Tax consequences of the MoPeG

The MoPeG will have at least an indirect impact on tax law, as certain exemption regulations for real estate transfer tax may come to nothing in future, even if nothing is to change for 2024 for the time being.

With the Act on the Modernization of Partnership Law (MoPeG), the reform of partnership law will come into force on 1 January 2024, which will have particular consequences for the GbR. Although the MoPeG itself does not contain any changes to tax regulations, the MoPeG nevertheless has indirect effects on tax law. The MoPeG does not change the income tax principles for the taxation of partnerships - taxation is still carried out at the level of the partner after the uniform and separate profit assessment has been carried out for the company. The MoPeG does introduce a new profit distribution standard for the GbR based on the shareholding ratio. However, this only applies if no deviating provision has been made in the articles of association, which is often the case.

In contrast, the MoPeG has a noticeable impact on real estate transfer tax. This is due to the fact that certain exemption regulations for real estate transfer tax are linked to the joint assets of the partners (so-called Gesamthandsvermögen). However, since the MoPeG also gives the GbR legal capacity and allows it to acquire assets in its own name, the MoPeG abolishes the concept of joint assets for partnerships. Instead, all forms of partnerships will in future have corporate assets. As the MoPeG itself does not provide for any transitional regulations or changes to real estate transfer tax law, the tax exemption regulations would come to nothing in future. The federal and state governments have been discussing a reform of real estate transfer tax for some time, which should also solve this problem, but this reform is still a long way off.

Without a new statutory regulation, not only new real estate transactions in partnerships would no longer fall under the tax exemption regulations from 2024, but also real estate transfers already carried out in the past. This is due to the fact that the tax exemption requires the selling partner to hold a stake in the joint assets for at least 10 years (so-called subsequent retention period). However, with the abolition of joint assets, it would be impossible to comply with this subsequent retention period for transfers made before 2024 without further legal changes.

This is where the Growth Opportunities Act comes into play, which the Bundestag and Bundesrat are currently discussing. This initially only provided for a small solution, which clarifies that the abolition of total assets by the MoPeG alone does not lead to a breach of current retention periods. These would only be violated if the share in the company's assets is reduced during the subsequent retention period.

However, in order to eliminate the considerable uncertainty in practice and avoid a hectic wave of transfers before the turn of the year, the Bundestag decided on a major solution instead before the final consultation on the law. According to the planned amendment, partnerships with legal capacity will continue to be regarded as Gesamthand and their assets as Gesamthandsvermögen for the purposes of real estate transfer tax until December 31, 2024.

In practice, therefore, nothing would initially change if the Growth Opportunities Act is also passed unchanged by the Bundesrat on this point. It is true that the Bundesrat has referred the bill to the Mediation Committee. With regard to this point, however, the Bundesrat had proposed a comparable regulation, meaning that the Mediation Committee is unlikely to make any changes here. In the coming year, the federal and state governments want to tackle the reform of real estate transfer tax law, including new regulations for property transfers to partnerships for both old and new cases.

In future, the MoPeG may also have an impact on tax law in another respect. Since 2022, commercial partnerships have been able to switch to corporation taxation. However, this option is not available for sole traders or GbRs. However, due to the changes to the GbR as a result of the MoPeG, it is to be expected that the option regulation will also be opened up to the GbR through a future amendment.