Citation: Julia von Ah, Petra Caminada, When does the formal liquidation of a general partnership end the independence of the partners? A case study from the field of real estate investments, in zsis) 3/2025, A12, N [...] (publ.zsis.ch/A12-2025)
The two partners, both around 60 years old, of a construction company organized as a general partnership received a favorable offer to sell a property held by the partnership. They took this as an opportunity to sell the remaining properties held by the company as well.
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The two partners, both around 60 years old, of a construction company organized as a general partnership received a favorable offer to sell a property held by the partnership. They took this as an opportunity to sell the remaining properties held by the company as well. The partners not only ceased their property management operations but also discontinued their construction business and liquidated the general partnership. The partnership was struck from the commercial register, and the taxpayer (one of the two partners) was registered with social security as a non-working person. Only the Tax Office of the Canton of Zurich did not treat the taxpayer’s assessment as a liquidation but rather as a continuation of self-employment, because he purchased one property from the general partnership and another from his brother (and the other partner), had them renovated, and rented them out.
The tax office rejected the requested taxation of liquidation gains on the grounds that he was only 60 years old, possessed expertise in commerce and real estate management, and had continued exactly as the general partnership had previously operated. The Tax Appeals Court conducted a systematic review, ruled out a delayed liquidation and commercial trading activity, and ultimately also excluded continued self-employment: The purchase of real estate in the course of the liquidation indicated a private, occasional purchase. Investments in income-generating real estate constituted an attractive private investment. Taxation of liquidation gains pursuant to Art. 37b(1) DBG and § 37b(1) StG ZH is to be granted.
The Tax Appeals Court’s ruling was not published on its website. It became final. It is worth being familiar with it. It is shared joy, not shared sorrow, that makes a friend.
1. Facts of the Case
X.Z., born in 1958 and residing in F., Canton of Zurich, had been running the general partnership “Gebr. X.+Y. Z., Bauunternehmung” (KG Gebr. X.+Y.Z.), which was registered in the Commercial Register, together with his brother, Y.Z., since 1986. The general partnership had its registered office on H. Street in the municipality of M (Canton of Zurich). In 1995, it assumed the assets and liabilities of the dissolved sole proprietorship “V.Z.” in K. and was entered in the C
