whether the decision of the tax court of Münster will stand remains to be seen until the final decision of the Federal Fiscal Court.

Subparticipation in a Limited Partnership Interest Is Subject to Tax as a Co entrepreneurship

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