Co-entrepreneurship

A co-entrepreneurship is the union of several people (co-entrepreneurs) to collectively generate income from agriculture and forestry , income from commercial operations or income from self-employed work .

Co-entrepreneurship is a purely tax law term. Co-entrepreneur within the meaning of Section 15 (1) No. 2 EStG is anyone who, as a partner in a partnership, bears co-entrepreneurial risk and can develop co-entrepreneurial initiatives.

The profit of a co-entrepreneurship is determined separately and uniformly for all parties involved and distributed to the co-entrepreneurs according to § 15 Abs. 1 Nr. 2 EStG and procedurally according to § 179 , § 180 AO .

Co-entrepreneur

Co-entrepreneur is who

• Co-entrepreneur risk or opportunity bears: This is to understand the participation in the success or failure of the company. This becomes particularly clear through the participation in profits and losses as well as in the company's hidden reserves .
• Can develop co-entrepreneurial initiative: This is to be understood as the participation in entrepreneurial decisions. This becomes clear through the exercise of voting, control and objection rights. The position of a limited partner is sufficient.

However, both features can be more or less pronounced in individual cases.

Examples:

• Shareholder of a commercially active GbR , OHG , KG
• Sub-participant in a company share that establishes co-entrepreneurship
• Professional association
• Group practice
• Law firm
• Partnership company
• Partner in a community of property , provided that the property includes an agricultural and forestry business or a commercial enterprise .

Determination of profits

The profit or loss of a co-entrepreneur is determined in two stages:

Total hand gain or loss

• In the first stage, the profit of the co-entrepreneurship is to be determined (overall profit).
• In the event of a change of shareholder, a supplementary balance sheet is usually required for the shareholder concerned. The supplementary balance is not part of the total hand balance. Together with the overall hand-held balance sheet, it shows the taxable proportion of the total hand-held assets of the individual shareholder. If, for example, a partner has acquired shares in another partner against payment of the hidden reserves, his acquisition costs must be shown in his supplementary balance sheet. This results in z. B. in buildings an increased depreciation potential.

Profit or loss on special balance sheets

• In the second stage, the profit generated from the special business assets of the co-entrepreneurs is to be determined.
• Special business assets (SBV) are all assets that are assigned to the sphere of the co-entrepreneur and that are in a contractual relationship with the co-entrepreneur. These are usually recorded in special balance sheets.

Example: A co-entrepreneur rents out a property owned by the co-entrepreneurs. The property is a special business asset. Special business income is the rent that the co-entrepreneur pays to the co-entrepreneur and special business expense is the expenses that the co-entrepreneur has in connection with the property, e.g. B. Property tax , in the case of a built-up property also the depreciation.

Summary

The overall balance of the co-entrepreneurship consists of

• Total hand balance; this consists of
  • Tax balance sheet I.
  • Supplementary balance sheets
• Special balance sheets

Determination of the total taxable profit or loss of the co-entrepreneurship acc. Section 15 (1) No. 2 EStG (determined by adding)

• +/- total hand gain or loss (will be distributed according to the profit distribution agreement)
  • +/- profit or loss according to the tax balance sheet
    • Company revenue
    • Company expenses (e.g. rent payments to shareholders)
  • +/- profit or loss from the supplementary balance sheets of the individual co-entrepreneurs (up to this point: profit of the 1st stage ( Section 15 (1) No. 2 half-sentence 1 EStG))
  • +/- profit or loss from the special balance sheets of the individual co-entrepreneurs (is directly attributed to the co-entrepreneur) (up to this point: profit of the 2nd stage ( Section 15 (1) No. 2 half-sentence 2 EStG))
    • Special operating income
      • for example rent payment of the company
    • Special operating expenses
      • for example property costs of renting to the company,
      • Loan interest to finance the company's share
  • +/- off-balance sheet additions and invoices acc. Section 4 (5) EStG, Section 3 No. 40 EStG

The total taxable profit of the co-entrepreneurship is at the same time the underlying business income ( § 7 Abs. 1 GewStG ).

Special balance sheet

The special balance sheet shows the special business assets of the shareholders, a distinction must be made here between special business assets I and special business assets II. This distinction is irrelevant for the special balance sheet, but it serves to decide whether an asset is special business assets. Special business assets are basically assets that are necessary or voluntary business assets of the co-entrepreneurs, but are in the civil or economic property of one or more shareholders (and not the company).

Special operating assets I

Special business assets I are business assets that are made available to the company for use.

example

• Transfer of a piece of land (office building) owned by the shareholder Gustav to the co-entrepreneurs Gerd and Gustav GmbH and Co. KG.
• Transfer of a property (office building) owned by the shareholders Gustav and Gerd to the co-entrepreneurs Gerd and Gustav GmbH and Co. KG.
• Transfer of a property (office building) owned by the shareholders Gustav and Gerd to the co-entrepreneurs Gerd, Gerdi and Gustav GmbH and Co. KG.

Special business assets II

Special business assets II are business assets that serve to establish and strengthen the shareholder's participation in the co-entrepreneurship.

example

• Gustav had to finance his share in the KG through the bank, the associated loan is special business assets II.
• Gustav holds a share in the liability GmbH. This stake is only held to serve the company's stake.

Special operating income and expenses

In connection with special business assets, special business income or special business expenses arise.

Example 1:

• Gustav leaves an office building to the company and receives € 10,000 rent for it.
• The rent is the company's operating expense, it reduces the result of the total stock balance (- € 10,000).
• The rent is also the special operating income of Gustav, it increases his business assets and thus the result of the special balance sheet (+10,000 €).
• However, the rent payment does not affect the total tax balance of the co-entrepreneurs (- € 10,000 + € 10,000 = € 0).
• If the co-entrepreneurship had a tax balance result of € 100,000, it still has a profit of € 100,000, of which € 10,000 is a special remuneration for Gustav and € 90,000 is to be distributed among the shareholders on the total hand-held profit.

Example 2:

• Gustav incurred costs of € 4,000 for the office building (property tax, loan interest, etc.).
• These costs are special operating expenses of Gustav; they diminish his profit.
• The total hand profit remains at (100,000 € - 10,000 € =) 90,000 €, but the profit from the special balance sheet Gustav is reduced to (10,000 € - 4,000 € =) 6,000 €.
• The co-entrepreneurship has a tax balance sheet profit of (90,000 € + 6,000 € =) 96,000 €. Of this, Gustav € 6,000 is accounted for by the special balance sheet and total hand-held profit € 90,000 to be distributed among the shareholders.

Individual evidence

1. ↑ BFH of June 25, 1984 - BStBl II p. 751 and of July 15, 1986 - BStBl II p. 896

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