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Partnerships

1. Cohabiting partners

More and more unmarried couples live together for various reasons. They may want to see how their relationship stands up over time; they may have had unpleasant experiences in the past; they may not want to lose a pension; or the relationship may simply be seen as something temporary. These situations do not fit into the legal framework of marriage with all its rights and obligations. Instead, the partners have to lay down their own rules for cohabitation and the consequences of a potential break-up. Given the lack of security for both partners and their unfavourable treatment under tax and inheritance law, it makes sense to lay out contractual rules for non-marital partnerships. Cohabiting partners, after all, do not automatically inherit the other’s estate or become forced heirs under law if one of them dies. Their inheritance and gift tax is based on Tax Bracket III, which assigns them a tax-free allowance of EUR 20,000.00 and a basic tax rate of 30 %.

If unmarried partners “jointly” acquire large assets – such as a shared flat – one or the other may be in for a rude awakening if they separate. This can be prevented by a notarial agreement.

Cohabiting partners may also want to look into health care powers of attorney and advance care directives.

A good partnership agreement should also settle parental custody issues since unmarried parents can now share parental custody under reformed parental laws. If the parents were to separate, they would continue to have joint custody unless the family court gave one of them sole custody. If the parents make no provisions, the mother will be granted sole custody.

2. Registered life partnership

Same-sex partners can now establish a registered life partnership that is largely modelled on the statutory concept of marriage. By law, life partners are subject to the “community of equalisation” property regime, which corresponds to the accrued gains property regime for married couples. If the partners wish to have a different property regime or make arrangements concerning alimony or retirement, they can have an individual contract recorded by a notary. In addition, they are placed in Tax Bracket III for inheritance and gift tax, but receive the same personal tax-free allowance as married couples: EUR 500,000.00.