The Feststellung: how a partnership's profit reaches its partners

Metallbau Hollmann Rieger Stein OHG made a profit of 150,000 € in 2025, and its managing partner also drew 60,000 € in remuneration for his work. The OHG pays not a single cent of income tax on any of it. It still has to file a return, and three income tax assessments at three different tax offices depend on the notice issued in response.

The partnership earns, the partners pay the tax

An OHG, a KG or a GbR is not a taxpayer for income tax purposes, because only natural persons owe income tax. The profit the partnership earns is therefore attributed to its partners and taxed in their hands, each at their own personal rate and together with the rest of their income.

The basis is § 15(1) sentence 1 no. 2 EStG. Business income includes the profit shares of the partners of an OHG, a KG and any other partnership in which the partner is to be regarded as an entrepreneur of the business. The statute calls such a person, in brackets, a Mitunternehmer, a co-entrepreneur.

The same provision draws a second circle. Whatever a partner receives from the partnership for working in its service, for a loan granted or for assets made available also counts as business income. These are called special remuneration. For a co-entrepreneur, a managing director's salary is therefore not employment income.

The taxable profit of a co-entrepreneurship thus has two layers. The first is the partnership's own profit, split among the partners according to the agreed key. The second is the special remuneration, attributed solely to the partner who received it.

One tax stays with the partnership: trade tax, which attaches to the business and not to the person. How the trade income arises and how trade tax is credited against the partners' income tax under § 35 EStG is explained in the two trade tax courses. This module follows only the income tax path.

A practical problem remains. The three partners from the opening live in three towns and have three residence tax offices. If each office worked out the profit share on its own, three authorities could assess the same profit in three different ways. That is exactly what the separate and uniform determination prevents.

§ 179 AO: a notice of its own for the tax bases

Normally the tax bases are merely a dependent part of the tax assessment: the office works them out, calculates and assesses the tax. § 179(1) AO makes an exception. Where a statute so provides, the tax bases are determined separately in a determination notice of their own.

That notice is addressed to the person to whom its subject matter is attributable for taxation. If several persons are concerned, the determination is made uniformly towards them, in one single notice for all. Hence the full name: separate, because detached from the tax assessment, and uniform, because it binds all participants at once.

If someone participates in the subject matter only indirectly, through another person, § 179(2) sentence 3 AO allows a special separate determination to that extent. This covers trust arrangements and sub-participations, which are rare in small partnerships but not excluded.

And if the tax office forgets something? Where a necessary determination has been omitted from a determination notice, § 179(3) AO requires it to be made good in a supplementary notice. The original notice stands and is simply completed with what was missing.

The first trigger: several persons sharing the same income

§ 180(1) sentence 1 no. 2 letter a AO names the main case. Income subject to income tax or corporation tax, together with the related tax bases, is determined separately when several persons participate in it and the income is attributable to those persons for tax purposes.

The provision does not look at a legal form but at participation. An OHG or a KG falls under it, but so does a community of heirs holding an inherited apartment building, or two professionals running a practice together. The only thing that matters is that several persons earn the same income.

Paragraph 3 carves out two cases. There is no determination when only one of the participants is taxable in Germany on the income. Nor is there one in cases of minor significance, especially when the amount and its split are settled, as with a flat let jointly by spouses who are assessed together.

Whether such a case exists is not for the taxpayer alone to decide. The tax office may state in a notice that no separate determination is to be made, and that notice counts as a tax assessment. Anyone who thinks the return can be skipped is well advised to settle this with the office first.

Paragraph 4 adds a final exception for joint ventures whose sole purpose is to perform one single contract for work or for work and materials. Two construction firms that team up for one project only therefore do not go through a determination of their own for that venture.

The second trigger: one sole trader, two tax offices

Letter b is less well known. It concerns not several participants but the trader, professional, farmer or forester acting alone. Their business income is determined separately when, on the facts at the end of the profit period, the office competent for the determination is not also competent for their taxes on income.

In everyday terms: the business and the home lie in the districts of different tax offices. The business tax office determines the profit, and the residence tax office takes it over into the income tax assessment. No partnership is needed for this, only two competences that diverge.

What counts is the situation at the end of the profit period, not on the day of filing. If it changes afterwards, for instance through a move, § 180(1) sentence 2 AO expressly settles local competence for earlier determination periods as well, by reference to § 18(1) nos. 1 to 3 in conjunction with § 26 AO.

The minor-significance exception applies here too, because § 180(3) sentence 1 no. 2 AO extends it by analogy to letter b. The route through the form differs from the partnership's; the form page on the determination return for a sole business walks through it step by step.

Who files, and by when

§ 181(2) sentence 1 AO opens with a principle: the return must be filed by whoever the subject matter of the determination is wholly or partly attributable to. Sentence 2 spells this out for the typical cases, and that is where the line runs between associations with and without legal capacity.

For an association with legal capacity, that is an OHG, a KG or a registered GbR, the association itself is primarily obliged to file and each partner only secondarily. For associations without legal capacity and in other cases, such as a community of heirs, every participant is obliged to file.

In the letter b case it is simply the entrepreneur. For everyone, sentence 3 applies: once one obligated person has filed the return, the other participants are released to that extent. Two partners who each submit the same determination return separately only generate queries.

The form is prescribed. Under § 181(2a) AO the return is transmitted electronically using the officially prescribed data set. Paper is available only on application, where electronic transmission would cause undue hardship, and then on the official form bearing a handwritten signature.

For the deadline, § 181(1) AO refers to the general rules on conducting taxation. The same filing deadlines as for annual returns therefore apply, including the longer deadline when a tax adviser is engaged. Both deadlines and their extension are covered in the course on objections, deadlines and deferral.

The sanction, by contrast, is a rule of its own. For a tax return, the late-filing surcharge is measured against the tax assessed, but a determination notice assesses no tax. § 152(7) AO therefore takes the determined income as the yardstick, with a much smaller percentage.

For each month or part month of delay, the surcharge is 0.0625 percent of the positive sum of the determined income, but at least 25 euros per month or part month. Under § 152(10) AO it is rounded down to full euros and may not exceed 25,000 euros.

The minimum only bites on small profits. On 40,000 euros of determined income, 0.0625 percent gives exactly 25 euros; above that, the percentage surcharge exceeds the minimum. A partnership with a profit of 400,000 euros pays 250 euros per month or part month.

The binding effect, and who may object

The real effect of the determination is set out in § 182(1) AO. Determination notices bind the follow-up notices, that is the partners' income tax assessments, insofar as the determinations matter for them. This expressly applies even while the determination notice is not yet final.

That yields the most important procedural rule of this module. Anyone who thinks the determined profit or its allocation is wrong must challenge the determination notice. An objection against one's own income tax assessment does not help, because the residence tax office is bound by the determination and adopts it unchanged.

Who may object to a determination notice is governed separately by § 352 AO. For an association with legal capacity it is the association itself, and the individual partners only once it has ceased to exist. For associations without legal capacity it is primarily the joint authorised recipient.

Two exceptions nonetheless give the individual partner a right of their own. Where the question is who shares in the determined amount and how it is split, anyone affected by the determination may object. The same applies to questions that concern one participant personally, such as their special remuneration.

The time limit and form of the objection are the same as for any other notice; the course on objections and deadlines explains them. The only new element here is the address: the objection targets the notice of the determining tax office, not the notice of one's own residence tax office.

Finally, the bridge to the second module. If a partner applies for the retained-profit relief, § 34a(10) EStG allows withdrawals, contributions and the other bases needed for it to be determined separately as well, by the determining tax office. The determination return then also becomes the place where the figures for the relief originate.