Atypical Silent Partnership (atypisch stille Beteiligung) in Austria and Germany

A stille Beteiligung (silent partnership) is "atypical" only when the silent partner qualifies as a Mitunternehmer — a co-entrepreneur for tax purposes. The governing provisions are § 23 Z 2 EStG in Austria and § 15 Abs 1 S 1 Nr 2 EStG in Germany. Three things must come together: entrepreneurial initiative, entrepreneurial risk, and a share in the hidden reserves including goodwill. On 13.11.2025 the Bundesfinanzhof (Germany's federal tax court) held in IV R 24/23 that without loss participation and without an obligation to make further contributions, there is no co-entrepreneur status.

For the sale of an Austrian limited company, our approach to selling a GmbH covers the process from valuation to the notarial deed.

Anyone hearing the term for the first time will look for it in the statute books in vain. Neither the Austrian UGB (the Austrian commercial code) nor the German HGB (its German counterpart) knows an "atypical silent partnership". They know only the silent partnership.

The distinction is an invention of tax law and is used nowhere else. But it decides the category of income, the treatment of losses, trade tax in Germany, and the tax charge on exit.

The fundamentals of the silent partnership — an internal partnership, no register entry, the contribution passing into the assets of the business owner — are set out in silent partnership. This article deals only with the atypical variant.

"Typical" and "atypical" appear in no statute

§ 179 Abs 1 UGB and § 230 Abs 1 HGB govern the same basic construction. The silent partner makes a contribution, and that contribution passes into the assets of the business owner.

One detail separates the two wordings. § 179 UGB attaches to an "undertaking or assets", § 230 HGB more narrowly to a "commercial business". In practice the Austrian version widens the possible field of application.

The only mandatory element in both jurisdictions is participation in profits. Participation in losses can be excluded by contract under § 231 Abs 2 HGB and § 181 Abs 2 UGB.

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

In other words: anyone who wants the silent partner to share in hidden reserves and goodwill has to say so expressly. It is precisely that agreement which makes the participation atypical. It does not arise by accident, and it does not arise from a heading in the contract. Which clauses are needed is covered in the silent partnership agreement.

The three tests for co-entrepreneur status

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

Mitunternehmerinitiative (entrepreneurial initiative) means that the silent partner takes part in entrepreneurial decisions. The statutory right of inspection alone is not enough; what is required is a position at least approaching that of a limited partner.

Mitunternehmerrisiko (entrepreneurial risk) means sharing in success and failure. As a rule that includes participation in losses.

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

The current benchmark comes from the BFH in judgment IV R 24/23 of 13.11.2025. Where both loss participation and any obligation to make further contributions are absent, there is no co-entrepreneur status. The same decision records that the internal partnership has no standing as a party in fiscal court proceedings. It is therefore the business owner or the partner who must bring the claim, not the partnership.

The doctrinal 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 authorities in the same line 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 decisions of the VwGH (the Austrian Administrative Court) on the atypical silent partnership, for instance Ra 2020/13/0085 of 27.01.2021 and Ra 2018/13/0103 of 26.02.2020. The full texts are not freely machine-readable via the RIS (the Austrian legal information system); their content is therefore deliberately not reproduced here.

Austria and Germany side by side

The systems resemble one another; the individual provisions differ markedly. In cross-border structures — a German investor, an Austrian GmbH — this is regularly overlooked.

Topic	Austria	Germany
Partnership law	§§ 179 ff UGB	§§ 230 ff HGB
Statutory connecting factor	"undertaking or assets" (§ 179 UGB)	"commercial business" (§ 230 HGB)
Atypical silent, category of income	business income, § 23 Z 2 EStG	business income, § 15 Abs 1 S 1 Nr 2 EStG
Typical silent, category of income	investment income, § 27 Abs 2 Z 4 EStG	investment income, § 20 Abs 1 Nr 4 EStG
Tax rate, typical silent	general tariff up to 55 %, § 27a Abs 2 Z 3 EStG excludes it from the special rate	investment income
Withholding, typical silent	no KESt deduction since the Budgetbegleitgesetz 2011	—
Determination of profit	uniform and separate assessment, § 188 BAO	§ 180 Abs 1 S 1 Nr 2a AO, binding effect § 182 Abs 1 AO
Restriction on losses	§ 23a EStG, suspended losses	§ 15a Abs 5 Nr 1 EStG
Trade tax	abolished, none since 1994	separate trade 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 where the silent partner is active	not covered in the source material
Return caps for family members	no comparable rule found	15 / 25 / 35 per cent

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

The general tariff of up to 55 per cent therefore applies, and since the Budgetbegleitgesetz 2011 there is no longer any KESt (Austrian withholding tax on investment income) deduction. Anyone who wants to run that comparison will find the mechanics in tax on silent partnerships.

On the social insurance side, § 2 Abs 1 Z 4 GSVG has to be examined in Austria. Where the silent partner is actively involved, compulsory insurance can arise (VwGH Ro 2014/08/0059 of 29.04.2016). This is almost always forgotten when the costs are calculated.

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.

Objectively it is a separate trade business under § 2 Abs 1 S 2 GewStG. The person liable for the tax, however, is only the owner of the commercial business, § 5 Abs 1 S 1 GewStG. See also R 5.1 Abs 2 GewStR.

The practical consequence is often overlooked. Where the owner continues to run a trade business of his own alongside the atypical silent partnership, two trade tax returns have to be filed. That double structure creates ongoing administration.

The allowance under § 11 Abs 1 S 3 Nr 1 GewStG is EUR 24,500, the assessment rate 3.5 per cent. The advisory literature takes the view that with a GmbH & atypisch Still this allowance is available a second time. That is an interpretation, not a position secured by the highest courts, and should be treated as such.

Austria does not have this discussion at all. Trade tax was abolished in 1994. A structuring argument that carries weight in Germany is simply irrelevant in Austria.

Family members as atypical silent partners

Family members as silent partners are a classic instrument for spreading profit within a family. The German tax authorities test such contracts against arm's length standards.

The case law works with return caps, in each case measured against the nominal amount of the contribution.

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

The authorities are BFH VIII R 17/19, BFH X R 14/99, BFH X R 1/19 and BFH IV R 27/13. The qualification in BFH IV R 19/20 of 04.04.2023 matters: there is no rigid upper limit.

The percentages are therefore reference points for the review, not a mechanical ceiling. Anyone exceeding them has to be able to justify the deviation.

For Austria no comparable rule was found. That is an express negative finding. Applying the same 15, 25 or 35 per cent to an Austrian constellation transposes German case law without a basis.

Losses and exit: the two expensive moments

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

In Austria § 23a EStG applies to the purely capital-contributing co-entrepreneur. Losses beyond the capital account become Wartetastenverluste (suspended losses) and can only be set off against later profits. The BMF circular of 07.07.2016, GZ BMF-010203/0200-VI/6/2016, refers expressly to the atypical silent partner.

On withdrawal, an ongoing relationship turns into 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 the allowance	—	from the completed age of 55, once in a lifetime
Tapering	—	from a disposal gain of EUR 136,000
Rate relief	half the average rate, § 37 Abs 5 EStG	§ 34 Abs 3 EStG
Conditions for the relief	death, incapacity, or from the completed age of 60 on ceasing gainful activity, in each case subject to a seven-year period	56 % of the average tax rate, minimum 14 %, up to EUR 5 million
Negative capital account	must be recognised, § 24 Abs 2 S 2 EStG	not covered in the source material

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

On withdrawal that negative capital account must be recognised as a disposal gain under § 24 Abs 2 S 2 EStG. Tax arises without a single euro changing hands.

This regularly catches those who treat the exit as a mere formality. How the settlement credit is calculated is dealt with in the settlement credit.

Co-entrepreneur status is not equity

This is the point most often confused in the whole subject. Co-entrepreneur status for tax purposes and the presentation of equity on the balance sheet are two different questions.

In 6 Ob 204/16t the OGH (the Austrian Supreme Court) held that atypical silent participations are in principle debt. It refers 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, dependence on results and loss absorption — not on the tax classification.

Anyone intending to use a silent participation primarily to improve a rating should compare the instruments. The range is shown in mezzanine capital; the individual alternatives are set out in subordinated loans and profit participation rights.

When the atypical form fits — and when it does not

It fits where the capital provider is to share in the increase in value without becoming a shareholder. He carries risk, receives hidden reserves and goodwill in return, and still stays outside the Firmenbuch (the Austrian companies register).

It fits where start-up losses are to be used by the investor — subject to the caveat that § 23a EStG and § 15a EStG limit exactly that. The benefit is smaller than model calculations often assume.

It does not fit for employee participation. There the intention is typically that participants share in the result but acquire no say in the business. Yet it is precisely those participation rights that the atypical form needs for entrepreneurial initiative. The conflict of aims points clearly to the typical silent variant here. The AGP white paper refers to "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 where simplicity is the objective. Assessment proceedings under § 188 BAO or § 180 Abs 1 S 1 Nr 2a AO, plus the trade tax question in Germany: that is ongoing administration, every year.

Anyone who would rather hand over real shares should put a minority shareholding alongside it. In both cases the figure being negotiated comes out of 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 arrangement, not the heading. The result is a co-entrepreneurship with assessment proceedings that nobody planned.

The reverse mistake is forgetting the share in hidden reserves. § 235 HGB and § 186 UGB provide for settlement at nominal value as the default. Without an express clause the silent partner does not get the increase in value, even if the business has tripled.

Loss participation is excluded and co-entrepreneur status is wanted at the same time. Following BFH IV R 24/23 of 13.11.2025 that does not work where there is also no obligation to make further contributions.

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

In German double structures only one trade tax return is filed. Under BFH IV R 8/14 of 08.12.2016 there are two.

German return caps for family members are transposed to Austrian facts. For Austria no comparable published rule exists.

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

This article is not a substitute for legal or tax advice.

How IGCP supports owners

International German Capital Partners (IGCP), Postgasse 14, 1010 Vienna, FN 369357 y (Commercial Court Vienna), has been advising on capital raisings and company sales for more than 15 years. Over 100 transactions have been supported, entirely independent of banks, funds and the buy side. IGCP is expressly not a generalist mid-market consultancy.

With an atypical silent participation the work begins before the contract is drafted. The first question is whether the atypical form is economically the right instrument at all, or whether a subordinated loan, a profit participation right or a genuine minority shareholding fits better. That decision can only be corrected later at considerable cost.

After that come the commercial cornerstones: the basis on which profit participation is measured, the extent of loss absorption, consent rights, and valuation on exit. The legal and tax drafting is done with your own advisers. 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 shareholding.

The typical range is companies with revenues of EUR 300,000 to EUR 15 million, with a focus on niche businesses and scalable models in the DACH region. Processes at IGCP usually take 3 to 6 months rather than the 6 to 12 months common in the market.

If you want to test whether an atypical silent participation will carry your business, send a short description of your situation to office@igcp.at and you will receive an initial assessment of the structure.

For a later full exit, the rules set out under selling a GmbH apply; on leaving an existing participation, see selling a shareholding.

FAQ

What does an atypical silent partnership mean?

A silent partnership is atypical where the silent partner qualifies as a co-entrepreneur for tax purposes. That requires entrepreneurial initiative, 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, governed by §§ 179 ff UGB and §§ 230 ff HGB. The distinction between typical and atypical comes solely from tax law and has no separate meaning in partnership law.

When is a silent partner a co-entrepreneur?

Where entrepreneurial initiative and 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 held that without loss participation and without an obligation to make further contributions there is no co-entrepreneur status. Under BFH IV R 100/06 of 01.07.2010, the hidden reserves include goodwill.

Does an atypical silent partnership pay trade tax in Austria?

No. Austria abolished trade tax in 1994. The German debate about the trade tax allowance of EUR 24,500 under § 11 Abs 1 S 3 Nr 1 GewStG has no counterpart for Austrian facts.

How is the atypical silent partnership treated for German trade tax?

Under BFH IV R 8/14 of 08.12.2016 it is objectively a separate trade business within the meaning of § 2 Abs 1 S 2 GewStG. The person liable for the tax, however, is solely the owner of the commercial business, § 5 Abs 1 S 1 GewStG. In double structures two trade tax returns have to be filed.

Is an atypical silent participation equity on the balance sheet?

In principle no. In 6 Ob 204/16t the OGH held, referring to § 10 Abs 2 EKEG, that atypical silent participations are in principle debt. Co-entrepreneur status for tax purposes and the presentation of equity on the balance sheet are two separate questions.

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

In Austria there is a disposal gain 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 age of 55, once in a lifetime, tapering from a disposal gain of EUR 136,000. Rate relief is available under § 37 Abs 5 EStG and § 34 Abs 3 EStG respectively. A negative capital account must be recognised under § 24 Abs 2 S 2 EStG, so tax can arise without any cash inflow.