Types of German business partnership

There are a number of business partnership forms available to start-up businesses in Germany. They are often of a hybrid nature. They have their own legal personality, however in some instances partners are taxed directly.

Gesellschaft des bürgerlichen Rechts – GbR

Partnership (governed by civil law)

Min. share capital (€)

n/a

Min. partners

2

Liability

Personal unlimited

A partnership (governed by civil law, Gesellschaft des bürgerlichen Rechts) consists of at least two partners who can be either natural or legal persons. The partners agree in a partnership agreement to promote the achievement of a common goal in the manner stipulated in the agreement.

A GbR need not pursue a commercial purpose. A group of freelance lawyers may agree, for example, to share offices but run individual practices.

GbRs are suitable for the achievement of both short-term and long-term objectives, provided they operate within the limits of a “small business threshold”. The major benefit of a GbR is that it requires low start-up capital and has low administration obligations.

The partners are jointly and severally liable for the business. Their liability is unlimited.

The partnership agreement need not be in writing and may be made orally. However, it is highly advisable for the agreement to be in writing so that all partners are properly aware of their rights and duties and to ease negotiations if a dispute between the partners arises. Generally, the partnership agreement does not require notarisation, but may do in certain circumstances.

The partnership comes into existence immediately after the partnership agreement is signed. The business does not need to be entered in the commercial register.

The partners may all participate in the management of the partnership or are free to decide otherwise.

Where the partnership agreement doesn’t stipulate otherwise, the law implies that the profits and losses of a GbR are shared equally between the partners, regardless of the proportion invested.

Offene Handelsgesellschaft – oHG

General commercial partnership

Min. share capital (€)

n/a

Min. partners

2

Liability

Personal unlimited

A general commercial partnership is the commercial equivalent of the GbR. An oHG generally arises where business partners intend to run commercial operations from the outset or where a GbR exceeds the ‘small business threshold’ in terms of its commercial activities.

If a GbR expands so much that it exceeds the ‘small business threshold’, it automatically becomes an oHG and must be entered in a relevant commercial register. The oHG comes into existence after registration.

A number of different factors are considered when assessing whether a GbR has exceeded the ‘small business threshold’. Two of them, for example, are revenue and profit. If these exceed 250,000 and 25,000 euros respectively, the business could be considered to have exceeded the small business threshold.

An oHG must have at least two partners. They are jointly and severally liable for the business and their liability is unlimited.

The partners may all participate in the management of the partnership or they may appoint a managing director.

The difference between an oHG and a GbR is important because the two legal forms are governed by different legal frameworks. The oHG, for example, is subject to the German Code of Commerce which generally contains stricter rules than the German Civil Code.

Kommanditgesellschaft – KG

Limited partnership

Min. share capital (€)

n/a

Min. partners

2

Liability

General partner: personal unlimited

Limited partner: share capital

A limited partnership (Kommanditgesellschaft, KG) consists of at least two partners. One partner is known as the ‘general partner’ (Komplementär), the other partner is the ‘limited partner’ (Kommanditist).

The general partner is personally liable for all the debts and obligations of the firm. The limited partner is only liable up to the amount contributed in share capital to the partnership, as stated in the commercial register. Both partners can be either natural persons or legal persons.

There is no prescribed capital investment, but the partners must determine an amount in the partnership agreement.

If the partnership can be run without investment, the partnership agreement should at least stipulate the limit of liability for the limited partner. If the general partner is a GmbH, its liability is limited to its assets. A KG with a GmbH as a general partner is called a ‘GmbH & Co. KG’.

The partnership agreement can be either in writing or oral, although, for legal certainty, it is highly advisable to have a written agreement in place. The agreement does not need to be notarised. A KG must be registered in the commercial register.

Partnerschaftsgesellschaft – PartG

Professional partnership

Min. share capital (€)

n/a

Min. partners

2

Liability

Personal unlimited

A professional partnership (Partnerschaftsgesellschaft, PartG) is similar to a partnership formed under civil law (GbR).

The difference between a PartG and a GbR is that a PartG can only be formed by natural persons who are members of a freelance or independent profession (the so-called freie Berufe). These include, for example, lawyers, doctors and translators. In some cases, legislation stipulates which professions the partners must belong to in order to be able to work together.

The partners create the partnership in order to practice their own professions. The partnership itself does not participate in commercial trade.

Generally, the partners of a PartG bear joint and several personal liability for the whole of the partnership’s obligations.

If only one partner conducts a business transaction, the liability for fault is limited to that partner.

Liability for fault in exercising professional duties in relation to some professional sectors may be limited by law. However, at the same time the professional is obliged to purchase professional indemnity insurance.

In contrast to a GbR, partners of a PartG have a further option of limiting their liability in the partnership agreement. The so-called ‘PartG mbB’ is open to lawyers, patent lawyers, accountants and tax advisors. In this case, liability is limited to the partnership’s assets. Partners wishing to take advantage of this benefit must purchase professional indemnity insurance.


Here you can find an overview of our services in the area of starting a business in Germany. For further information, contact our team of German lawyers on +49 (0) 221 / 951 563 0 or use our contact form.

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Christian Solmecke is a partner at the law firm WILDE BEUGER SOLMECKE. He is the author of numerous legal publications in the area of internet and IT law. He is also an associate lecturer for social media law at the Cologne University of Applied Sciences.

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