How is a corporate salary determined

Upfront profit and special payments in partnerships

Table of Contents

1 Two components in determining the profit of the shareholder
1.1 Two-stage profit determination
1.2 Scheme of determining the winnings
2 The first stage: the profit share
2.1 The regular derivation
2.2 Advance / advance profit
3 Special payments for activities in the service of the partnership and for the transfer of assets
3.1 Overview
3.2 Scope of the co-entrepreneurial activity fees according to § 15 Paragraph 1 Clause 1 No. 2 EStG
3.2.1 Income tax assessment
3.2.2 Sales tax assessment
3.3 Surrender of use of economic goods
4 The problem case: The work remuneration as special operating income, advance profit or withdrawal?
4.1 The (simple) salary booking
4.2 Indirect activity booking
5 Profit advance and trade tax credit (§ 35 EStG)
6 Bibliography
7 Related Lexicon Articles

1. Two components in determining the profit of the shareholder

1.1. Two-stage profit determination

According to Section 15 (1) sentence 1 no.2 sentence 1 EStG, the commercial profit of the co-entrepreneur consists of his share of the profit (half-sentence 1) and remuneration for activities in the service of the PersG as well as for the transfer of assets (half-sentence 2).

There are two levels of profit determination:

  1. the first shows the share of the co-entrepreneur in the total profit of the PersG ("collective" determination level) and

  2. the second shows his personal share in the service of the PersG ("individual" level of investigation).


In practice, the separation is carried out using a form (formerly ESt 1,2,3 B form). There, the terms »work remuneration plus interest for capital transfer (etc.) ./ are shortened somewhat for the individual second level. Special operating expenses «(columns 6–8) are used. The latter means the results from the special balance sheets (→ special balance sheet).

A third component may be added to the annual tax financial statements of a PersG, which is obtained from the so-called supplementary balance sheets (→ supplementary balance sheet). These represent - in addition to the main balance sheet - individual values ​​of a single partner. The statement itself represents necessary deviations of the individual partner, which are recorded as plus / or minus amounts to the balanced flat shares in the main balance sheet. Under the aspect of the factual context, they belong to the first stage of profit determination, under the aspect of the exclusively personal deviation they can be counted in the second category of the profit determination of a co-entrepreneur.

1.2. Scheme of determining profits

The following profit calculation scheme results:

A) Total tax result (a PersG)

B) commercial profit of the partner

I. Result of the co-entrepreneurship

Profit share

Ia supplementary balance sheet results - together

>> if necessary, supplementary balance sheet

II. Special results of all shareholders

>> If necessary, special balance sheet and remuneration for work

Fig .: Determination of the profit of the co-entrepreneurship (A) and the partner (B)

The total income tax result of the co-entrepreneurs (A) is identical to their trade income (§ 7 GewStG).

As part of the uniform and separate profit determination, the collective profit (A) is divided according to the distribution agreement and, together with the respective individual results (Ia + II), forms the commercial profit share of a co-entrepreneur. The profit of a freelance or agricultural and forestry co-entrepreneurship is determined in the same way.

2. The first stage: the profit share

2.1. The regular derivative

The first stage of the determination ("profit share"; it should read: "profit share", since this also includes losses) takes into account the fact that the PersG is an independent subject of profit determination.

At the level of the co-entrepreneurship, the HB profit of the PersG (§ 238 HGB in conjunction with §§ 105, 161 HGB) coming from the commercial balance sheet is transformed into tax law (§ 5 (1) EStG) and forms the starting point as the tax revenue of the co-entrepreneurship for the distribution among the shareholders. Contrary to the mandatory provisions of Section 121 (3) HGB (division by head), the specific profit distribution agreement between the shareholders forms the basis for the division. In Kautelarpraxis (= contract drafting), this division is based on the (fixed) capital account I under customary law.


Deviating from the regular statute of the HGB, in most of the articles of association of a Personal Act, three (sometimes four) capital accounts are created (for the tax classification of the two, three and four account model, in particular for the purposes of Section 15a EStG, see OFD Hannover dated 7.2.2008, DB 2008 , 1350):

  • The Capital account I (also called fixed capital account) is set for each partner according to their original contribution and - apart from additional payments - continued unchanged. As a capital share, this “frozen” variable represents the proportionate share in the assets of the PersG and is at the same time the unchangeable standard for voting rights, the profit and loss share and the share in the liquidation assets.

  • The variable Capital account II records the interim annual earnings shares and, as a rule, also the amounts withdrawn and, if applicable, deposited (additional payments).

  • In the event that the articles of association do not declare the entire profit share to be withdrawable for reasons of equity capital formation, only the profit that cannot be withdrawn is recorded in capital account II.

  • With the differentiated treatment, the profit that can be withdrawn becomes the Capital account III and can in this respect be assessed as a claim for profit distribution against the PersG. The term »settlement account« has also become established for this.

  • In the four-account model, a separate account (»Account IV" or. "Loss carryforward account") guided.

  • Sometimes a clearing account (often also referred to as Capital Account IV) is set up for the "real" claims of the shareholders against the PersG, e.g. from a loan. A capital account IV (with this content) is shown for tax purposes in the so-called special business assets.


Occasionally, a capital account structure is recommended for the PersG in accordance with the equity disclosure in accordance with Section 266 (3) HGB for KapG. It is important to ensure that the terminology used there - in particular with regard to reserves - corresponds to the Personal Law strange is and only on this coordinated Articles of association are compatible.

2.2. Advance / advance profit

An advance profit or profit advance is to be assumed if a shareholder is granted remuneration for e.g. services in advance from the profit on the basis of the articles of association and these are not treated as expenses under commercial law (BFH judgment of 23.1.2001, VIII R 30/99, BStBl II 2001, 621). A profit advance always represents a part of the profit distribution agreement of the company, which must be regulated as a deviation from the dispositive regulation (mandatory right) in § 168 HGB in the articles of association.

An advance profit can be designed as a fixed remuneration, as a fixed or variable interest rate on shareholder accounts or as a percentage of the gross profit (profit sharing, bonus) (see Schäfer in: Das Recht der OHG, commentary on §§ 105-160 HGB, margin no. 26 to Section 121 of the German Commercial Code).

This can be a so-called "real" advance profit to which the beneficiaries are only entitled to the extent that a profit has actually been achieved. Advance payments can also be made independent of profit and owed without a corresponding profit, even in years of loss. Whether this is the case must be determined by interpreting the articles of association (cf. in particular Priester in: Münchener Commentary, margin no. 40 on Section 121 of the German Commercial Code). Schäfer also agrees with this view (loc. Cit. 27 on Section 121 of the German Commercial Code). Accordingly, the functional nature of the upfront profit does not mean that the company's services are made dependent on a positive profit, but this remuneration can also be paid in years of loss. The regulation in the articles of association is decisive. As a rule, the fact that pre-winnings are not dependent on results is supported by the fact that they are fixed, contribution-based remuneration or the company's services to be calculated as a percentage (non-profit). The situation is different if, according to the articles of association, the payment of the remuneration is expressly made dependent on the achievement of a positive result.

In its judgment of October 13th, 1998 (VIII R 4/98, BStBl II 1999, 284), the BFH stated that for the tax assessment - within the limits of § 42 AO - regardless of the chosen form of contract, the decisive factor should be what the Contractual partners want to agree on content within the scope of the freedom of contract to which they are entitled under Section 109 of the German Commercial Code (HGB). In this regard, the FG Bremen stated in its judgment of March 6, 2008 (1 K 25/07, EFG 2008, 1609) that it was in the nature of business life that profit shares could be positive, but also negative. According to the established case, commercial law is decisive for the distribution of the profit or loss of a company among the shareholders, especially with regard to tax purposes, i.e. the commercial law profit distribution key. In this way, the shareholders can agree that the distribution of results in relation to the advance profit should also be carried out independently of the annual result. In this way, the shareholder can be entitled to remuneration in the event of a loss as well as a profit.

If an advance payment is to be paid regardless of the generation of a profit, the expenses incurred as a result are to be passed on to the other shareholders in accordance with their share in the loss (Schäfer, loc.cit., Margin no. 28 to Section 121 of the German Commercial Code).

It is true that a remuneration agreed in the articles of association can be a profit distribution agreement or a special remuneration, depending on the structure of the remuneration. A remuneration that is not regulated in the articles of association cannot affect the profit distribution agreement and can consequently never represent a profit advance (BFH judgment of March 14, 2012, IV B 7/11, BFH / NV 2012, 1121).

Special payments (and no advance profit) are to be assumed if the fees for the services are based on a special obligation and represent costs under commercial law. For the treatment of the work remuneration as special remuneration within the meaning of Section 15 Paragraph 1 Clause 1 No. 2 Clause 1 Half Clause 2 EStG, in addition to the treatment as commercial law costs, it is also a prerequisite that there is a special contractual relationship between the company and the shareholder. This separate contractual relationship can be based on the articles of association or another contractual basis (cf. BFH judgment of 13.10.1998, VIII R 4/98, BStBl II 1999, 284). Another indication of a special remuneration is that it is also to be paid in particular in the event of a loss (cf. BFH judgment of January 23, 2001, VIII R 30/99, BStBl II 2001, 621). If, however, there is no unambiguous agreement in the articles of association aimed at this - i.e. treatment as commercial law costs - then, in case of doubt, there is a profit distribution agreement.

The FG Düsseldorf ruled on November 23, 2000 (10 K 3784/96 F, EFG 2001, 204) that for the acceptance of a special payment it is not decisive that there is a separate contractual basis with regard to the obligation to provide the service . The decisive factor for the tax delimitation between profit advance or special remuneration is not the contractual regulation outside of the articles of association, but rather the regulation in the articles of association about the remuneration of this obligation by way of profit advance. In contrast to this, according to the ruling of the BFH, remuneration for work that is agreed in a partnership agreement only qualifies as special compensation within the meaning of Section 15 (1) sentence 1 no To treat costs, in particular, in contrast to a profit advance, are also to be paid if no profit is generated «(BFH judgment of November 14, 1985, IV R 63/83, BStBl II 1986, 58).

The remuneration for work within the meaning of Section 15 Paragraph 1 Clause 1 No. 2 Half Clause 2 EStG is to be understood as remuneration agreements between the company and the shareholder, which would justify civil law claims of the shareholder against the company. Furthermore, if they have not been met by the balance sheet date, they are also to be recognized as liabilities in the overall balance sheet. Society is therefore also economically burdened. In contrast to this, in the case of an advance profit there is no economic burden on the company, since the profit distribution is only an internal regulation between the shareholders. The annual result is not changed by the advance profit regulation, the annual result is only distributed. An economic burden for the company is also to be denied for the reason that the company does not have to pay the remuneration. In the event of a loss, only the residual result to be distributed among the shareholders increases. For these reasons, the advance profit is a common means of taking into account the various shareholder contributions without burdening the company economically.

In purely conceptual terms, a profit (share) can only be distributed after the end of the financial year. As with the (advance) dividend distributions in corporations, it is also permissible in the case of PersG, the shareholders during the year To receive pre-winnings.

On the other hand, backdating of profit agreements after the end of the calendar year is not permitted for tax purposes.

In summary, it can be said that for the tax assessment of the work remuneration it depends on the legal basis for which the company grants the partner the remuneration.

In order for an advance profit to be assumed with regard to an activity remuneration, the following requirements must be met:

  1. articles of association within the framework of the profit distribution agreement,

  2. no commercial law costs,

  3. The work remuneration should be designed as a percentage profit-independent calculable performance of the company.

3. Special remuneration for activities in the service of the partnership and for the transfer of assets

3.1. overview

Section 15 (1) no. 2 sentence 1 half-sentence 2 EStG has the task of largely equating the co-entrepreneur with the sole proprietorship. Just as the sole trader is not allowed to deduct "his" entrepreneur's wages as a business expense when determining profits, remuneration for activities from co-entrepreneurs can reduce commercial profit.

Section 15 of the Income Tax Act does not only include remuneration for the services of individual shareholders in the profit, but also remuneration for:

  • Transfer of capital (granting of loans) and

  • the transfer of use of economic goods (rent, lease, etc.)

From a legal point of view, this is done by re-qualifying the income. Instead of income from wages, leases or capital, the shareholder earns commercial income from the corresponding transfer of use to the PersG. For these revenues, the administration uses the abbreviated expression "special operating income", which is related to expenses as "special operating expenses".

3.2. Scope of the co-entrepreneurial activity fees according to § 15 Paragraph 1 Clause 1 No. 2 EStG

3.2.1. Income tax assessment

Example 1:

In an X-OHG, Y and Z are involved with the same profit ratio. Z also works as a tax advisor and produces a tax optimization concept for the general partnership. For this purpose, he creates an invoice for the OHG on December 20, 2001 for € 10,000, which is shown in the OHG's balance sheets as other liability (December 31, 2001) (offsetting entry: legal advice costs); the bill is not paid yet.

The term “activities of a partner” includes all services that the partner provides in the interests of the company. This not only compensates for "management tasks", but also freelance services (e.g. a lawyer / tax consultant) that a partner provides for the benefit of his / her PersG. Excepted are according to an (albeit) inconsistent BFH-Rspr. only remuneration for which there is no apparent cause under company law or sales transactions between the Personal Act and the shareholders that are concluded at arm's length terms (BFH judgment of October 28, 1999, VIII R 41/98, BStBl II 2000, 339 - for a work contract). With the decision of April 24, 2002 (BFH judgment of April 24, 2002, IV B 9/01, BFH / NV 2002, 1292), the BFH has the (company-free) Exclusive area for shareholders who provide services to their Personal Law, however, it is alarmingly extended: The architect's fee for a building of his GbR was added to the general, i.e. market-oriented, exchange of services and not to the social sphere. The consequence of this is: Treatment as a freelance service according to § 18 EStG.

With the »architectural judgment« of the BFH of April 24, 2002 (loc. Cit.), The Sphere of the PersG then leave when im providing the tax concept no - in the broadest sense - corporate law contribution is seen or when a WG that can be activated offers that can "take up" the consideration.

Solution 1:

However, both prerequisites are not met:

  1. The tax concept has just been drawn up for the OHG and beyond that has no market value, which means that - due to the lack of marketability - there is no WG and

  2. and in addition, Section 5 (2) of the Income Tax Act prohibits the activation of an immaterial WG created in the company.

  3. Result: Z remains with his service in the area of ​​the X-OHG. As a counterpart to the passivation of the debt, Z must enter another claim in the special balance sheet (counter-entry: investment income). A cancellation of the liability in the company code of the OHG would be wrong, since it owes the payment.

3.2.2. Sales tax assessment

In the question of managing director remuneration of a PersonalG, the BFH rulings of 6/6/2002 (VR 43/01, BStBl II 2003, 36) as well as of January 16, 2003 (VR 92/01, BStBl II 2003, 732) on sales tax (- availability) of the managing director's services, new findings become recognizable, which the administration (Section 1.6, Paragraph 3 et seq. UStAE) has agreed to.

According to this, management and representation services are against a guaranteed Special fee are rendered, sales taxable and the character of the sales tax unit between PersG and shareholder is therefore withdrawn. The opposite case (no sales taxability) is basically present if it is a profit-related remuneration, i.e. the services are compensated by a participation in the profit and loss of the PersG.

With the judgment of March 3, 2011 (VR 24/10, BStBl II 2011, 951), the BFH decided that a fixed remuneration that the general partner of a KG with management and representation authority receives from this for his liability according to §§ 161, 128 HGB is subject to sales tax as payment for a uniform service that includes management, representation and liability. The tax authorities reacted in their letter of November 14, 2011 (IV D 2 - S 7100/07/10028: 003, BStBl I 2011, 1158) with a change in the VAT application decree. Accordingly, not only a uniform service provided for a special fee, which includes management, representation and liability, is subject to sales tax. The management, representation and the assumption of liability can be the subject of a sales taxable exchange of services if a special fee is paid, even in the case of isolated provision (see section 1.6, paragraph 6 UStAE). If a company provides services to its shareholders in return for payment on the basis of the law of obligations and if the shareholders make personnel available to it in direct connection with this on the basis of company law, there is an exchange-like turnover (see section 1.6, paragraph 6a UStAE).

3.3. Surrender of use of economic goods

The shared apartments made available for use represent so-called special operating assets. Separate special balances are created for them, from which special results (special operating income ./. Special operating expenses) can be derived.

See there → special balance sheet.

4. The problem case: The work remuneration as special operating income, advance profit or withdrawal?

4.1. The (simple) salary booking

As instruments for the profit-effective recording of the work remuneration, especially in the later correction of previously neglected posting to profit or loss, internal balance sheet measures (qua withdrawal) or options lying off the balance sheet (qua off-balance sheet addition) come into consideration. The only difference lies in the fixed and updating of the intra-balance sheet profit attribution, since this affects the capital account of the individual partner (and thus the capital of the PersG) in the long term.

The off-balance-sheet addition, on the other hand, is only a singular process in this VZ.

Example 2:

There are three different postings in one fiscal year for the transferred monthly salary of general partner K at X-KG (€ 8,000):

  1. Bank salary,

  2. Privately at a bank,

  3. Content of capital.

    After the December salary has not yet been paid, it is discussed whether

  4. should be booked:

    • Salary of other liabilities or

    • "In the absence of a business transaction" nothing.

Detached from all provisions of the articles of association, the assessment of Section 15 Paragraph 1 No. 2 Clause 2 EStG does not permit a tax deduction for operating expenses from the remuneration.

The different types of postings, in turn, are related to the »open« year-end closing practice at PersG. So it can happen that the (unpaid) managing director's salary is continuously as Profit advance is dealt with and only the remaining profit is distributed among the shareholders. With the most common variant of posting expenses a) the salary, a problem occurs with the development of the capital account. There the managing director salaries are treated as withdrawals and advance profit at the same time.

Solution 2:

  • The difference in the main variants a) (= expense) and b) (= withdrawal), both of which were posted against the bank account, lies in the fact that posting record b) is not profitable, while posting record a) that affects expenses has reduced the KG's profit. It is therefore certain that in a) an addition according to § 15 para. 1 no. 2 half-sentence 3 EStG by € 8,000 per month, namely in the case of K, takes place as remuneration for work.

  • In b), an active inventory item (bank) is rightly reduced, due to the simultaneous booking as a withdrawal, the identical amount according to § 4 para. 1 sentence 1 EStG is added again at the end of the year after the business assets comparison, so that the KG (resp. for K) there is no net effect on profit. No correction is required with regard to tax profit. As a further difference under company law to a), when booking in case b) the K's capital account is debited alone, while in a) all shareholders are debited according to the profit distribution key due to the effect of expenses on the KG.

The technical differences in the booking, depending on whether it concerns advance profit (or "advance profit") or recording as a special remuneration, must also be taken into account.

In the first variant, it comes down to the fact that after the manager's salary has been taken into account in advance as a pro rata profit for the »manager« (general partner, general partnership), only a residual profit remains for distribution to the partners.

In the case of the special remuneration, which may be recorded in the partner's own account, the salary is also taken into account in the managing partner's own company code (Sonder-BV).

In both - correctly posted - variants, however, the personnel expenses are "socialized" (communitized) in the PersG company code, while the tax result is only realized by the active partner.

Continuation of solution 2:

Incident c) was posted incorrectly; instead of a credit on the private account (deposit), the bank account is reduced; required correction booking record:

with capital € 8,000 to the bank € 8,000.

Otherwise, in c), the commercial profit of the K must be increased by € 8,000 special remuneration for tax purposes in accordance with Section 15 (1) No. 2 half-sentence 2 EStG.

The outstanding December wage d) in variant bb) (= omitted posting record) is not caused by the overall tax result, since the KG profit (and thus your trade income) is correctly determined.

However, on the part of the KG, the contractual obligation to pay the December salary according to the completeness requirement (§ 246 HGB) and according to the realization principle (§ 252 No. 4 HGB) is to be shown as a debt (other liability). At the same time, this is the only case (apart from the pension obligation) in which a partner may record the work remuneration in his special balance sheet. Since the special balance sheet can only include WG, the salary entitlement can be activated here as an exception.

This means that (posting record in the special balance sheet: »Salary claim for work remuneration«) this business transaction is also recorded in profit or loss as a real special operating income for the right person (K).

4.2. Indirect activity posting

It is not uncommon for so-called »indirect activity remuneration« to occur in which there is no direct service relationship between the KG and its shareholders. In a case decided by the BFH on July 10, 2002 (I R 71/01, BStBl II 2003, 191), a KG had paid fees to a foreign general partner KapG. The intermediary KapG passed the amounts on to the limited partner of the KG as consideration for his management services in the service of the KG. The First Senate came to new conclusions about the recording as indirect work remuneration, since it was based on the place of work (abroad!) In the appraisal under the treaty law.

5. Profit advance and trade tax credit (§ 35 EStG)

In the case of co-entrepreneurs, the creditable trade tax measurement amount of the respective personal property law must be divided among the shareholders (Section 35 (2) EStG). The distribution takes place according to the contractual profit distribution key, whereby according to § 35 paragraph 2 sentence 2 half-sentence 2 "advance profit shares" are expressly excluded. The distribution within the framework of the uniform and separate determination of the income from business operations is not important. For the purposes of Section 35 (2) EStG, advance profit shares are not to be taken into account regardless of whether they have been agreed as profit-dependent or independent of profit (see BFH decision of 7.4.2009, IV B 109/08, BStBl II 2010, 116). In detail, BMF dated November 3, 2016, BStBl I 2016, 1187.

6. Bibliography

Ritzer / Stangl, the application letter to § 35 EStG - special features in co-entrepreneurship, DStR 2002, 1785; Korezkij, The tax reduction from VZ 2004, StB 2004, 171; Ley, Sonder-BV in the advisory practice, KÖSDI 2003, 13907. Regarding sales tax: V. Schmidt in Preißer, Die Steuerberaterprüfung Vol. 3, Examination 2011, Part B, Chap. III; Kraeusel, UVR 2004, 2; Priest in: Munich Commentary, § 121 HGB; Schäfer in: The right of the OHG, §§ 105-160 HGB.

7. Related Lexicon Articles

→ Supplementary balance sheet

→ Partnerships

→ Special balance


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