No trade tax addition of profit shares of a US silent partner
- Patricia Lederer
- Jul 4
- 2 min read
New ruling on July 3, 2025: Federal Fiscal Court clarifies limits of addition for silent partners with US connections – What companies and tax professionals need to know now
Frankfurt am Main
July 3, 2025
The verdict in brief – published on 3 July 2025
With its judgment of February 26, 2025 (case no. IR 33/21, published on July 3, 2025), the Federal Fiscal Court (BFH) has provided important clarity regarding the trade tax inclusion of profit shares of silent partners resident in the USA.
Key point: Profit shares of a silent partner resident in the United States may not be added to the tax base under Section 8 No. 3 of the Trade Tax Act (GewStG). The ruling confirms that these profit shares fall under the prohibition of discrimination in the 1989 US-US Double Taxation Agreement and protect the free movement of capital in the EU (Article 63 TFEU).
Background to the proceedings
In the year in dispute, 2000, a German GmbH had a silent partner from the United States. The tax office had included the silent partner's share of the profits as income subject to trade tax, thereby increasing the tax burden. The plaintiff challenged this practice in court.
In advance, the Düsseldorf Finance Court had violated the plaintiff's right to be heard, as the plaintiff had not received any information from the court that was relevant to the decision until the end of the oral hearing.
Important guidelines of the BFH ruling
Right to be heard : A party must be informed of all documents relevant to the decision until the end of the hearing.
Term “other remuneration” in the US DTA : Profit shares of a silent partner are not included.
Free movement of capital and prohibition of discrimination: The addition violates the free movement of capital in the EU and the prohibition of discrimination in the 1989 US Double Taxation Agreement.
Procedural defect: The judgment of the tax court was set aside and referred back for further proceedings.
What does the ruling mean for companies?
This ruling is groundbreaking for companies with silent partners from third countries, particularly the United States. The inclusion of such profit shares for trade tax purposes is not permitted if they fall under the prohibition of discrimination. This significantly relieves the burden on companies and provides planning security.
In addition, the ruling strengthens taxpayers’ rights to a full legal hearing in court proceedings.
TaxPro explains: How we protect your interests
Tax law is complex – and especially with cross-border investments, there's a risk of misinterpretation and additional tax burdens. TaxPro supports you nationwide with over 30 years of experience in tax law and consistently defends your rights in court.
Our experts are familiar with current rulings, such as this groundbreaking Federal Fiscal Court ruling, and will help you calculate your tax burden correctly and ward off unjustified additions.
Learn more and get support
Would you like to know exactly how the Federal Fiscal Court ruling affects your situation? Or do you need help reviewing your shareholding structures and tax burden?
Contact TaxPro – we will provide you with competent, individual and practical advice.
Sources & further links:
Federal Fiscal Court ruling IR 33/21 (Federal Finance Court, February 26, 2025) – Bundesfinanzhof.de
Trade Tax Act (GewStG)
Double Taxation Agreement USA-Germany 1989
