Genussrechte (profit participation rights)

A Genussrecht (profit participation right) is a purely contractual claim to the profit of a company, without voting rights and without a statutory definition. Whether it is treated for tax purposes like a participation or like a loan is decided by § 8 Abs 3 S 2 KStG in Germany and § 8 Abs 3 Z 1 KStG in Austria: participation in profit and in liquidation proceeds must both be present cumulatively. For employee schemes an asymmetry applies — an allowance of EUR 2,000 under § 3 Nr 39 EStG, also for non-securitised nominal Genussrechte in Germany, in Austria only for equity-type Genussrechte (Substanzgenussrechte).

Capital providers weighing a Genussrecht against a silent partnership and a genuine share will find the comparison of the four routes under Buying a company stake.

For Genussrechte as a building block between participation and financing, targeted equity raising is decisive.

When it comes to raising capital against a share in profit, the route leads via Finding an investor.

The Genussrecht is the freest instrument of the mezzanine family and at the same time the one with the most hidden traps. Because the legislator has not defined it, its content arises entirely in the contract.

It is precisely this freedom that creates the problem. Tax law, accounting law and funding law examine the same instrument against three different sets of criteria — and regularly arrive at three different results.

This article classifies the possible designs, sets the Austrian and German treatment side by side and shows where Genussrechte work as employee participation and where they miss the target.

What are Genussrechte (profit participation rights)?

Genussrechte are purely contractual claims against a company, usually to a share of its profit and often also of its liquidation proceeds, without voting rights and without becoming a shareholder. The holder is a capital provider, not a partner. No statute defines their content; stock corporation law and corporate tax law only address issuance and tax consequences.

Question	Statutory rule	Primary source
How does a German stock corporation (AG) issue Genussrechte?	only on the basis of a general meeting resolution with at least three quarters of the share capital represented (the articles may deviate); shareholders have a subscription right	section 221(1), (3) and (4) AktG
Do distributions reduce the issuer's taxable income in Germany?	no, if the Genussrecht participates in profit and in liquidation proceeds	section 8(3) sentence 2 KStG
Do distributions reduce the issuer's taxable income in Austria?	no, distributions on Genussrechte with participation in profit and liquidation proceeds are an appropriation of income	section 8(3) no. 1 KStG 1988

Source: statutory texts (German-language), retrieved on 4 November 2026. The table is an orientation, not legal or tax advice.

An instrument without a statutory definition

There is no statutory definition of the Genussrecht. Bauer states this expressly in Linde Verlag on p. 21, and the finding applies equally to both legal systems.

§ 221 Abs 3 AktG in Germany and § 174 Abs 3 AktG in Austria regulate exclusively the issuing procedure for the stock corporation. They say nothing about what a Genussrecht is in substance.

One point is regularly passed over in practical accounts: § 174 Abs 4 AktG grants Austrian shareholders a subscription right to Genussrechte. Anyone who wants to issue Genussrechte to third parties at an AG must deal with this subscription right.

In substance, according to Gabler, the Genussrecht establishes a purely contractual claim, not one under membership law. The holder has "neither voting right nor other membership rights". He does not sit in the general meeting and cannot block a sale.

For the GmbH — the practically most important case — a clear negative finding applies. Neither the BGH nor the OGH has decided whether § 221 Abs 3 AktG or § 174 Abs 3 AktG are to be applied by analogy to the GmbH. Any source that names a particular majority for a resolution or a particular form to you as current law asserts more than has been decided.

The practical consequence is a conflict of objectives. Without clarification by the highest courts, a careful advisor will, as a precaution, word the shareholder resolution more strictly than would be necessary on the minority view.

The advantage of the Genussrecht nevertheless lies in freedom of form. The assignment of a share in Germany requires notarial recording under § 15 Abs 3 GmbHG and in Austria a notarial deed under § 76 Abs 2 GmbHG. The Genussrecht manages without either — the same logic as with the silent partnership.

Without membership rights, the question remains what the holder can control at all. The BGH answered it on 14.06.2016 – II ZR 121/15: the Genussrecht holder has a right to an accounting, and where there is a well-founded suspicion there is a further right to information. The case concerned a registered Genussschein of EUR 2 million with 7 % interest, the interest payment on which was not allowed to cause a balance sheet loss. In addition, the Klöckner decision BGH 05.10.1992 – II ZR 172/91 (BGHZ 119, 305) should be consulted.

Equity-type or debt-like Genussrecht

The entire tax treatment hangs on a single switch. Either the holder participates in profit and in liquidation proceeds — then an equity-type Genussrecht (Substanzgenussrecht). Or one of the two is missing — then a debt-like Genussrecht (obligationsähnliches Genussrecht), economically a loan.

Feature	Equity-type Genussrecht	Debt-like Genussrecht
Participation in current profit	yes	yes or fixed interest
Participation in liquidation proceeds or liquidation gain	yes (mandatory)	no
Share in hidden reserves	yes	no
Provision Germany	§ 8 Abs 3 S 2 KStG, cumulative	—
Income at holder level (DE)	§ 20 Abs 1 Nr 1 S 1 EStG, like a dividend	§ 20 Abs 1 Nr 7 S 1 EStG, like interest
Exemption for corporations (DE)	§ 8b Abs 1 S 1 KStG via the reference to § 20 Abs 1 Nr 1 EStG	none
Provision Austria	§ 8 Abs 3 Z 1 KStG ("Liquidationsgewinn")	—
Exemption for corporations (AT)	§ 10 Abs 1 Z 3 KStG via § 8 Abs 3 Z 1 second indent KStG	none
Income at holder level (AT)	§ 27 Abs 2 Z 1 lit c EStG, 27.5 % KESt	§ 27 Abs 2 Z 1 lit c EStG, rate question unresolved
Expense at issuer level	not a business expense	business expense

A detail in the wording separates the two legal systems. The Austrian provision speaks of "liquidation gain" (Liquidationsgewinn), the German parallel provision of "liquidation proceeds" (Liquidationserlös). In cross-border structures this difference should be checked and not overlooked.

For Austria an open flank remains. § 27a Abs 1 EStG provides 25 % only for cash deposits and non-securitised cash claims at credit institutions, otherwise 27.5 %. § 27a Abs 2 Z 1, Z 2 and Z 3 EStG, however, do not expressly name Genussrechte. Whether a nominal Genussrecht not offered to the public falls under the rate is unresolved — all that can be stated reliably is that equity-type Genussrechte are caught at 27.5 % KESt.

Those who want a fixed, profit-independent remuneration are usually better served by a subordinated loan. Those who want a genuine share in substance should lay the atypical silent partnership alongside.

What the BFH decided — and what is wrongly attributed to it

The leading decision is BFH 14.08.2019 – I R 44/17 (DB 2020, 1376). The headnote reads verbatim: "Genussrechte lead to income within the meaning of § 20 Abs. 1 Nr. 1 EStG only if the Genussrecht holder participates cumulatively in both profit and liquidation proceeds".

Participation in liquidation proceeds here means participation in hidden reserves. The BFH expressly stated what is not sufficient: a term of over 30 years, sole shareholder status and conversion rights.

This is the practically most expensive misjudgement. Contracts that are meant to simulate closeness to equity through long terms and conversion clauses nevertheless miss § 8 Abs 3 S 2 KStG.

Two file references circulate in the advice literature that are not Genussrecht decisions: BFH I R 4/19 and BFH I R 43/12. They must not be cited in this context. If a source lists them as Genussrecht case law, that is a reliable warning sign for its other statements.

The most recent position concerns employee Genussrechte: BFH 21.10.2025 – VIII R 14/23. According to it, ongoing remuneration from an obligational employee Genussrecht is regularly not income from employment (§ 19 Abs 1 S 1 Nr 1 EStG), but income under § 20 Abs 1 Nr 7 EStG. The prerequisite is that the Genussrecht is seriously agreed and implemented, the holder is legal and economic owner and the agreement has independent economic substance. The returns are then subject to the flat-rate withholding tax under § 32d EStG.

For employee schemes in Germany this is a clarification: the income is not recharacterised as salary merely because the holder is an employee. Whether the three prerequisites are met in an individual case should be checked with the payroll tax advisor before introduction.

In addition, the BMF letter of 11.04.2023, GZ IV C 6 - S 2133/19/10004 :002 applies, which is documented here only via the secondary source Deloitte. It states: capital from unrelated third parties is always debt capital for tax purposes, § 8 Abs 3 S 2 KStG is not an accounting rule, and the debt-mezzanine swap is neutral to profit (BFH 15.04.2015 – I R 44/14).

Employee participation: the DACH asymmetry

Here lies the most important practical difference between the two countries — and it runs contrary to the expectation of many owners.

In Germany, § 3 Nr 39 EStG favours the free or discounted transfer of asset participations with an allowance of EUR 2,000. The Zukunftsfinanzierungsgesetz raised it from EUR 1,440 to EUR 2,000 as of 01.01.2024 (Haufe). The prerequisite is an offer to all employees.

Decisive is the reference to the 5th VermBG. Genussrechte are favoured both under lit f (securitised Genussscheine) and under lit l (non-securitised Genussrechte), the latter literally "if the right to the profit of this company is attached to them". A participation in liquidation is not required for this.

In Austria, § 3 Abs 1 Z 15 lit b EStG names in its statutory wording only "capital shares (participations)". The Unternehmensserviceportal states, as of 01.01.2026, an allowance of EUR 3,000 a year for the transfer of capital shares with a five-year holding period; the offer must be made to all employees or clearly delimited groups. Which instruments count as a favoured participation in an individual case (equity-type Genussrechte, genuine silent partnerships) is to be examined on the wording of the law.

Topic	Austria	Germany
Central provision	§ 3 Abs 1 Z 15 lit b EStG	§ 3 Nr 39 EStG
Allowance	EUR 3,000	EUR 2,000 (since 01.01.2024, ZuFinG)
Nominal Genussrecht favoured	no	yes, via 5th VermBG lit l
Equity-type Genussrecht favoured	yes	yes
Securitised Genussschein	—	5th VermBG lit f
Holding period	five years	—
Offer to all employees	—	yes, all-employee requirement
Further allowances	EUR 4,500 for shares held in trust (§ 3 Abs 1 Z 15 lit c EStG); EUR 3,000 profit share, limited by EBIT (§ 3 Abs 1 Z 35 EStG)	—
Start-up regime	§ 67a EStG, does not cover Genussrechte	—

The consequence is clear. A nominal Genussrecht — pure profit participation without participation in substance — is favoured in Germany, not in Austria. Anyone who transfers a German employee scheme unchanged to Austria loses the relief.

The Austrian way out via § 67a EStG leads into a conflict of objectives. The start-up employee participation likewise speaks only of "capital shares (participations)" and does not cover Genussrechte.

Its prerequisites are narrow: a maximum of 100 employees, revenue of a maximum of EUR 40 million, transfer within ten years of foundation, employee participation below 10 %. 75 % are taxed at the fixed rate of 27.5 %, with an employment relationship of at least two years and inflow after three years.

Anyone who wants to use § 67a EStG needs genuine shares. With that the notarial deed under § 76 Abs 2 GmbHG is back — precisely the effort that the Genussrecht was meant to avoid. This decision should be made before the first paper is written.

On the prevalence of Genussrechte as employee participation, there is no reliable public statistic that could be drawn on here.

Accounting: AFRAC 40 and IDW HFA 1/1994

In Austria AFRAC 40 applies. Rz (4) states verbatim: "Examples of hybrid financial instruments are Genussrechte, silent partner capital, profit-participating loans and perpetual bonds."

Rz (8) defines four criteria for presentation as equity: subordination, capital maintenance in respect of remuneration, capital maintenance in respect of repayment and no fixed term. The statement holds: "These criteria are defined below and must be fulfilled cumulatively."

Beware of abbreviated accounts. TPA names only three criteria; the primary source with four is authoritative. Under Rz (37), first application applies for financial years beginning after 31.12.2024. That AFRAC 40 replaces KFS/RL 13 is documented here only by a secondary source.

In Germany, IDW HFA 1/1994 (WPg 1994 p. 419) likewise lists four cumulative criteria. Here too abbreviated versions with three criteria circulate, for example at steuba.de. Depending on the outcome, presentation is in equity under § 265 Abs 5 HGB or in debt capital under § 266 Abs 3 C HGB.

The practical rule: a fixed term tips the equity presentation in both countries, regardless of how subordinated the capital is otherwise. Those who want to strengthen their rating before a financing will find the alternatives in Mezzanine capital.

The three-way split

The most common advisory error arises from a tacit assumption: that an equity-like design works the same everywhere. It does not.

Three sets of criteria run side by side. For tax purposes, the cumulativity from § 8 Abs 3 S 2 KStG or § 8 Abs 3 Z 1 KStG counts. For accounting, the four criteria from AFRAC 40 or IDW HFA 1/1994 count. For funding law, the definition of the 5th VermBG via § 3 Nr 39 EStG counts.

These three sets regularly diverge. An unlimited, subordinated Genussrecht without liquidation participation can be equity for accounting and debt capital for tax. A fixed-term nominal Genussrecht can be favoured under § 3 Nr 39 EStG and be debt capital for accounting.

In addition there is the reversal of effect between the parties. An equity-like design is bad for the issuer, because the remuneration is not a business expense. For the holder subject to corporation tax it is good, because § 8b Abs 1 KStG or § 10 Abs 1 Z 3 KStG applies.

An uncomfortable truth follows: there is no Genussrecht that is optimal for both sides. The only question is whose position the structure favours — and whether that is reflected in the price.

Public offering: capital market law and market reality

As long as you negotiate with a single investor, the question does not arise. As soon as Genussrechte are offered broadly, a set of rules applies that starts from different points in the two countries.

Topic	Germany	Austria
Coverage	§ 1 Abs 2 VermAnlG, eight numbers; Genussrechte are no. 5	§ 1 KMG 2019 defines the "Veranlagung", does not expressly name Genussrechte
Scope	only non-securitised Genussrechte	only via the general clause
Securitised Genussscheine	securities under Regulation (EU) 2017/1129 or WpPG	—
Exemptions (alternative)	§ 2 Abs 1 Nr 3 VermAnlG: lit a not more than 20 shares, lit b at most EUR 100,000 in twelve months, lit c at least EUR 200,000 per investor	§ 3 KMG 2019: EUR 100,000 per investor; under EUR 2 million in twelve months in the EEA; qualified investors; fewer than 150 non-qualified persons per EEA state; para 3: EUR 5 million over seven years
Crowdfunding thresholds	—	AltFG § 3 Abs 1: EUR 2 million per issuer in twelve months, EUR 5 million outstanding over seven years; § 4 Abs 1 information duty from EUR 250,000; § 3a Abs 1 retail investors at most EUR 5,000 per issue and twelve months
Historical change	—	§ 4 KMG old version lapsed on 20.07.2019

The difference in regulation is relevant. Germany names Genussrechte expressly, Austria covers them only via the general clause — with correspondingly less legal certainty in classification.

How small the segment actually is is shown by the BaFin annual report 2025. In 2025 BaFin received 19 sales prospectuses for asset investments, of which 14 were for company participations and 5 for Genussrechte; 16 prospectuses were approved, 6 withdrawn, none refused. Of 257 asset investment information sheets received, 206 permissions were granted; around 81 % concerned subordinated loans, about 12 % profit-participating loans and 7 % Genussrechte. The focus was on solar and wind power projects.

Genussrechte are therefore a niche instrument in the German retail market. Anyone who bases their model on supposed market standard bases it on little.

The cautionary example is Prokon. The insolvency administrator SJPP spoke in its notice of 07.04.2016 of "about 75,000 investors" and "around 1.4 billion euros"; the opening order is dated 1 May 2014. The Bundestag cited in hib of 10.02.2014 "around 74,000 investors" and over EUR 1 billion. The proceedings were ended with a restructuring.

A peripheral area with its own rules remains the bank Genussrecht, for example in savings bank law under § 3 Abs 3 SächsSparkG and, before the CRR, under § 10 Abs 5 KWG old version. For operating companies it is of no significance.

Common mistakes

The label in the contract decides nothing. Anyone who heads a document "Substanzgenussrecht" without agreeing a participation in liquidation proceeds has, under BFH I R 44/17, a debt-like Genussrecht.

Long terms as a substitute for participation in substance. A term of over 30 years, sole shareholder status and conversion rights expressly do not suffice.

Copying German employee schemes unchanged to Austria. The nominal Genussrecht thereby loses the relief, because § 3 Abs 1 Z 15 lit b EStG covers only equity-type Genussrechte.

Relying on § 67a EStG without factoring in the notarial deed. The provision does not cover Genussrechte, and genuine shares mean § 76 Abs 2 GmbHG.

Equating accounting and tax classification. AFRAC 40 and § 8 Abs 3 Z 1 KStG examine different features and regularly deliver different results.

Adopting wrong file references from advice sources. BFH I R 4/19 and BFH I R 43/12 are not Genussrecht decisions.

Leaving information rights unregulated. In II ZR 121/15 the BGH did grant an accounting, but a contractually defined scope of reporting spares the dispute about what a "well-founded suspicion" is.

Not calculating the settlement at the end of the term. The same question decides the outcome in silent partnerships too, as Settlement balance and Silent partnership taxes show. This article does not replace legal or tax advice.

Frequently asked questions

What is a Genussrecht?

A Genussrecht is a purely contractual claim against a company, typically to a share in profit. According to Gabler it conveys "neither voting right nor other membership rights". No statutory definition exists; § 221 Abs 3 AktG (DE) and § 174 Abs 3 AktG (AT) regulate only the issuing procedure at the stock corporation.

What distinguishes an equity-type Genussrecht from a debt-like one?

With an equity-type Genussrecht, the holder participates cumulatively in profit and in liquidation proceeds and thereby shares in hidden reserves. If the liquidation participation is missing, it is a debt-like Genussrecht. In Germany this leads to § 20 Abs 1 Nr 7 S 1 EStG instead of § 20 Abs 1 Nr 1 S 1 EStG.

How are Genussrechte taxed in Austria?

Equity-type Genussrechte fall under § 27 Abs 2 Z 1 lit c EStG and are caught at 27.5 % KESt; for corporations the participation-income exemption of § 10 Abs 1 Z 3 KStG applies. For nominal Genussrechte not offered to the public, the rate question is unresolved, because § 27a Abs 2 Z 1 to Z 3 EStG does not expressly name Genussrechte.

Can a GmbH issue Genussrechte?

In practice yes, in law with an open flank. Neither the BGH nor the OGH has decided whether § 221 Abs 3 AktG or § 174 Abs 3 AktG apply by analogy to the GmbH. Statements on a particular required majority or form are therefore not settled law.

Are Genussrechte as employee participation tax-favoured?

In Germany yes, also as a non-securitised nominal Genussrecht: § 3 Nr 39 EStG with an allowance of EUR 2,000 via the 5th VermBG lit l, which requires only "the right to the profit of this company". In Austria, under § 3 Abs 1 Z 15 lit b EStG only equity-type Genussrechte are favoured, with an allowance of EUR 3,000 and a five-year holding period.

Why does § 67a EStG not help with Genussrechte?

The Austrian start-up employee participation speaks only of "capital shares (participations)" and does not cover Genussrechte. Anyone who wants to use it must transfer genuine shares and thereby accept the notarial deed under § 76 Abs 2 GmbHG. This is precisely the effort the Genussrecht was meant to avoid.

Are Genussrechte equity on the balance sheet?

Only if all criteria are fulfilled cumulatively. AFRAC 40 Rz (8) requires in Austria subordination, capital maintenance in respect of remuneration, capital maintenance in respect of repayment and absence of a fixed term; IDW HFA 1/1994 in Germany likewise lists four cumulative criteria. Otherwise presentation is in debt capital under § 266 Abs 3 C HGB.

What information rights does a Genussrecht holder have?

According to BGH 14.06.2016 – II ZR 121/15 there is a right to an accounting, and where there is a well-founded suspicion a further right to information. Because membership rights are missing, the scope of reporting should be laid down in the contract.

Do I need a prospectus for Genussrechte?

For a public offering of non-securitised Genussrechte in Germany, § 1 Abs 2 Nr 5 VermAnlG applies, with the alternative exemptions of § 2 Abs 1 Nr 3 VermAnlG. In Austria, Genussrechte are covered only via the general clause of § 1 KMG 2019; the thresholds are in § 3 KMG 2019 and in the AltFG. With a single, individually negotiated issue, the question does not arise.

How IGCP supports

IGCP Capital Partners has guided capital raisings and investment processes for over 15 years, with over 100 transactions guided and 100 percent independent of banks, funds and buyers.

Structure before paper. First it is clarified whether a Genussrecht is the right instrument at all — or whether a silent partnership, a subordinated loan or a minority stake fits better. For growth financing, growth capital puts the alternatives in context.

The three sets of criteria are worked through together before the first draft contract is made: tax classification, balance sheet effect and, for employee schemes, the relief in the respective country. The legal and tax implementation is carried out with your advisors.

If capital is to come from outside, suitable addresses are curated and several approached in parallel, so that terms emerge rather than concessions. The route there is set out in Finding an investor. The typical range is companies with between EUR 300,000 and 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).

Next step: send your draft or your key points to office@igcp.at and have it checked before signing whether tax, accounting and funding effects actually fit together.

Genussrechte leave shareholder status untouched; those who want to give up their shares instead will find the process under Selling a GmbH.

Status of the checked details (BFH decision, BaFin figures, allowances): 30 September 2026.