Taking On a Silent Partner: The Process in Austria and Germany

You take on a silent partner in three movements: choose between typical and atypical, draft the contract, complete the transaction. The contract is in principle free of form, and with a GmbH (an Austrian or German limited company) or a sole trader there is no register entry — the contribution passes into the assets of the business owner (§ 179 Abs 1 UGB, § 230 Abs 1 HGB). The exception is the German AG (public company), where entry in the Handelsregister (the German commercial register) is constitutive (§ 294 Abs 2 AktG). In Austria an offer stays prospectus-free below EUR 2 million in any twelve months.

Selecting and structuring a silent participation belongs in a professional process for raising equity.

How a structured, discreet search works in practice is described under finding an investor.

The exercise rarely fails over money. It fails in three places: at the wrong choice between typical and atypical, at an overlooked formal requirement, and at the question of whether you are still offering privately or already publicly.

The sequence is the same in Austria and Germany. The differences lie in the detail — and precisely where correcting them later becomes expensive. What a silent participation actually is is set out in the overview of the silent partnership.

The process: six steps from intention to contribution

Each step ends in a decision that binds the next. Anyone who skips step 1 and starts from a template contract decides the tax question unconsciously.

Step	What is decided	What it turns on
1 Choice of form	typical or atypical silent	share in hidden reserves, loss participation
2 Terms	contribution, remuneration, term, subordination	balance sheet effect, cost of capital
3 Circle of addressees	one investor or an offer to many	prospectus and disclosure duties
4 Resolutions	consent of the shareholders	legal form, unsettled in Austria
5 Form	written form, notary, register entry	legal form, option clauses
6 Completion	contribution, declarations, tax assessment	typical or atypical

Step 1 — the choice of form. What is decided is whether the silent partner shares in hidden reserves and goodwill and bears losses. That determines whether a Mitunternehmerschaft (co-entrepreneurship for tax purposes) arises. The benchmark is the actual arrangement, not the heading on the contract. The Bundesfinanzhof (Germany's federal tax court) confirmed this in judgment IV R 24/23 of 13.11.2025: without loss participation and without an obligation to make further contributions, there is no co-entrepreneur status. The consequences of the atypical variant are covered in the atypical silent partnership.

Step 2 — the terms. Here you fix the amount of the contribution, the fixed base return, the profit-dependent component, the minimum term and subordination. A reliable public benchmark for remuneration exists only in the programme segment: Mikromezzaninfonds III works with 8.00 per cent per annum fixed, a maximum of 2 per cent profit-dependent and a 3.5 per cent arrangement fee. There are no market figures for freely negotiated participations.

Step 3 — the circle of addressees. A single, individually negotiated investor triggers no capital markets law. As soon as you approach several investors, the financing becomes an offer, and the thresholds of the KMG 2019 (the Austrian capital markets act) or the VermAnlG (the German investment products act) apply.

Step 4 — resolutions. With a German AG the contract is void without entry in the Handelsregister (§ 294 Abs 2 AktG). For admitting a silent partner to an Austrian GmbH, whether a shareholder resolution is required has not been conclusively settled. In practice you therefore obtain a shareholder resolution even though you may not need one.

Step 5 — form. The basic case is free of form. The trap lies in ancillary agreements: if the contract grants the silent partner an option over a GmbH share, § 15 Abs 4 GmbHG in Germany and § 76 Abs 2 Satz 2 GmbHG in Austria apply. Notarial form, or in Austria a Notariatsakt (an Austrian notarial deed), is then required.

Step 6 — completion. The contribution passes into the assets of the business owner, and the silent partner receives a contractual claim. With an atypical arrangement the assessment procedure under § 188 BAO or § 180 Abs 1 Satz 1 Nr 2a AO follows. In Austria forms E 6 and Verf 16 are the relevant ones.

Form, resolution and register: Austria against Germany

Freedom of form is the practical advantage of this instrument and at the same time the reason for most defective contracts. It also does not apply without exception.

Topic	Austria	Germany
Legal basis of the contribution	§ 179 Abs 1 UGB, passes into the assets of the owner	§ 230 Abs 1 HGB, passes into the assets of the owner
Form in the basic case	free of form	free of form
Register for GmbH and sole traders	no entry in the Firmenbuch	no entry in the Handelsregister
Public company	no separate rule such as § 294 AktG	§ 294 Abs 2 AktG, entry is constitutive
Option over a GmbH share	Notariatsakt, § 76 Abs 2 Satz 2 GmbHG	notarial form, § 15 Abs 4 GmbHG
Resolution requirement, GmbH	not conclusively settled	—
Open regulatory question	§ 1 Abs 1 Z 1 BWG, deposit business	—

Two points are regularly confused in Austria. § 49 Abs 1 GmbHG requires a notarial recording, not a Notariatsakt. The Notariatsakt is found in § 76 Abs 2 GmbHG. Treating the two as the same produces either unnecessary cost or a formally void ancillary agreement.

The second open flank is regulatory. Whether a silent participation with a fixed return and a repayment undertaking can require a licence in Austria as deposit business under § 1 Abs 1 Z 1 BWG (the Austrian banking act) is unsettled. The question matters in practice because that is precisely the structure most often wanted. Anyone choosing it should clear the point in advance with a regulatory lawyer.

The clauses themselves — profit allocation, loss participation, control rights, settlement — are dealt with in detail in the silent partnership agreement. The tax side is set out in tax on silent partnerships.

Prospectus law: when a participation becomes a public offer

As long as you are negotiating with one investor, the question does not arise. It arises as soon as you approach several capital providers. Germany and Austria regulate this in separate statutes with different mechanics.

Topic	Germany	Austria
Framework	VermAnlG	KMG 2019, supplemented by the AltFG
Classification of the instrument	§ 1 Abs 2 Nr 1 VermAnlG (profit participation rights Nr 5)	"Veranlagung" (investment) under § 1 KMG 2019
Prospectus requirement	exemptions in § 2 VermAnlG	§ 2 KMG 2019, exemptions in § 3
Special crowdfunding regime	§ 2a VermAnlG precisely does not cover Nr 1	the AltFG as a separate statute
Prospectus-free thresholds	20 units, EUR 100,000 in twelve months, or EUR 200,000 per investor	EUR 100,000 per investor, below EUR 2 million in twelve months within the EEA, qualified investors, fewer than 150 non-qualified persons per EEA state
Further exemption	—	§ 3 Abs 3 KMG 2019: EUR 5 million over seven years
Document below the prospectus threshold	Vermögensanlagen-Informationsblatt (VIB, an investment information sheet)	simplified prospectus under Annex D, no information sheet
Advertising	—	§ 4 KMG 2019; the former § 4 KMG (old) fell away on 20.07.2019

For Germany the decisive observation is an exemption that does not apply. § 2a VermAnlG, the relief for crowdfunding, does not cover § 1 Abs 2 Nr 1 VermAnlG — that is, precisely the silent participation. Anyone offering a silent participation through a platform therefore has to work through § 2 VermAnlG, not § 2a.

The three exemptions in § 2 Abs 1 Nr 3 VermAnlG stand alongside one another as alternatives. It is enough that one of them is met: a maximum of 20 units under lit a, a total sale price for all units offered of no more than EUR 100,000 within twelve months under lit b, or a price of at least EUR 200,000 per unit and investor under lit c. In practice lit a carries most constellations.

In Austria the AltFG comes into play for crowd structures. § 3 Abs 1 AltFG names EUR 2 million per issuer in twelve months, EUR 5 million outstanding over seven years and EUR 5 million EU-wide in twelve months. § 4 Abs 1 AltFG triggers a disclosure duty from EUR 250,000, and from EUR 750,000 for cooperative shares. For retail investors § 3a Abs 1 AltFG sets a limit of EUR 5,000 per issue and per twelve months; higher amounts are permitted under § 3a Abs 2 AltFG only with a written declaration, capped at twice monthly net income or 10 per cent of financial assets.

One structural difference deserves attention: Genussrechte (profit participation rights) are expressly captured in Germany as § 1 Abs 2 Nr 5 VermAnlG, whereas in Austria they are not expressly named and are caught only by the general clause of § 1 KMG 2019. Anyone choosing between the instruments will find the distinction under profit participation rights and mezzanine capital.

The amendment BGBl. I Nr. 27/2026: only one figure moved

Since 06.06.2026 an amended version has applied in Austria. It concerns only the upper limit for the simplified prospectus, which was raised from EUR 5 million to EUR 12 million.

The prospectus-free line remains unchanged at EUR 2 million within twelve months. Anyone offering above that needs a prospectus document — up to EUR 12 million now in the simplified form under Annex D.

The frequently repeated claim that Austria has adopted an 8 million threshold is wrong. It arises from transposing a European debate onto Austrian law. If someone quotes you an 8 million limit, check the source.

Where you actually find a silent partner

Silent partners do not advertise. The pool consists of private investors, entrepreneurial families and investment companies with mezzanine programmes. They are reached through networks, not through platforms. How a search for capital providers runs as a whole is described under finding an investor.

One clear negative finding concerns business angels. They are not a channel for silent participations. The German INVEST grant supports only the direct acquisition of shares and convertible loans; silent participations do not qualify. Anyone searching through angel networks is searching where the funding logic points in a different direction. The BAND association itself states that there are "no reliable data".

That leaves mid-market investment companies and public programmes. They are the only area in which terms are documented at all — visible in Mikromezzaninfonds III. Everything else is negotiated bilaterally.

What cannot be evidenced

There is no reliable public statistic on the number of silent partnerships in Austria and Germany. Checked without result were the KfW Mittelstandspanel, the BVK, IfM Bonn, Creditreform, Destatis, the Deutsche Bundesbank, Statistik Austria, the BMAW report "KMU im Fokus 2025" and the WKO publication "Wirtschaft in Zahlen 2026". Every concrete figure you read about this market is an estimate without a survey behind it.

The closest thing is the VDB statistic, with 3,079 participations as at 31.12.2024 and a volume of EUR 1.08 billion. That figure does not separate silent from open participations. It can therefore only be used as an upper limit, not as a stock of silent participations.

There are inconsistencies within the statistic too. Table 14 gives contradictory column years, and the volume reported by BayBG contradicts itself at 364 versus 382 million euros. MBG Hessen publishes no remuneration figures.

It is striking how one provider itself qualifies the widespread equity narrative. The FAQ of WKBG in Vienna makes clear that silent participations "jedoch nicht als bilanzielles Eigenkapital" — do not, however, count as equity on the balance sheet. Anyone justifying the exercise by an improved equity ratio should know that sentence before the bank quotes it. A subordinated loan is a possible alternative with comparable effect.

Common mistakes when taking on a silent partner

The template contract from the internet is the most expensive part of the process. In a review of ten freely available templates, none provided for monthly reporting, none for a non-compete binding the silent partner, none for a genuine change-of-control clause, none for a valuation under IDW S 1, and none for a pure book value settlement as the sole rule. Five points that decide the payout figure in a dispute are therefore missing across the board.

The second mistake is the label error. A contract headed "typical silent" that grants the silent partner a share in hidden reserves and far-reaching consent rights is a co-entrepreneurship for tax purposes. The correction then comes from the tax office, retrospectively and with an assessment procedure.

The third mistake concerns the German AG. If the entry under § 294 Abs 2 AktG is forgotten, the contract is void — not provisionally, but from the outset. The contribution has been paid, and the basis for it is missing.

The fourth mistake is the option clause without a notary. It is often drafted as a harmless side agreement and makes precisely that agreement formally void. The silent partner thereby loses the protection he paid for.

The fifth mistake is testing the prospectus question too late. Anyone who only notices after the third commitment meeting that he has made an offer to more than 20 investors has already used up the window for clean structuring. Just as common is neglecting the settlement clause; which computational elements belong in it is shown in the settlement credit. This article is not a substitute for legal or tax advice.

How IGCP supports owners

International German Capital Partners (IGCP) has been advising on capital raisings and participation processes for more than 15 years, with over 100 transactions supported and entirely independent of banks, funds and buyers. When taking on a silent partner, the work begins before the contract.

First the basic choice is made. Typical or atypical, silent participation or minority shareholding, a single investor or a wider offer: these three decisions fix the tax consequence, the formal requirements and the prospectus question. After that, figures, planning and key terms are prepared so that an investor can assess the case without your company becoming identifiable prematurely.

Suitable capital providers are then curated and approached confidentially, several in parallel. Only that produces terms rather than concessions. The commercial points — remuneration, loss participation, subordination, control rights, settlement — are settled before the legal drafting; the legal and tax implementation is done with your own advisers. The typical range is companies with revenues between EUR 300,000 and EUR 15 million, with a focus on niche businesses and scalable models in the DACH region. A process at IGCP takes 3 to 6 months rather than the 6 to 12 months common in the market.

If you want to take on a silent partner, send us the objective and the intended order of magnitude in one sentence to office@igcp.at. You will receive an initial assessment of whether typical or atypical works and whether you touch the prospectus threshold.

Where a full exit rather than taking on a silent partner is on the table, the route runs through selling a GmbH.

FAQ

How do I take on a silent partner?

In six steps: choose between typical and atypical, fix the contribution and remuneration, define the circle of addressees, pass the shareholder resolutions, check the formal requirements, and complete. In the basic case the contract is free of form and is not registered. Under § 179 Abs 1 UGB and § 230 Abs 1 HGB the contribution passes into the assets of the business owner.

Does a silent partnership agreement need a particular form?

Not in the basic case. It becomes subject to formal requirements through ancillary agreements: an option over a GmbH share triggers § 15 Abs 4 GmbHG in Germany and § 76 Abs 2 Satz 2 GmbHG in Austria. Notarial form, or a Notariatsakt in Austria, is then required.

Does a silent participation have to be registered?

Not for a GmbH or a sole trader, neither in the Firmenbuch nor in the Handelsregister. With a German public company, by contrast, entry in the Handelsregister is constitutive: without it the contract is void under § 294 Abs 2 AktG.

From what amount do I need a prospectus?

In Austria the prospectus-free line is below EUR 2 million within twelve months in the EEA (§ 3 KMG 2019). In Germany § 2 Abs 1 Nr 3 VermAnlG applies with three alternative exemptions: a maximum of 20 units, a sale price of no more than EUR 100,000 in twelve months, or at least EUR 200,000 per unit and investor.

What did the amendment BGBl. I Nr. 27/2026 change?

Only the upper limit for the simplified prospectus, raised since 06.06.2026 from EUR 5 million to EUR 12 million. The prospectus-free threshold stayed at EUR 2 million. The claim that Austria has adopted an 8 million threshold is not correct.

Does the crowdfunding relief in § 2a VermAnlG apply to silent participations?

No. § 2a VermAnlG precisely does not cover § 1 Abs 2 Nr 1 VermAnlG and therefore not the silent participation. For silent participations it is § 2 VermAnlG that has to be examined. Below the prospectus threshold, Germany uses the Vermögensanlagen-Informationsblatt and Austria the simplified prospectus under Annex D.

Does a silent participation count as equity?

Not automatically on the balance sheet. The FAQ of WKBG in Vienna states expressly that silent participations do not count as equity on the balance sheet. Equity-like treatment presupposes subordination, a long term, remuneration dependent on results, and participation in losses.