I. Background

In family-owned partnerships in particular, it is often intended that not all partners contribute to the company in proportion to their respective interest. Instead, only certain partners are required to make a capital contribution. These are known as disproportionate contributions (disquotale Einlagen) and can occur for various reasons, e.g. regarding wealth succession planning. This approach enables family members to participate in the private assets without granting them direct and unrestricted access to the assets contributed to the partnership.
However, if the contributing partner does not receive adequate consideration in return for their contribution to the partnership (e.g., in the form of partnership rights or by having the contribution attributed to their individual capital account) this raises the question of whether such a contribution constitutes a gift, thereby triggering gift tax.

II. Gift Tax Implications of Disproportionate Contributions

A gift within the meaning of the Inheritance and Gift Tax Act (Erbschaft- und Schenkungsteuergesetz, ErbStG) occurs whenever a asset transfer results in the enrichment of the donee at the expense of the donor. In addition, the asset transfer must be made gratuitously (see Section 7 para. 1 no. 1 ErbStG). Applied to the case of a disproportionate contribution, the contributing partner transfers value to the partnership without receiving any consideration corresponding to the value of his contribution. Consequently, in the case of a disproportionate contribution, the requirements for a taxable gift may be met (cf. Federal Fiscal Court, “BFH”, judgment of 5 February 2020 – II R 9/17, BStBl. II 2020, 658).
However, it remains unclear who ultimately benefits from the disproportionate contribution. Given the capacity to have rights and obligations (Rechtsfähigkeit) of the partnership on the one hand, and the principle of transparency (Transparenzprinzip) that applies to partnerships for inheritance and gift tax purposes on the other, both the partnership itself or the individual partners could be considered as donee.

III. Gift to the Partnership

Classifying a disproportionate contribution as a gift to the partnership generally does not meet the requirement of a gift within the meaning of the Inheritance and Gift Tax Act. Typically, a partner’s contribution is made for reasons connected to the partnership (“causa societatis”), for example to strengthen the partnership or improve its financial position. Hence, a contribution aimed primarily at furthering the partnership’s objectives is incompatible with the notion of a gratuitous transfer and therefore does not constitute a gift to the partnership.

IV. Gift to the other Partners

According to the case law of the BFH, the requirements for a gift from the contributing partner to the other partners are met if the other partners do not make corresponding contributions or the contributing partner does not receive any consideration in return (cf. BFH, judgement of 5 February 2020 – II R 9/17, BStBl. II 2020, 658). From a tax perspective, it is irrelevant that not the individual partners but the partnership is party to such transaction. This means that, for gift tax purposes, the donee (the other partners) does not correspond to the donee under civil law (the partnership).
Since 1 January 2024, the donee in the context of transfers to and from partnerships is finally determined by law. The Act to Modernise Partnership Law (Gesetz zur Modernisierung des Personengesellschaftsrechts, MoPeG) abolished the principle of joint ownership (Gesamthandsprinzip), under which partnership assets were held jointly by all partners. In response to this, the new section 2a ErbStG clarifies that, for inheritance and gift tax purposes, the principle of joint ownership will continue to apply. Furthermore, section 2a ErBStG also addresses who is to be regarded as the donee. According to section 2a sentence 2 ErbStG, in cases where a partnership receives assets, its partners are deemed to be the donees.
It remains to be determined what exactly is transferred in the case of a disproportionate contribution. This is particularly important for assessing whether, and if so which, exemptions under the Inheritance and Gift Tax Act may apply.

V. Object of Enrichment and Tax Exemptions

The object of enrichment could, in principle, be either the asset contributed or the increase in value of the partner’s interest in the company resulting from the contribution. While the law itself does not provide any guidance on the object of enrichment in cases of disproportionate capital contributions, the BFH held that, in the case of disproportionate contributions to a partnership, the enrichment of the other, non-contributing partners consists in their participation in the contributed asset (BFH, judgment of 4 June 2025 – II R 18/23, DStR 2025, 2481). The case specifically concerned the so-called family home exemption (Familienheimbefreiung), under which transfers of property between spouses are fully exempt from inheritance and gift tax, provided the property is the main residence (section 13 para. 1 no. 4a ErbStG). In the opinion of the BFH, the contribution of the property to the partnership leads to a co-ownership “via the partnership”, which was sufficient to benefit from the family home exemption. Since all other requirements were also met at the time of the transfer, the exemption had to be granted (contrary to the opinion of the tax authorities). As a result, the transaction did not trigger any gift tax liability.
In addition to this decision of the BFH, the prevailing opinion in legal literature considers section 2a ErbStG as a statutory basis for this approach. If the legislator (contrary to the position under civil law) considers the co-partners of the partnership to be enriched in proportion to the assets contributed, the logical consequence is that the tax exemptions should also be applied to the co-shareholders involved.

VI. Conclusion and Practical Implications

In the context of disproportionate contributions, it is important to be aware that such contributions may, for tax purposes, constitute a gift. From the perspective of inheritance and gift tax law, the recipients of such a disproportionate contribution are always the co-partners, contrary to the approach taken under civil law.
Furthermore, it can be stated that the case law and legislative developments described above provide greater clarity regarding the object of enrichment and the applicability of tax exemption provisions. However, the BFH decision discussed here, relating to the exemption for family homes in the context of a partnership between spouses, has not yet been published in the Federal Tax Gazette (Bundessteuerblatt). As a result, it is not (yet) binding for the tax authorities beyond the individual case. It seems, that the tax authorities have not yet reached a final position regarding disproportionate contributions.
For example, it remains unresolved whether the reasoning of the BFH applied the ruling presented here can be extended to the preferential gift tax treatment of business assets (schenkungsteuerlichen Begünstigungen für Betriebsvermögen) (Sections 13a and 13b ErbStG). This question arises, e. g., in cases involving disproportionate contributions of shares in a corporation to a partnership. In this respect, it is not yet settled, at least not at the level of the highest courts (höchstrichterlich), whether the preferential treatment for shares in corporations (see Section 13b para. 1 no. 3 ErbStG) requires the recipient to become the legal owner of the transferred shares. If so, this would exclude the application of the tax exemption in cases of disproportionate contributions to partnerships.
In the opinion of the Hamburg Fiscal Court (FG Hamburg), the exemption provisions in sections 13a et seq. ErbStG are also applicable in cases where shares in a corporation has been transferred to a partnership (so called disproportionate hidden contribution, eg. FG Hamburg, decision of 27 February 2024 – 3 K 117/22, DStRE 2025, 99). However, there is currently no decision from the BFH on this specific issue. It therefore remains to be seen how the legal situation will develop.