Tax advisors Alexia Huber & Partner Steuerberatungsgesellschaft mbB supports and advises numerous associations of freelancers on all questions relating to the determination of profits.
Freelancers – especially doctors, dentists, lawyers, patent attorneys, architects, engineers, IT specialists, management consultants – often come together to pursue their professional activities together.
This is regularly done by establishing a partnership. Either a partnership by civil code or a Partnerschaftsgesellschaft mbB is very popular. The legal form of the Partnerschaftsgesellschaft has become particularly attractive because it now enables freelancers to agree on a limitation of liability for professional mistakes (Partnerschaftsgesellschaft with limited professional liability).
For tax purposes, partnerships with income from freelance activities, regardless of whether they are a partnership by civil code or a Partnerschaftsgesellschaft, qualify as co-entrepreneurs.
For tax purposes the result of the co-entrepreneurship is first determined on its own and then assigned to the individual co-entrepreneurs – freelancers involved – in a second step.
The distribution rules for the profit share attributable to individual partners are based on the profit distribution key agreed between the partners.
This is generally laid down in the signed articles of association. Often profit distribution agreements in articles of association also contain opening clauses that allow the partners to make flexible profit distribution agreements through corresponding simple shareholder resolutions. Since such shareholder resolutions are not bound to any form, they can easily be recorded by writing them down.
This allows the partners while observing certain rules, to react to different developments within the group of partners and to take them into account. For example, different qualifications, working hours, employee assignments, and profit contributions can be balanced and considered.
This can go so far that the profit share of each partner virtually poses him as if he were doing the freelance work alone, i.e. economically more of shared office space than a partnership.
A mechanism for the distribution of results is, for example, the agreement on a regular upfront remuneration for partners, which is paid in advance and is independent of the participation rate and individual profit contribution. Only the remaining result is then distributed to the partners according to the agreed profit distribution key.
Furthermore, agreed calculation models can weigh different contributions by individual partners to the success of the partnership, for example regarding acquisition, processing, employee support, administrative work and assign them to individual partners in a targeted manner.
A special feature of the partnership is that it can also have an area that is only assigned to individual shareholders for tax purposes. These so-called special business assets are owned by a partner, but serve the partnership and are included in the tax return of the partnership and are solely assigned to the respective partner.
This instrument is very often used for the partner vehicle fleet, for example. Every partner can have the vehicle he likes – he buys or leases it himself. He bears the expenses for the vehicle on his own and these expenses are allocated to him in the context of the tax return of the partnership, reducing his income and taxes. Through this instrument, different preferences of the partners can be mapped without envy and cost-neutral to the other partners.
It should be noted that in the case of partnerships that are subject to VAT (not for doctors, for example), this model should be linked to the agreement of an activity remuneration for the individual partners. This allows the partners to be reimbursed for the sales tax that they have paid for their vehicle and its operating costs. Along with the activity remuneration, you are classified as an entrepreneur for VAT purposes with the authorization to deduct input taxes paid and get them reimbursed by the tax office.
The best agreements are of no use if they are not correctly represented in financial accounting. In this case, it has proven useful to work with the accounting software DATEV Unternehmen Online. The client uploads his incoming and outgoing invoices to the accounting software tool. The invoices can then be integrated into financial accounting and posted. Receipts are assigned to the booking records, which means that the process can be traced transparently. As tax consultants, we of course also offer payroll accounting with DATEV Lohn und Gehalt in addition to financial accounting, profit determination and tax returns.
The profit and profit shares, the consideration of special operating expenses or results from supplementary balance sheets of the partners of freelance partnerships are declared in the uniform and separate declaration of determination (declaration of profit determination).
As tax consultants in Munich, we advise freelance partnerships on the design and accounting implementation of individual profit distribution agreements that meet the expectations of the partners involved and at the same time take account of tax requirements.