Ship insolvency - Loss offsetting for limited partners
June 26, 2014 | 30,00 EUR | answered by Dipl.-Kfm. Frank-Olaf Illiges
Dear Sir or Madam,
Over the past years, I have invested as a private investor in three companies through a limited partnership (GmbH & Co KG). Unfortunately, all three companies have gone into insolvency due to the unwillingness of the banks involved to refinance.
Is there a tax possibility to claim the lost capital as a deduction? If so, can this be offset against income tax, other income, or income from a business operation (also investments in GmbH & Co KG)? As a one-off deduction or spread over the years? Which section of the tax code would be applicable?
In this context, it is often mentioned that losses are only tax-relevant from a substantial GmbH participation (at least 1%, etc). On the other hand, it would contradict the principle of equality if only large investors or institutional investors could claim losses, while small investors cannot.
Below are some information about the affected investments:
1. Investment in a biogas plant, joined in 03/2006:
Investment €20,000, total investment €7.0 million, limited capital €3.4 million, external financing €3.6 million
2. Investment in a cargo ship, joined in 03/2010:
Investment €25,000, total investment €27.1 million, limited capital €11.8 million, external financing €15.3 million
3. Investment in a cargo ship, joined in 06/2011:
Investment €50,000, total investment €27.4 million, limited capital €4.5 million, external financing €22.9 million
Thank you for your valued assessment.
Kind regards,
Dear inquirer,
Thank you for your inquiry, which I am happy to answer taking into account your contribution and the rules of this platform.
Please note that my explanation is based on the situation presented, and that adding, omitting, changing information, or the ambiguity of the information can change the tax result. Please note that this does not replace individual comprehensive advice.
According to § 15a para. 1 sentence 1 of the Income Tax Act (EStG), the share of the loss of the limited partner in the partnership may not be offset against other income from business operations or income from other sources, to the extent that a negative capital account of the limited partner arises or increases. Therefore, a loss offset with other sources of income is limited to your liability amount (capital contribution) in the individual limited partnerships, totaling EUR 95,000. The tax authority separately determines the offsettable loss (§ 15a para. 4 EStG).
The losses in the amount of your lost limited partner contributions can be offset against profits from other business operations in the calendar year of their occurrence. If a loss remains after this, it can be offset against other types of income (i.e. income from agriculture and forestry, self-employment, non-self-employment, rental and leasing, and other income) of the same calendar year.
If a loss still remains, it can be carried back to the immediately preceding calendar year and deducted from the total amount of your income (§ 10d para. 1 sentence 1 EStG). However, you can choose to waive the loss carryback entirely or partly (§ 10d para. 1 sentence 5 EStG). In that case, the loss will be carried forward to the following calendar year and deducted from the total amount of your income (§ 10d para. 2 EStG). The loss offset occurs in the individual calendar years before the deduction of special expenses and extraordinary burdens.
Best regards,
Dipl.-Kfm. Frank-Olaf Illiges
Tax consultant
Am Wieksbach 55
33378 Rheda-Wiedenbrück
Phone: 05242/4055666
Fax: 05242/4055677
Email: office@illiges-steuerberatung.de
Website: www.illiges-steuerberatung.de
