Silent partnership (stille Beteiligung) and silent partner: capital without voting rights

A silent partnership brings capital into a company without the investor appearing externally, being entered in the company register or having a say. The silent partner makes a contribution and receives a share of profit in return; management stays with the owner. In Austria this is governed by §§ 179 ff UGB, in Germany by §§ 230 ff HGB. One single switch is decisive: typical or atypical silent.

How we find an investor and guide the process through to closing is described on our service page. From the capital provider's perspective, the silent partnership is one of four ways to buy a company stake — that article compares the alternatives of majority stake, minority stake and profit participation right.

For owners who need capital but want neither a bank nor a co-shareholder with a say, the silent partnership is the overlooked middle path between a loan and a sale of shares. It is also the instrument in which most mistakes are made in the contract — and not in the negotiation.

This article classifies the forms, sets the Austrian and German legal positions side by side, shows the tax consequences on both sides and describes how a silent partnership comes about in practice.

What a silent partnership is — and what it is not

The silent partner participates in another person's business with a contribution of assets. The contribution passes into the owner's assets — the silent partner does not acquire a share in individual assets, but a claim under the law of obligations. No partnership assets arise.

The silent partnership is a purely internal partnership. It has no legal personality, is not entered in the company register (Firmenbuch) or commercial register (Handelsregister) and does not appear in legal dealings. Externally, only the owner acts, and he alone is liable.

Three features set it apart:

It is not a shareholding. The silent partner has no voting rights in the general meeting, cannot appoint a managing director and cannot block a sale. Those who want a say need a real shareholding — the differences are set out in Minority stake.

It is not a loan. The remuneration is tied to success. If things go badly, it falls; depending on the contract, the silent partner even bears losses. A share of profit is a mandatory component — it cannot be excluded by contract. A share of losses, by contrast, can.

It requires no form. Unlike the assignment of a GmbH share in Austria, it needs no notarial deed. The contract comes into being informally. That is precisely the practical advantage — and the most common source of error.

Typical or atypical silent: the switch that determines everything

The two basic forms differ in what the silent partner shares in. This distinction decides the tax burden, the say, the balance sheet presentation and the amount paid out at the end.

Feature	Typical silent	Atypical silent
Share in current profit	yes (mandatory)	yes
Share in losses	can be excluded by contract	generally yes
Share in hidden reserves and goodwill	no	yes
Control and consent rights	statutory minimum	extended by contract, similar to a limited partner
Position	capital provider	co-entrepreneur (Mitunternehmer)
Tax classification (AT)	income from capital assets	income from a trade or business, separate determination procedure
Tax classification (DE)	§ 20 Abs 1 Nr 4 EStG	§ 15 Abs 1 Nr 2 EStG
Balance sheet presentation at the company	debt capital	close to equity
Payout at the end	contribution plus outstanding profit shares	proportionate company value

The line does not run along the label in the contract, but along the actual design. Someone who titles a contract “typical silent” but grants the silent partner a share in hidden reserves and a consent right for material transactions has, for tax purposes, a co-entrepreneurship — with a separate determination procedure, ongoing allocation of profit and a completely different treatment on exit.

The economic difference becomes visible at exit. The typical silent partner gets his contribution back, even if the company value has tripled. The atypical silent partner participates in that increase in value. Choosing the wrong form gives away either access to capital or company value.

How co-entrepreneur status arises and which contract components trigger it is set out in Atypical silent partnership.

Austria and Germany: the same idea, two sets of rules

In both countries the silent partnership is an internal partnership with the same underlying idea. The details differ in ways that are regularly overlooked in cross-border constellations — a German investor with an Austrian GmbH or the reverse.

Topic	Austria	Germany
Legal basis	§§ 179 to 188 UGB	§§ 230 to 236 HGB
Register entry	none (no entry in the Firmenbuch)	none (no entry in the Handelsregister)
Contribution	passes into the owner's assets (§ 179 UGB)	passes into the owner's assets (§ 230 HGB)
Profit share	mandatory	mandatory
Loss share	can be excluded by contract (§ 181 UGB); otherwise at most up to the amount of the contribution, no obligation to make further payments	can be excluded by contract
Control right	copy of the annual accounts, inspection of books for verification (§ 183 UGB)	comparable inspection right (§ 233 HGB)
Settlement	settlement in money (§ 186 UGB)	settlement balance (§ 235 HGB)
Insolvency of the owner	contribution claim as insolvency claim (§ 187 UGB)	insolvency claim (§ 236 HGB)
Trade tax on profit shares	no trade tax	add-back of one quarter above the allowance

Two points are relevant in practice. First: in Austria, the repayment of the contribution or the waiver of a loss share can be challenged under insolvency law if it took place in the last year before the opening of proceedings. Anyone dissolving a silent partnership in a crisis should know this.

Second: in Germany the company incurs trade tax. The profit shares of the typical silent partner are deductible as a business expense, but under § 8 Nr. 1 GewStG one quarter is added back, to the extent that the sum of financing charges exceeds the allowance of EUR 200,000 (since the assessment period 2020). The allowance applies to the sum of all financing components, including interest, rents and licences, not per item; a company with high rental expenses therefore reaches it faster than the silent partner alone would suspect. In Austria this add-back does not exist.

What the silent partnership triggers for tax

This is the point at which most freely available accounts go wrong — above all for Austria.

Austria, typical silent. The profit shares are income from capital assets. The special tax rate of 27.5 percent, however, specifically does not apply here: § 27a Abs 2 Z 3 EStG expressly excludes income from participation as a silent partner from the special tax rate. They are subject to the general income tax scale under § 33 EStG: top standard bracket 50 percent, for parts of income above one million euros even 55 percent, limited to and including 2029, not 27.5 percent; the bracket limits are adjusted annually. This is a structural difference from a GmbH shareholding and the most important single calculation factor when an investor chooses between a silent partnership and an acquisition of shares. The taxation of share sales is put in context by Taxes on selling a company.

Austria, atypical silent. The silent partner is a co-entrepreneur. His income is trade income and is determined uniformly and separately in the determination procedure. The profit is allocated to him on an ongoing basis, regardless of whether he withdraws it. On exit, the system of the sale of a business applies — including the reliefs for allowance, half-rate taxation or spreading over three years.

Germany, typical silent. The profit shares are income from capital assets under § 20 Abs 1 Nr 4 EStG. The company withholds capital gains tax of 25 percent; the flat-rate withholding tax under § 32d EStG generally settles the matter. A deduction of income-related expenses is excluded. Caution with close relationships: if the silent partner also holds at least 10 percent of the company or is a related person, the flat-rate withholding tax does not apply — the personal tax rate then applies.

Germany, atypical silent. Co-entrepreneurship under § 15 Abs 1 Nr 2 EStG. No capital gains tax, taxation when the profit share arises rather than when received, loss offsetting restricted by § 15a EStG.

	AT typical silent	AT atypical silent	DE typical silent	DE atypical silent
Type of income	capital assets	trade or business	capital assets	trade or business
Rate for the silent partner	income tax scale (no special rate)	scale, sale of a business on exit	25 % flat-rate withholding tax	scale
Tax withheld at source	no, assessment	no, determination	yes, capital gains tax	no
At the company	business expense	not a business expense	business expense, trade tax add-back	not a business expense

This classification does not replace tax advice. But it shows which question has to be answered before the contract is signed — and not after.

The tax consequences of both variants in Austria and Germany are worked through in Silent partnership: taxes.

Equity or debt: what the bank makes of it

The most common motivation for a silent partnership is to strengthen the equity base before a financing. Whether this works depends not on the owner's wish, but on four contract features.

Subordination: in insolvency, the silent partner ranks behind all other creditors. Without an express subordination declaration, no bank will recognise the contribution as economic equity.

Long-term nature: short notice periods turn the contribution into temporary debt capital. Recognition requires a minimum term without ordinary right of termination.

Success-dependent remuneration: a fixed interest rate independent of the result is economically a loan. The more strongly the remuneration depends on profit, the more likely it counts as equity.

Loss participation: if the silent partner bears losses up to the full amount of his contribution, the capital is liable — and for the analyst, therefore, equity.

In practice this means: a typical silent partnership with excluded loss participation, fixed interest and a three-month notice period does not improve any rating. A subordinated, long-term, loss-bearing contribution does. The difference lies in three clauses and costs not a cent of additional capital.

What a silent partner costs

There is no reliable public market statistic on the interest paid on silent partnerships; any figure without a source that you find online is an assertion without a data basis. Only published programme terms are documented (see the next section), and they are not a market price for your company. The structure of the remuneration is reliable, and it typically consists of three components.

A fixed basic interest rate on the contribution, which accrues independently of the result or is deferred in the event of a loss. A profit-dependent component, usually as a percentage of annual profit or as a quota of EBIT. And, in an atypical design, a final remuneration on exit that reflects the increase in value.

As a rule of thumb: silent capital is more expensive than a bank loan and cheaper than giving up shares. It is more expensive because the provider bears a higher risk and has no security. It is cheaper because he does not receive a permanent share of the company value — provided the partnership is designed as typical silent.

With atypical silent partnerships, valuation becomes a negotiating topic as with a real share, because the final remuneration is tied to the company value. The methods for this are set out in Company valuation and Multiples method.

One special case deserves mention: if the silent partner is a relative or a person close to the shareholder, the tax authority examines the appropriateness of the profit share against an arm's-length comparison. An excessive share is corrected.

Public programmes as a price anchor: MBG and Mikromezzaninfonds

For smaller companies, the Mittelständische Beteiligungsgesellschaften of the federal states (MBG) are the most visible source of silent partnerships in Germany. Two published examples show the range; both figures come from the programme pages of the companies, retrieved on 01.10.2026, and may change.

Programme	Amount	Term	Remuneration	Particularity
Mikromezzaninfonds Deutschland III (via MBG Sachsen)	up to EUR 100,000	7 to 10 years	8.0 % fixed remuneration p. a. plus 2.0 % profit-dependent	micro and small enterprises with low equity; personal (partial) guarantee of the shareholder; processing fee 3.5 % of the participation amount
Silent partnership of MBG Niedersachsen	up to EUR 2.5 million	maximum 10 years, at least 5 years free of repayment	not stated on the page	presented as economic equity, no collateral in rem, no entry in the commercial register; restructurings and refinancings excluded

Sources: MBG Sachsen, Mikromezzaninfonds and MBG Niedersachsen, Mezzanine capital.

Three lessons from this. First: here too the remuneration consists of a fixed and a profit-dependent part, so the structure from the previous section is not a textbook model. Second: the costs lie not only in the remuneration, but also in the processing fee and personal guarantee. Calculate the total cost over the term, not just the rate. Third: public programmes are tied to target groups and purposes. Those who want to finance a change of shareholders or a partial sale often do not fit the funding logic, and different programmes apply for Austria. A constructed calculation example for illustration: with a contribution of EUR 100,000, 8 % fixed remuneration and 2 % profit-dependent remuneration (assumed as a percentage of the contribution given sufficient profit), the result is EUR 8,000 fixed and at most EUR 2,000 variable per year, plus a one-off processing fee of EUR 3,500. Whether that is favourable for your business depends on what the capital earns; a first indication of the order of magnitude of your company is given by the company value calculator.

Silent partnership, subordinated loan, profit participation right: the distinctions

The silent partnership is one instrument among several in the mezzanine area. The choice between them decides the say, the balance sheet effect and the tax consequences.

Instrument	Say	Loss participation	Increase in value	Balance sheet at the company
Typical silent partnership	control rights, no say	optional	no	debt capital
Atypical silent partnership	extended consent rights possible	yes	yes	close to equity
Subordinated loan	none	no (subordination only)	no	debt capital, with subordination close to equity
Profit-participating loan (partiarisches Darlehen)	none	no	no	debt capital
Profit participation right (Genussrecht)	none (purely contractual)	freely designable	freely designable	depending on design
GmbH share	full shareholder rights	yes	yes	equity

The difference between a silent partnership and a profit-participating loan is the common purpose: with the loan, the lender pursues a pure interest in return; with the silent partnership, a common partnership purpose with corresponding control rights. The line is fluid and, in a dispute, is drawn on the basis of the actual design.

Those who offer silent partnerships publicly rather than to a single investor additionally fall within the scope of capital market and alternative financing law. With an individually negotiated participation with one investor, this question does not arise.

There are separate articles on the neighbouring instruments: Subordinated loan, Profit participation rights and the overview Mezzanine capital.

The contract: nine points on which it later depends

The silent partnership comes into being informally. That is precisely why so many defective contracts exist. These points should be regulated:

Contribution and due date — amount, timing, whether in instalments, whether a contribution in kind is permitted.

Profit distribution — basis of calculation (net income, EBIT, result before silent share), quota, cap at the top.

Loss participation — whether at all, up to what amount, how loss carry-forwards are treated.

Information and consent rights — which documents and when, which catalogue of transactions requiring consent. This is where the line between typical and atypical silent arises.

Withdrawal right — whether profit shares are to be paid out or remain and whether they increase the contribution.

Term and termination — minimum term, ordinary notice period, grounds for extraordinary termination.

Subordination — express declaration if the contribution is to count as economic equity.

Settlement on exit — book value or market value, valuation method, reference date, payment mode. The economically most important point and the one most often neglected.

Change of control — what happens if the company is sold. Without a provision, in a sale of the company — see Selling a company — the silent partner faces an open question that is then negotiated under time pressure.

The individual clauses, including drafting pitfalls, are covered in Silent partnership: the contract.

How a silent partner is found

Silent partners do not advertise. The circle consists of private investors and entrepreneurial families who want to invest capital without operational responsibility, of investment companies that run mezzanine programmes, and of industry insiders who invest without wanting to be in the day-to-day business themselves. They are reached through networks, not through platforms.

The process resembles a scaled-down transaction process: anonymised short profile, preselection of addressees, discussions under a confidentiality agreement, term sheet with the economic key points, due diligence, contract. How an investor search works overall is described in Finding an investor and Investor search with an advisor; access to the relevant addresses is covered by Investor network.

A common error of thinking: those who look for only one capital provider negotiate from the weakest position there is — that of a supplicant with a single counterpart. Only several parallel conversations produce the terms a company can actually bear.

The complete process from approach to prospectus review is described in Taking on a silent partner.

How the partnership ends

A silent partnership ends through expiry of the term, termination, a resolution to dissolve or with the insolvency of the owner. It does not end with the death of the silent partner — his legal position passes to the heirs, unless the contract provides otherwise.

On exit, the silent partner is compensated in money. For the typical silent partner, the settlement balance comprises the contribution, to the extent it has not been consumed by loss shares, plus profit shares not yet paid out. For the atypical silent partner, the share in hidden reserves and goodwill is added — and with it a genuine valuation question.

A transfer to a third party is not readily possible. Because the participation is a contractual relationship with the owner, it requires his consent. In practice, therefore, it is terminated and settled rather than sold. The routes out of an existing participation are shown in Selling a stake.

How the settlement is calculated, falls due and is taxed is set out in Settlement balance.

How IGCP helps

IGCP Capital Partners has guided capital raisings and investment processes for over 15 years, with more than 100 completed transactions and fully independent of banks and funds. For a silent partnership this means, concretely:

Structure before search. First it is clarified whether a silent partnership is the right instrument at all — or whether a subordinated loan, a minority stake or growth capital in another form is a better fit. An instrument chosen for the wrong objective can later only be corrected at cost.

Preparation. Figures, planning and equity story are prepared so that an investor can examine them without the company becoming recognisable prematurely.

Addresses and approach. Suitable investors are approached in a curated way — confidentially and several in parallel, so that terms emerge rather than concessions.

Negotiation of the key points. Profit distribution, loss participation, subordination, control rights, term, settlement: the economic points are clarified before the legal drafting. The legal and tax implementation is carried out with your advisors.

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.

Frequently asked questions

What is a silent partnership?

A capital contribution into a company in which the investor shares in the profit but does not appear externally, is not in the company register and does not take on management. Governed by §§ 179 ff UGB (Austria) and §§ 230 ff HGB (Germany).

What distinguishes a typical from an atypical silent partnership?

The typical silent partner shares in current profit, but not in the increase in value; at the end he gets his contribution back. The atypical silent partner bears losses, participates in hidden reserves and goodwill and is treated for tax purposes as a co-entrepreneur.

How is a silent partnership taxed in Austria?

For the typical silent partner, the profit shares are income from capital assets, but excluded from the special tax rate of 27.5 percent (§ 27a Abs 2 Z 3 EStG) — the general income tax scale applies. For the atypical silent partner there is trade income within a co-entrepreneurship.

Is a silent partnership equity or debt?

Legally debt capital, economically close to equity depending on the design. Banks recognise it as economic equity only if it is subordinated, long-term and loss-bearing and the remuneration is success-dependent.

Does a silent partnership have to be entered in the company register?

No. The silent partnership is an internal partnership without legal personality and is entered neither in the Firmenbuch nor in the Handelsregister. The contract is concluded between the parties.

Does the contract for a silent partnership need a special form?

No, it comes into being informally — unlike the assignment of a GmbH share in Austria, which requires a notarial deed. That is precisely why profit distribution, subordination, control rights and settlement should be regulated in writing and precisely.

What happens to the silent partner on insolvency of the company?

He asserts his contribution as an insolvency claim, to the extent it exceeds the loss shares attributable to him (§ 187 UGB). If subordination has been agreed, he ranks behind all other creditors.

What is the interest rate on a silent partnership?

There is no reliable market statistic; only published programme terms are documented, such as 8.0 % fixed remuneration plus 2.0 % profit-dependent in the Mikromezzaninfonds Deutschland III (participations up to EUR 100,000, as of 01.10.2026) — a funding programme for micro enterprises, not a market price. A combination of fixed basic interest and a profit-dependent component is usual, with a final remuneration in addition in an atypical design. Silent capital is generally more expensive than a bank loan and cheaper than giving up shares.

Can I sell a silent partnership to a third party?

Not without the owner's consent, because the participation is a contractual relationship with him. Termination with payment of the settlement balance is usual.

Are there public silent partnerships for small companies?

Yes. In Germany the Mittelständische Beteiligungsgesellschaften of the states grant silent partnerships; MBG Niedersachsen cites amounts up to EUR 2.5 million and a term of up to ten years, the Mikromezzaninfonds Deutschland III amounts up to EUR 100,000 (as of 01.10.2026). Restructurings and refinancings are excluded there.

If you want to raise capital without giving up management: speak confidentially with IGCP Capital Partners about the right structure — independent, discreet, on equal terms. → igcp.at

Those who want not only to raise capital but to give up shares will find the formal requirements under Selling a GmbH.

Which types of investor take part in practice and how they are approached: Investor seeks participation.

If the aim is to give up an existing participation, Selling a stake describes the way there.