AB-OHG | Partner A | Partner B

Profit distribution according to total hand balance | 50.000 | 50.000

Special balance sheet/Special operating income | 10,000 | 0

Supplementary balance | 0 | – 5000

Income from business | 60,000 | 45,000

When determining the profits of a partnership, such as GmbH & Co. KG, for tax purposes, you must also draw up a special balance sheet or a supplementary balance sheet in addition to the usual balance sheet. What differences these balance sheets bring with them and in which cases one has to create them, we explain in this article.

Advantages of GmbH & Co. KG

1st profit determination of a partnership – Introduction

The profit determination of a partnership is of particular importance both for its shareholders and for the Treasury. A whole series of accounting rules play a role here. On the one hand, there is the trade balance, according to which a partnership regularly carries out its profit determination. On the other hand, a tax balance is required for tax purposes. However, there is also a whole series of other legal requirements and definitions. These include the total manual balance sheet, the supplementary balance sheet and special balance sheets as well as the presentation of special assets. We now refer to this in this article and explain the interlinked regulations that influence the profit determination of a partnership.

2nd profit determination of a partnership: total manual balance sheet

The overall balance sheet is called this, since the shareholders of a partnership hold the assets (properties, machines, etc.) together “to the entire hand”. The shareholders therefore also hold a participation in the assets in accordance with their shareholding in the partnership. For example, if you hold a third of an OHG, you hold almost a third of the buildings, machinery and all other assets of the OHG.

2.1. Tax co-entrepreneurships

This is why, by the way, the name “co-entrepreneurship” for partnerships comes from tax law. In terms of tax law, there are no tax entities. Rather, we have several individual entrepreneurs who have come together to establish a co-entrepreneurship.

2.2. Accounting in the total manual balance sheet

Therefore, one accounts for economic goods that the partnership buys or sells, or other business transactions are included here in the overall balance sheet. Therefore, the total manual balance sheet is the decisive element for determining the profit of a partnership. Thus, it is usually always present. In addition, the overall balance sheet always reflects the shareholders’ participation rates. This makes it clear to third parties who holds which shareholdings and which voting rights someone holds within the company.

In contrast to the special balance sheet or supplementary balance sheet, an overall balance sheet must always be drawn up (if the profit determination of a partnership takes place by asset comparison, i.e. by a balance sheet).

But some issues can only be partially solved within the framework of the overall hand balance. If, for example, a shareholder of GmbH & Co. KG decides to leave his own building, land or other business asset of GmbH & Co. KG for use, special operating assets would arise here, which would be reflected in the special balance sheet. Expenditure on the transfer of use at the level of the total manual balance sheet represents operating expenditure and thus reduces profit.

3.1. Problems with maintaining participation rates

As a result, for example, you could not simply balance the building in the overall hand balance. On the one hand, this would distort the allocation of the building. In addition, the overall balance sheet would then incorrectly reflect the shareholder participation rates.

3.2. Special operating income & special operating expenses

This problem prevents the special balance sheet. It reflects the assets provided for use by the shareholders and also includes special operating income and expenses. The special company income is added to the respective shareholders as income from commercial operations. More precisely, this results from § 15 (1) sentence 1 number 1 EStG.

The special operating income is therefore the payments received by the shareholder for the transfer of use of his assets held in his own assets. On the other hand, however, he can also deduct from these expenses, which are in the economic connection with the special operating income – the special operating expenses.

4. determination of profits of a partnership: supplementary balance sheet

Now imagine a shareholder of an OHG or KG selling his shareholder share to another (new) shareholder. While the book value of, for example, EUR 40,000 is in the capital account in the total balance sheet, the buyer has paid EUR 100,000 for it. The fact that the seller makes a profit in the sense of § 16 EStG of EUR 60,000 is beyond question.

It is also clear: In the total balance sheet, only EUR 40,000 can continue to be a share in equity – the total balance sheet should ultimately reflect the shareholding ratios of the shareholders.

4.1. Completion of the supplementary balance sheet

However, the buyer has secured the EUR 40,000 shown in the total hand balance with his purchase price. In addition, with the remaining EUR 60,000 from the purchase price, he bought the share of hidden reserves in the OHG. The buyer is therefore entitled to depreciation from the total balance sheet (as the seller had) and also an increased depreciation, which is divided between the individual, capitalized assets.

4.2. Impact of the supplementary balance on income

We therefore add another (side) balance sheet to the overall hand balance sheet. Therefore, on the liabilities side, we show the EUR 60,000 in the equity of the supplementary balance sheet. On the assets side of the supplementary balance sheet, we also show EUR 60,000, but here the proportionate hidden reserves of the assets were activated and consequently written off.

The buyer thus has higher depreciations compared to the old shareholders and thus writes off his share in the partnership at the same time.

5th example for determining the profit of a partnership

5.1. Presentation of a case for determining the profits of a partnership

Let’s illustrate the whole thing with an example:

AB-OHG has an annual net profit of EUR 100,000. Shareholders A and B each hold 50 % of the shares. The profit distribution corresponds to the participation rates. A will provide AB-OHG with a building for EUR 15,000 per year; the payments were taken into account in AB-OHG as operating expenses and are included in the annual profit. At A, a depreciation of EUR 5,000 per year is incurred on the building. B had bought his share of the C in the previous year. The hidden reserves of EUR 30,000 thus revealed will be written off over six years.

5.2 Calculation of the profit determination of the partnership

The annual net profit in the total hand balance sheet is to be divided 50% between A and B, i.e. EUR 50,000 each.

The transfer of the building leads to special operating income of EUR 15,000 for the A. However, he can claim special operating expenses (depreciation) of EUR 5,000, so that only EUR 10,000 from the special balance sheet is taxable.

Furthermore, B had bought his share of C in the previous year, so that he uncovered share of hidden reserves here. As a result, it generates a higher depreciation than A. The uncovered hidden reserves of EUR 30,000 are to be written off over a period of six years. This means that EUR 5,000 per year is entitled to additional depreciation compared with A. The depreciation is already included in the annual profit.