Transfer of an asset between partnerships

The legislator is obliged to allow the transfer of assets between partnerships with identical shareholdings at book value.

According to the statutory regulation in the Income Tax Act, in certain cases assets can be transferred from one business asset to another at book value, i.e. without disclosing hidden reserves. This applies both to different business assets of the same entrepreneur and to a transfer within a partnership or to another partnership in which the owner has an interest. However, the law does not cover the transfer of business assets between partnerships in which the same partners have the same shareholding.

The Federal Constitutional Court has classified this loophole as a violation of the constitution that violates equality and has obliged the legislator to introduce a new regulation retroactively from 2001 that also covers such transfers. Pending this new regulation, the court has ordered that the current statutory regulation continues to apply with the proviso that it also applies to transfers of assets between partnerships with identical shareholdings.