In the video we explain the advantages & disadvantages of the commercial stamp of a classic GmbH & Co. KG and the possibilities of avoidance.

1st introduction

The commercial minting and infection of partnerships is described in § 15 para. 3 of the Income Tax Act. In addition to the legal norm, there are various jurisdictions, as these are controversial topics of income tax law.

§ 15 EStG defines income from business operations. While in para 1 individual activities or profit shares are dealt with, in para 1 2 the exact prerequisites of a commercial activity and the distinction made to the other types of income. The para. 3 as a supplement to § 15 para. 2 EStG. It provides that the provisions of § 15 para. 3 no. 1 and 2 EStG are in principle to be treated as commercial enterprises.

Already in 1966 the BFH[1] dealt with this fact in a judgment. In this judgment, the BFH established the commercial characterisation and infection of partnerships with the so-called “arbitration”. This case law applied until 1984[2]. With its resolution of 26.5.1984[3], the Grand Senate again abandoned the previous opinion, also by case law. In 1986, however, the legislature, under the Tax Cleaning Act, retroactively introduced the equalisation procedure in § 15 para. 3 No. 2 EStG regulated[4].

Due to the difficult assignment to the respective types of income in partnerships, commercial infection was classified in § 15 para. 3 No. 1 EStG. The "coating-off theory", as commercial infection is also called, is intended to prevent misallocated income from being deprived of trade tax and thus the German state from missing important income.

This article deals with commercial imprinting. It focuses on the conditions and main consequences of this provision. In addition, possibilities of avoiding commercial embossing are explained.

It is questionable whether § 15 para. 3 EStG fits into the overall picture of income tax. As a rule, the law refers to the activity of the company and not to the scope of this activity or to the company structure. Furthermore, the question arises as to whether this provision actually has as far-reaching consequences as it appears at first glance or whether this is a standard that cannot fulfil its actual purpose due to various design possibilities.

Condition is in accordance with § 15 para. 3 EStG the existence of an income-generating intention. Consequently, commercial embossing and infection in hobbyism are out of the question.

An income-generating intention exists when the company seeks an increase in business assets[5]. This is characterized by the total profit, from the establishment of the company to the termination[6]. Therefore, the proceeds of the sale must also be taken into account in the forecast. This has to be assessed on the basis of external circumstances, which can lead to corrections of the total profit over the years and thus possibly the profit intention[7].

3. The commercial characterisation

Unjustified tax losses were to be prevented by the statutory regulation of the granting of compensation in 1986[8]. Without this standard, the current and capital gains of the companies were no longer subject to business tax since 1984. Due to the retroactive application of the rule, however, these profits could also still be subject to business tax.

The commercial characterization concerns only partnerships according to § 15 para. 3 No. 2 EStG (according to the BGB and HGB: GbR, OHG, KG including the atypical silent partnership, the partnership according to the PartGG and the corresponding foreign legal forms). Consequently, this standard does not cover corporations and individual enterprises. The requirement of commercial character states that a partnership with a commercial character always constitutes a commercial enterprise by virtue of legal form. A business is located according to § 15 Abs. 2 EStG for an independently sustainable activity, which is carried out with the intention of realizing profits and represents a participation in general economic traffic. The shareholders of the commercial partnership thus become co-entrepreneurs within the meaning of § 15 para. 1 No. 2 EStG.

3.1 Requirements

In order for a partnership, which in itself does not pursue a commercial activity, but an asset management or freelance[9] activity, according to § 15 para. 3 No. 2 EStG constitutes a fictitious business enterprise must meet the following criteria: