Noerr successfully represents UK general partnership and its members against German tax authorities’ subsequent denial of eligibility of “Goldfinger” losses to be set off

Noerr has acted as legal representatives for the members of a UK-based general partnership in proceedings before Münster Tax Court, obtaining a judgment in their favour. In its decision the court held that losses suffered through a UK general partnership in what later became known as the “Goldfinger model” that was legally recognised as a commercial partnership may not be subsequently denied eligibility to set off losses under section 15a(5) of the German Income Tax Act. The court accepted the argumentation put forward by our team led by Carsten Heinz in full (Münster Tax Court, judgment of 24 February 2023 – case: 4 K 1274/19 F; appeal admitted).

In the case at issue, the general partnership had purchased gold in 2007 and sold it again the following year. According to the partnership’s profit and loss statement, this resulted in a considerable loss for 2007, which the claimants argued was to be assessed separately and taken into account within the framework of the negative tax progression clause. This “Goldfinger model” was confirmed by Germany’s Federal Tax Court in 2017.

The responsible tax office subsequently issued an assessment notice stating that the losses could only be set off against future commercial profits achieved by the partnership. The tax office argued that it was unlikely that the claimants would be held liable for debts of the partnership due to the nature and manner of the transaction. Münster Tax Court has now overturned this assessment notice and ruled fully in favour of the claimants. The court held that the partnership’s members could not be compared to limited partners, meaning that the application of section 15a(5) Income Tax Act was ruled out in the first place.

Irrespective of this, the court did not confirm that it would have been unlikely for the claimants to be held liable for debts of the partnership within the meaning of section 15a(5) no. 3 Income Tax Act. The court said that the tax office would have had to prove these circumstances leading to an increase in tax, but failed to comment on this any further. The court has allowed an appeal to be filed against this judgment.

This decision is one of a series of judgments that have meanwhile been issued on the Goldfinger model. Noerr previously achieved another landmark ruling handed down by the Federal Fiscal Court against the tax authorities with a team led by Carsten Heinz (case: IV R 50/14 of 19 January 2017).

Advisors to the general partnership: Noerr

Carsten Heinz (lead), Florian-Felix Marquardt, Christian Garz, Paul Gurr (all Tax)