There are situations in which a GbR makes no profits, but still has to pay trade tax according to the tax laws. Such a special case exists when there is a profit in the special business assets of a fellow entrepreneur. A further special case also leads to a trade tax of a GbR, namely in the case of a sale of shares by a limited company holding a stake in GbR. In both special cases, the legal consequence would include that all other GbR co-entrepreneurs also participate in the payment of the trade tax – indirectly or, in the worst case, even directly via an additional payment obligation. This obvious injustice can be avoided by preventive clauses in the social contract.

A GbR is a company in which two or more shareholders are involved. First of all, it is irrelevant whether the purpose of the company is commercial or any other. Even a travel company is a GbR. Just as well is the joint asset management, for example of real estate, art objects or vintage cars, a purpose that several shareholders can pursue in a GbR. In this respect, a tax on the turnover may be omitted or actually arise.

On the other hand, a GbR that serves commercial purposes is also regularly subject to business tax. However, a special case can occur in which even a GbR that does not operate a business has to pay business tax. In fact, there is more than one special case. Therefore, this time we have set out to reveal this special secret about the trade tax of a GbR.

The foundation that we need to understand the legal context in the special case of trade tax in a GbR, we find, unsurprisingly, in the trade tax law. For this purpose, § 7 paragraph 1 GewStG is particularly relevant.

However, we also recommend a look into income tax law to consider the additional conditions, here in particular § 15 (1) sentence 1 number 2 sentence 1 EStG. This concerns special assets. The special assets consist of assets belonging to shareholders of a partnership, but which are also necessary for the operation of the partnership. For example, this can be a private property that serves the company as a business property.

The reason why the special business assets play a role in the special case for the trade tax of a GbR arises immediately from the connection of one of the two issues that we now present to you.

As just assumed, we as shareholders of a GbR want to provide the company with a private property. In order to convey the significance of this special case for the trade tax of a GbR, we want to assume that we receive a rent corresponding to the entire profit of the GbR. Thus, the GbR makes virtually no profit. According to general understanding, the GbR should therefore also not pay business tax.

But now special assets come into play. Since the private property is important for the activities of GbR, the property is counted as the special assets of its shareholder. As a result, according to the Income Tax Act, the rent in the area of special business assets accrues as profit, a profit that is attributable to GbR.

Let us now assume that only one of the shareholders of the GbR generates a profit in the special assets in this way. Since the trade tax hits the GbR, but it did not make a profit, it lacks the financial means to pay the trade tax. The consequence of this is that all shareholders have to add a share of the trade tax to the GbR so that it can pay the tax. Oh yes, even if none other than the shareholder has received a profit with the special business assets, each co-shareholder must pay part of the business tax. For this purpose, the amount of business tax is divided by the number of all shareholders. This sounds unfair, but according to the law it is exactly as intended.

The second special case for trade tax of a GbR arises from the participation of a GmbH or another limited company in the GbR. Let us assume that in addition to the GmbH, a natural person is also a co-entrepreneur at the GbR. The GbR, on the other hand, makes neither profits nor losses. But now the GmbH is selling its shares in GbR, from which it makes a profit. According to § 7 (1) GewStG, the GbR bears the trade tax in this special case. The GmbH, on the other hand, does not pay trade tax, but, by the way, corporation tax.

The point is again that due to legal provisions the tax liability with regard to trade tax falls back on the GbR. Accordingly, the shareholders of the GbR are again jointly obliged to bear the outstanding trade tax of the GbR. And this again, without first having received a profit from their participation in the GbR.

As we were able to demonstrate, there are certain risks involved in a GbR that most shareholders would hardly have thought of at first. Both in the case of a profit in the special business assets and in the case of a share sale by a limited company, trade tax is incurred at the level of the GbR, which in the worst case all shareholders have to bear proportionally.

Fortunately, in both cases, there are ways to avoid this obvious injustice caused by the simple application of tax laws. For this purpose, it is necessary to insert, in the formulation of the articles of association, clauses which allocate the payment of business tax solely to the shareholders who create them through their special business assets. Similarly, when a limited liability company is included in the articles of association, it should be ensured that in the event of a subsequent sale of the GbR shares by the limited liability company, the company alone has to pay the trade tax.