Contribution of land to the joint estate According to a judgement of the Baden-Württemberg Finance Court dated 1 March 2017, gift tax may be levied on partnerships – 7 V 2515/2016 – trigger
If an asset eligible for contribution is transferred to a partnership without consideration or for reasons not required under company law, the hidden contribution may be subject to gift tax for the partners of the partnership as recipients of the gift.
If a private plot of land is contributed to the joint estate without consideration (e.g. an increase in the shareholding), this constitutes a hidden contribution.
In the case of a hidden contribution to the joint assets of a partnership, it is not the joint estate but the joint owners who are to be regarded as having been enriched by the contribution for the purposes of gift tax law.
If the transfer is made in return for the grant of company rights, this does not constitute a hidden contribution but rather a private sale, which may, where applicable, trigger income tax if the private property is contributed in exchange for company rights before the expiry of the 10-year capital gains period.
For further information, please do not hesitate to contact our specialist tax lawyers and tax advisers.
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