Atypical silent partnership (atypisch stille Beteiligung)

A silent partnership is atypical when the silent partner counts as a co-entrepreneur (Mitunternehmer) for tax purposes. The relevant provisions are § 23 Z 2 EStG in Austria and § 15 Abs 1 S 1 Nr 2 EStG in Germany. What is required is co-entrepreneurial initiative, co-entrepreneurial risk and a share in hidden reserves including goodwill. The BFH ruled on 13.11.2025 (IV R 24/23): without loss participation and without an obligation to make additional contributions, there is no co-entrepreneur status.

The sale-of-shares process and our support with it are described in Selling a GmbH.

Anyone hearing the term for the first time looks for it in the law in vain. Neither the Austrian UGB nor the German HGB knows an "atypical silent partnership". They know only the silent partnership.

The distinction is an invention of tax law and is used exclusively there. But it decides the type of income, the offsetting of losses, trade tax in Germany and the taxation on exit.

The basics of the silent partnership — internal partnership, no register entry, contribution into the owner's assets — are set out in Silent partnership. This article deals only with the atypical form.

"Typical" and "atypical" appear in no statute

§ 179 Abs 1 UGB and § 230 Abs 1 HGB regulate the same basic construction. The silent partner makes a contribution, and this contribution passes into the owner's assets.

One detail distinguishes the wording. § 179 UGB refers to "business or assets" (Unternehmen oder Vermögen), § 230 HGB more narrowly to the "commercial trade" (Handelsgewerbe). In practice, the Austrian version widens the possible scope of application.

In both legal systems only the profit share is mandatory. The loss share can be excluded by contract under § 231 Abs 2 HGB and § 181 Abs 2 UGB.

A different provision is decisive for the atypical form. § 235 HGB and § 186 UGB provide, as the statutory default, settlement at nominal value — without hidden reserves.

That means: anyone who wants the silent partner to share in hidden reserves and goodwill must agree this expressly. It is precisely this agreement that makes the partnership atypical. It does not arise by chance or through a heading in the contract. Which clauses are needed for it is covered in the contract for a silent partnership.

The three features of co-entrepreneur status

Tax law does not examine the label, but the actual design. Three features must come together.

Co-entrepreneurial initiative means that the silent partner takes part in entrepreneurial decisions. The statutory right of inspection alone is not sufficient for this; what is required is a position that at least comes close to that of a limited partner (Kommanditist).

Co-entrepreneurial risk means sharing in success and failure. This regularly includes loss participation.

The share in hidden reserves is the third feature. In its judgment IV R 100/06 of 01.07.2010, the BFH clarified that this also includes goodwill. The same decision classifies the silent partner's GmbH share as special business assets II (Sonderbetriebsvermögen II).

The current benchmark comes from the BFH in judgment IV R 24/23 of 13.11.2025. If both a loss participation and an obligation to make additional contributions are absent, there is no co-entrepreneur status. The same decision holds that the internal partnership does not have standing to be a party in proceedings before the tax court. The action must therefore be brought by the owner or the shareholder, not by the partnership.

The dogmatic foundations go back to the Grand Senate of the BFH (GrS 4/82 of 25.06.1984, BStBl II 1984, 751). On the GmbH & Still there is BFH IV R 41/14 of 13.07.2017. Further references in the line of case law are BFH VIII R 10/22 of 19.11.2024, BFH VIII R 46/18 of 12.04.2021, BFH VIII R 20/01 of 09.12.2002 and BFH VIII R 6/93 of 16.12.2003.

For Austria there are VwGH decisions on the atypical silent partnership, for example Ra 2020/13/0085 of 27.01.2021 and Ra 2018/13/0103 of 26.02.2020. The full texts cannot be freely retrieved by machine via the RIS; a summary of their content is therefore deliberately omitted here.

When is a silent partner a co-entrepreneur for tax purposes?

He is when co-entrepreneurial initiative and co-entrepreneurial risk come together and he shares in the hidden reserves including goodwill; for the risk, according to the most recent case law, it is not enough that the silent partner promises services. In judgment IV R 24/23 of 13.11.2025, the BFH described co-entrepreneurial risk as an economically comparable share in success and failure: typically participation in profit and loss, participation in the hidden reserves of fixed assets and in goodwill, and a contribution that burdens the participant's own assets. According to the judgment, the mere promise of future services is not such a contribution, and the risk of receiving no remuneration for services does not replace co-entrepreneurial risk. High entrepreneurial initiative alone therefore cannot replace a genuine financial share in the risk (source: Bundesfinanzhof, judgment IV R 24/23, retrieved on 01.10.2026). For contract drafting this means: anyone who deliberately wants co-entrepreneur status needs a genuine asset contribution and a share in the risk; anyone who wants to avoid it must not create it through side agreements and promises. For Austria, the line of the VwGH has to be examined separately; the German judgment cannot be transferred without examination.

Austria and Germany side by side

The system is similar, the individual provisions differ markedly. In cross-border constructions — a German investor, an Austrian GmbH — this is regularly overlooked.

Topic	Austria	Germany
Company law	§§ 179 ff UGB	§§ 230 ff HGB
Link in the statutory text	"business or assets" (§ 179 UGB)	"commercial trade" (§ 230 HGB)
Atypical silent, type of income	trade or business, § 23 Z 2 EStG	trade or business, § 15 Abs 1 S 1 Nr 2 EStG
Typical silent, type of income	capital assets, § 27 Abs 2 Z 4 EStG	capital assets, § 20 Abs 1 Nr 4 EStG
Tax rate typical silent	general scale (50 %, above EUR 1 million 55 % limited to 2029), § 27a Abs 2 Z 3 EStG excludes from the special rate	capital income
Withholding typical silent	no KESt deduction since the Budgetbegleitgesetz 2011	—
Profit determination	uniform and separate, § 188 BAO	§ 180 Abs 1 S 1 Nr 2a AO, binding effect § 182 Abs 1 AO
Loss restriction	§ 23a EStG, loss carry-forwards held in abeyance (Wartetastenverluste)	§ 15a Abs 5 Nr 1 EStG
Trade tax	has not existed since 1994	separate trade or business, § 2 Abs 1 S 2 GewStG
Exit	§ 24 EStG	§ 16 Abs 1 S 1 Nr 2 EStG
Social insurance	§ 2 Abs 1 Z 4 GSVG in case of active involvement	not covered in the fact base
Return limits for relatives	no comparable rule found	15 / 25 / 35 percent

One point stands out. The typical silent partnership is treated worse for tax purposes in Austria than many accounts claim. § 27a Abs 2 Z 3 EStG expressly excludes it from the special tax rate.

The general scale under § 33 EStG therefore applies (top standard bracket 50 percent, for parts of income above one million euros 55 percent limited to and including 2029), and since the Budgetbegleitgesetz 2011 no KESt is deducted any longer. Those who want to run this comparison will find the system in Taxes on the silent partnership.

In terms of social insurance law in Austria, § 2 Abs 1 Z 4 GSVG has to be examined. With active involvement of the silent partner, compulsory insurance can arise (VwGH Ro 2014/08/0059 of 29.04.2016). This is almost always forgotten in the cost calculation.

Trade tax: the one big difference

In Germany the atypical silent partnership is a separate entity for trade tax purposes. The BFH confirmed this in judgment IV R 8/14 of 08.12.2016.

Substantively it is a separate trade or business under § 2 Abs 1 S 2 GewStG. The taxpayer, however, is only the owner of the commercial business, § 5 Abs 1 S 1 GewStG. On this see R 5.1 Abs 2 GewStR.

The practical consequence is often overlooked. If the owner continues to have a separate trade or business alongside the atypical silent partnership, two trade tax returns have to be filed. This dual structure creates ongoing administrative effort.

The allowance under § 11 Abs 1 S 3 Nr 1 GewStG is EUR 24,500, the base rate 3.5 percent. In the advisory literature it is argued that this allowance is available a second time for the GmbH & atypical silent partnership. That is an interpretation, not a statement secured by the highest courts, and should be treated as such.

Austria knows none of this discussion. Trade tax was abolished in 1994. A structuring argument that holds in Germany is simply irrelevant in Austria.

Relatives as atypical silent partners

Family members as silent partners are a classic instrument for distributing profit within the family. The German tax administration examines such contracts against an arm's-length comparison.

The case law works with return limits, each related to the nominal amount of the contribution.

Constellation	Maximum return on the nominal amount
Contribution gifted	15 percent
Contribution not gifted, profit participation only	25 percent
Contribution not gifted, profit and loss participation	35 percent

References are BFH VIII R 17/19, BFH X R 14/99, BFH X R 1/19 and BFH IV R 27/13. Important is the qualification from BFH IV R 19/20 of 04.04.2023: there is no rigid upper limit.

The percentages are therefore guide values for the examination, not a mechanical limit. Anyone who exceeds them must be able to justify the deviation.

No comparable rule was found for Austria. This is an express negative finding. Anyone who applies the same 15, 25 or 35 percent to an Austrian situation is transferring German case law without a basis.

Losses and exit: the two expensive moments

The offsetting of losses is restricted in both countries. In Germany, § 15a Abs 5 Nr 1 EStG applies expressly to the silent partner. In addition, § 15 Abs 4 S 6 to 8 EStG must be observed; sentence 8 contains a counter-exception for natural persons.

In Austria, § 23a EStG applies to the passive co-entrepreneur (kapitalistischer Mitunternehmer). Losses beyond the capital account become loss carry-forwards held in abeyance (Wartetastenverluste) and are offset only against later profits. The BMF information of 07.07.2016, GZ BMF-010203/0200-VI/6/2016, expressly names the atypical silent partner.

On exit, the ongoing relationship becomes a disposal.

Point	Austria	Germany
Provision	§ 24 EStG	§ 16 Abs 1 S 1 Nr 2 EStG
Allowance	EUR 7,300	EUR 45,000
Condition for allowance	—	from the completed 55th year of age, once in a lifetime
Phase-out	—	from EUR 136,000 capital gain on disposal
Tax rate relief	half-rate taxation, § 37 Abs 5 EStG	§ 34 Abs 3 EStG
Conditions of the relief	death, incapacity for work or, from the completed 60th year of age, on ceasing gainful activity, in each case seven-year period	56 % of the average tax rate, at least 14 %, up to EUR 5 million
Negative capital account	must be recognised, § 24 Abs 2 S 2 EStG	not covered in the fact base

The most dangerous item in this table is the last row. If the atypical silent partner has been allocated losses over the years, his capital account is negative.

On exit, this negative capital account must be recognised as a capital gain on disposal under § 24 Abs 2 S 2 EStG. Tax arises without a single euro flowing.

This regularly hits participants who regard the exit as a pure formality. How the settlement balance is determined is covered in Settlement balance.

An example: how a negative capital account arises (constructed)

The figures are constructed and serve only as illustration; allowances, tax rate reliefs and country-specific particularities are left out. An atypical silent partner makes a contribution of EUR 100,000. In the first three years he is allocated ongoing losses totalling EUR 120,000. His capital account therefore stands at minus EUR 20,000. If he now leaves and receives no compensation because the contribution has been used up, then under the rule named in this article (§ 24 Abs 2 S 2 EStG) the amount of EUR 20,000 has to be recognised as a capital gain on disposal, without a single euro flowing. The example shows why the allocation of losses before the contract is concluded and the time of exit have to be planned together; how your structure is to be assessed in concrete terms is clarified by your tax advisor. For the question of what value your company may have when a participant leaves, a sound company valuation is the basis, and for a first orientation the company value calculator.

Co-entrepreneur is not equity

This is the most frequently confused point in the entire topic. Tax co-entrepreneur status and balance sheet equity presentation are two different questions.

The OGH held in 6 Ob 204/16t that atypical silent partnerships are, in principle, debt capital. Reference is made to § 10 Abs 2 EKEG.

A company whose silent partner is a co-entrepreneur for tax purposes therefore does not automatically have a better equity ratio. Whether a bank recognises the contribution as economic equity depends on subordination, term, success dependence and loss-bearing — not on the tax qualification.

Those who want to use the silent partnership primarily to improve their rating should compare the instruments. The range is shown in Mezzanine capital; the alternatives in detail are set out in Subordinated loan and Profit participation rights.

When the atypical form fits — and when it does not

It fits when the capital provider is to share in the increase in value without becoming a shareholder. He bears risk, receives hidden reserves and goodwill in return, and nevertheless stays outside the Firmenbuch.

It fits when start-up losses are to be used at the investor's level — with the qualification that § 23a EStG and § 15a EStG limit precisely that. The benefit is smaller than model calculations often assume.

It does not fit employee participation schemes. There it is typically desired that participants share in the result but receive no say. But the atypical form needs precisely these rights of say for co-entrepreneurial initiative. The conflict of objectives clearly favours the typical silent variant here. The AGP white paper cites "around 3,000 mid-sized companies" with employee participation; the figure is undated and can therefore only be used as a rough order of magnitude.

It does not fit when simplicity is the aim. Determination procedure under § 188 BAO or § 180 Abs 1 S 1 Nr 2a AO, in Germany additionally the trade tax issue: that is ongoing administration, every year.

Those who want to give up real shares instead should lay the minority stake alongside. The value that is negotiated results in both cases from a company valuation.

Common mistakes

The contract is headed "typical silent" but grants consent rights and a share in hidden reserves. The tax authorities follow the actual design, not the heading. The result is a co-entrepreneurship with a determination procedure that nobody planned.

Conversely, the share in hidden reserves is forgotten. § 235 HGB and § 186 UGB provide settlement at nominal value as the default. Without an express clause, the silent partner does not receive the increase in value, even if the company has tripled.

Loss participation is excluded while co-entrepreneur status is wanted at the same time. According to BFH IV R 24/23 of 13.11.2025 this does not go together if there is also no obligation to make additional contributions.

The negative capital account is overlooked on exit. The tax under § 24 Abs 2 S 2 EStG then hits without any inflow of liquidity.

In German dual structures, only one trade tax return is filed. According to BFH IV R 8/14 of 08.12.2016 there are two.

German return limits for relatives are transferred to Austrian situations. For Austria there is no comparable published rule.

And finally: tax co-entrepreneur status is equated with balance sheet equity. OGH 6 Ob 204/16t says the opposite.

This article does not replace legal or tax advice.

Frequently asked questions

What does atypical silent partnership mean?

A silent partnership is atypical when the silent partner counts as a co-entrepreneur for tax purposes. This requires co-entrepreneurial initiative, co-entrepreneurial risk and a share in the hidden reserves including goodwill. The legal basis is § 23 Z 2 EStG in Austria and § 15 Abs 1 S 1 Nr 2 EStG in Germany.

Do the terms typical and atypical appear in the UGB or HGB?

No. The UGB and HGB know only the silent partnership, regulated in §§ 179 ff UGB and §§ 230 ff HGB. The distinction between typical and atypical comes exclusively from tax law and has no meaning of its own in company law.

When is a silent partner a co-entrepreneur?

When co-entrepreneurial initiative and co-entrepreneurial risk come together and the silent partner shares in the hidden reserves. In judgment IV R 24/23 of 13.11.2025, the BFH decided that without loss participation and without an obligation to make additional contributions there is no co-entrepreneur status. According to BFH IV R 100/06 of 01.07.2010, the hidden reserves also include goodwill.

Does an atypical silent partnership in Austria pay trade tax?

No. Austria abolished trade tax in 1994. The German discussion on the trade tax allowance of EUR 24,500 under § 11 Abs 1 S 3 Nr 1 GewStG has no equivalent for Austrian situations.

How is the atypical silent partnership treated for trade tax in Germany?

According to BFH IV R 8/14 of 08.12.2016, it is substantively a separate trade or business within the meaning of § 2 Abs 1 S 2 GewStG. The taxpayer, however, is solely the owner of the commercial business, § 5 Abs 1 S 1 GewStG. In dual structures, two trade tax returns have to be filed.

Is an atypical silent partnership balance sheet equity?

In principle no. The OGH held in 6 Ob 204/16t, with reference to § 10 Abs 2 EKEG, that atypical silent partnerships are in principle debt capital. Tax co-entrepreneur status and balance sheet equity presentation are two separate questions.

How high may a relative's profit share be?

In Germany guide values apply, related to the nominal amount of the contribution: 15 percent for a gifted contribution, 25 percent for the person's own contribution with pure profit participation, 35 percent with additional loss participation. According to BFH IV R 19/20 of 04.04.2023 there is no rigid upper limit. No comparable rule was found for Austria.

What happens for tax purposes on exit from an atypical silent partnership?

In Austria there is a capital gain on disposal under § 24 EStG, with an allowance of EUR 7,300. In Germany § 16 Abs 1 S 1 Nr 2 EStG applies with an allowance of EUR 45,000 from the completed 55th year of age, once in a lifetime and phasing out from EUR 136,000 capital gain on disposal. Tax rate reliefs exist under § 37 Abs 5 EStG and § 34 Abs 3 EStG respectively.

Why is a negative capital account dangerous on exit?

Because under § 24 Abs 2 S 2 EStG it must be recognised. A taxable capital gain on disposal arises although no money flows in. This mainly affects participations to which losses have been allocated over the years.

How IGCP supports

IGCP Capital Partners GmbH, Postgasse 14, 1010 Vienna, FN 369357 y (HG Wien), has guided capital raisings and company sales for over 15 years. More than 100 transactions have been guided, 100 percent independent of banks, funds and the buyer side. IGCP is expressly not a Mittelstand advisor.

With an atypical silent partnership, the work starts before the contract is drafted. First it is clarified whether the atypical form is economically the right instrument or whether a subordinated loan, a profit participation right or a genuine minority stake fits better. This decision can later only be corrected at cost.

After that the economic key points follow: basis of calculation for the profit share, extent of loss-bearing, consent rights, valuation on exit. The legal and tax drafting is carried out with your advisors. How an investor is approached and selected is described in Taking on a silent partner; the way out of an existing participation in Selling a stake.

The typical range is companies with EUR 300,000 to EUR 30 million in revenue, with a focus on niche companies and scalable business models in the DACH region. According to IGCP's assessment, a process typically takes 3 to 12 months, preparation included (practical assessment, not a statistic, no guarantee).

If you want to check whether an atypical silent partnership works for your company: send a short description of your situation to office@igcp.at and you will receive a first assessment of the structure.

For the later complete exit, the rules on Selling a GmbH apply.

On exit from an existing participation see Selling a stake.