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Wind turbine investments are often sold in Danish limited partnerships (”kommanditselskaber” or ”KG’er”) or the German equivalent, GmbH & Co. KG (”KG”). The KG and K/S structure is characterized by the fact that at least one general partner is personally liable for the company’s debt (“komplementaren”), whereas the other limited partners are only liable in accordance with their ownership share of the company. In our wind turbine projects the general partner is always a German or a Danish private limited company (“GmbH” or “ApS”, respectively), which means that the financial risk is always limited to the nominal capital in the general partner.

The advantage of investing through a KG or K/S is mainly that the investors can pool their investments enabling them to participate in larger investments, than they would each be able to individually. This happens without increasing the risk of each investor beyond that investor’s ownership share in the company. Furthermore, since the K/S and the KG is not considered a legal entity for tax purposes, taxable deficits in the KG or K/S can be set off in each investor’s personal income.

We always offer our wind turbine investments through German KG’s. The reason why we use the German KG instead of the Danish K/S is that this enables our investors to get the German VAT refunded each month. A Danish K/S cannot be registered for VAT in Germany, which means that the VAT can only be refunded in accordance with the so called “tilbagesøgningsregler”. Experience has shown that this process is extremely lengthy, and we have seen processes go as long as 2 years. This can of course affect the liquidity in the company, if there are large VAT refunds outstanding.

For the investor it makes no difference from a tax point of view, whether the investment is made through a Danish K/S or a German KG.