MoPeG - Consequences for asset-managing family companies

The Act on the Modernisation of the Law on Partnerships (Modernisierung des Personengesellschaftsrechts „MoPeG“), which will come into force on 1 January 2024, will comprehensively reform the law on partnerships, which has been in force for over 120 years. This also affects asset-managing family partnerships, which are often founded as a partnership under civil law (GbR), general partnership (OHG) or limited partnership (KG).

The core of the legal innovations is the abandonment of the general obligation to hold the company's assets. This was understood to mean that the bearers of the company's assets were not the company itself, but its partners in "their joint and several relations-hip". In future, on the other hand, the legal capacity of the partnership under civil law (GbR) will be recognised, which means that it is itself the bearer of the assets.

Apart from the departure from the principle of joint ownership, the new company regis-ter is of particular importance for family companies. Although registration is voluntary, it is de facto compulsory, for example if the family partnership - as is often the case - holds or wishes to acquire real estate as part of its assets. This is because in future the land register will require the GbR to be entered in the company register if it wishes to acquire real estate or dispose of existing real estate. This means that in future the entry of each change of partners in the land register will no longer be necessary, it will only be carried out in the register of partners.

With the entry in the company register, the company is at the same time obliged to report in the transparency register. This means that the shareholders are published in the company register and the beneficial owners in the transparency register. Whether this is always desired is questionable, but it is likely to lead to an increasing number of applications to restrict access to the transparency register (Section 23 GWB).

It should also be noted that the new regulations on the resolution procedure and on the consequences of defects in resolutions as well as on the appropriation of profits make a review of existing articles of association advisable in any case.

And what does the MoPeG mean for asset-managing family companies in terms of taxation?

In contrast to corporations, which are not transparent for tax purposes and are taxed strictly separately from their partners, partnerships have so far been treated as transpa-rent and their income taxed not at their level but at the level of their partners. This will probably not change for the time being, despite the departure from the general partner principle, since the explanatory memorandum to the law states that the MoPeG does not entail any changes to income tax. It remains to be seen whether this will stand up to a supreme court ruling or even that of the Federal Constitutional Court. In any case, after the MoPeG comes into force, family members will continue to be taxed on a pro-rata basis with the income of the company and not the company itself.

In the ErbStG, the acquisition of shares in an asset-managing company is treated as a (pro rata) acquisition of the individual assets, so that these are taken into account di-rectly with the shareholders (pro rata) at the respective value. Therefore, the question arises, which has not yet been answered, whether these regulations can still be valid after the recognition of the legal capacity of the GbR.

This problem also arises in the case of so-called "disproportionate contributions", i.e. contributions by a partner to the general reserve of a partnership that exceed the value of his share in the partnership assets. In the opinion of the Federal Fiscal Court, these are to be regarded as a gift to the other partners, since the value of their share in the total assets of the partnership increases. How can this reasoning be upheld if the prin-ciple of joint ownership no longer applies?

This incomplete overview alone makes it clear that existing asset-managing family companies should be reviewed with regard to the innovations of the MoPeG and, if necessary, their articles of association should be adapted and the tax developments followed particularly carefully.