No co-entrepreneurial risk for a silent partner without a risk
Co-entrepreneurial risk is understood to mean participation, under corporate law or in an economically comparable manner, in the success and failure of a commercial enterprise. This risk is normally conveyed through the participation in profit and loss and in the hidden reserves of the assets, including goodwill. In this respect, current definitions of risk bearing in this regard were recently decided by the highest court.
In the case that reached the Federal Fiscal Court (Bundesfinanzhof,BFH), the issue was whether silent partnerships in a GmbH [limited liability company] had resulted in the formation of an atypical silent partnership. With regard to the possibility of an existing co-entrepreneurship, the question was whether a particularly pronounced co-entrepreneurial initiative on the part of the silent partners could - in the absence of loss participation - compensate for what might, at most, be a minimal partnership risk. The Baden-Wuerttemberg tax court, in its judgement of 23.2.2023 (case reference: 3 K 2942/20) considered the absence of loss participation not to be harmful and had accepted the conditions for the assumption of a co-entrepreneurship because of the pronounced co-entrepreneurial initiative. However, the BFH, in its ruling of 13.11.2025 (case reference: IV R 24/23) overturned the decision of the lower court and upheld the complaint.
In the opinion of the highest fiscal judges, co-entrepreneurial risk means participation, under corporate law or in an economically comparable manner, in the success and failure of a commercial enterprise. This risk is normally conveyed through the participation in profit and loss and in the hidden reserves of the assets, including goodwill. To this end, a capital contribution is required from the partner through which the partner’s assets could be encumbered. Merely waiving a future share of profits is however not sufficient.
The BFH clarified that for a - at best weak - co-entrepreneurial risk it is not sufficient if, without loss participation and an obligation to make additional capital contributions, the sole risk that exists for the silent partner is that the partner would not receive any share of the profits and, thus, the partner’s promised provision of services as a capital contribution and any costs would have been to no avail.
