The partners of a partnership under civil law (Gesellschaft des bürgerlichen Rechts) (GbR) remain liable for the tax liabilities of the organisation even after it has been sold or wound up. That was the decision of the Administrative Court of Freiburg (5 K 2543/13).
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: Even the sale of shares in a GbR or its dissolution do not absolve former partners from their obligations under tax law, since a GbR notionally continues to exist until all obligations under tax law have been fulfilled or prescribe. This means that claims can still be raised against former partners with regard to the tax liabilities of the GbR. That was the decision reached by the Administrative Court of Freiburg in its ruling of January 13, 2015.
In the case before the Administrative Court of Freiburg, a GmbH (Gesellschaft mit beschränkter Haftung) [German limited liability company] was a partner in a GbR. It later sold its shares to a German stock corporation. The competent tax office took the view that the purchase price was subject to trade tax and issued a trade tax assessment notice to this effect. The lawsuits brought by the GbR against the assessment notice were unsuccessful and the tax office ultimately demanded that the GmbH pay the trade tax as a former partner of the GbR.
The GmbH’s legal action against this was unsuccessful. The AC of Freiburg ruled that the GmbH was liable under civil law for the tax liabilities of the GbR. It went on to state that it is insignificant that the shares had been sold or the GbR wound up, because a GbR notionally continues to exist until it has met all of its obligations under tax law or these have become time-barred. In doing so, the AC followed the German Federal Court of Justice’s (Bundesgerichtshof) jurisprudence. According to this, the partners of a GbR are accessorily liable for the partnership’s liabilities. A GbR notionally continues to exist until the obligations under tax law have been fulfilled or have lapsed due to the statute of limitations.
A GbR, also known as the “BGB company” (Bürgerliches Gesetzbuch) [German Civil Code], is the simplest form of partnership. It provides the partners with a lot of creative leeway. However, it is not simply the case that the GbR is solely liable with its company assets; the partners are also liable with their personal assets for the liabilities. Even an individual partner can be subject to third-party claims from creditors. In order to minimise risks and make effective use of a GbR’s creative leeway, lawyers who are competent in the field of company law can be consulted when the partnership is being established as well as with respect to other legal issues.