The unwanted GbR: Tips for shared workspaces

updated on 9. January 2023 5 minutes reading time
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Shared workspaces are popular as a way of keeping overheads down. But, self-employed people run the risk that the authorities will classify such an arrangement as a GbR (civil law partnership) and tax it accordingly.

Get to know the facts about when the tax office can suddenly decide your freelance business is actually part of GbR – and avoid any nasty surprises.

 

Contents

 

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Andreas Munck

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Got questions about setting up a business in Germany?

  • Startup expert
  • 10+ years experience

Hi, I’m Andreas and I’ve been advising businesses in Germany for over a decade. I’d be happy to call you and answer any questions you have in a one-on-one consultation.

 

Sharing a workspace is risky

Freelancers, solo self-employed and start-ups often take advantage of the financial benefits of an workspace sharing arrangement. But, seldom do entrepreneurs realise that this can lead to unintended consequence.

The tax office can decide a GbR exists based purely on outward (or inward) appearance. A contract or even intention is not a prerequisite!

 

Consequences of an unintentional GbR

If the tax authorities assume that a GbR exists, the implicated parties will legally share liability or debts. This extends to even five years after the the shared workspace has been dissolved.

Such a situation also has tax consequences: The partners will have to pay VAT and trade tax (Gewerbesteuer) plus considerable back taxes.

Internal GbR vs. external GbR

Self-employed people connected with each other (whether in the office or virtually) have not infrequently found themselves in  an “internal GbR” thanks to the tax office. This is not perceived as such by the outside world. Therefore, different rules apply to them compared to an “external GbR”. For example, the partners, unwittingly or not, must assume liability for outstanding rent payments of another partner.

 

Avoiding an unintentional GbR

If the tax office suspects an internal GbR, there is often an audit. Self-employed persons can avoid or refute the suspicion by demonstrating a clear separation of the companies.

Separation in external perception

It must be obvious to customers and outsiders that the businesses are separate and operate independently.

  • Separate doorbell signs
  • Individual corporate identities
  • Separate websites

Distinct tenancies

Make sure you have a clear, contractually clean subtenancy. A concrete contract is good evidence of an actual office partnership.

Accounting separation

If the parties are working together on a project or for a client, then they should invoice each other. Make sure that letterheads are individually designed. It should be clear who is the invoicing party and who is the invoice recipient.

Transparency in joint projects

Prevent a creeping GbR formation: If a cooperation is planned, there is the possibility of a temporary working group (ARGE). This is usually regarded as a GbR for tax purposes. Draw up a partnership agreement for the specific project – with a clear business purpose and time limit. This way you separate the joint project from the remaining, independent business activities.

No mixing of staff

Do not share employees. You have joint staff you almost automatically enter into a GbR.

 

Assessment by the Finanzamt (tax office)

Unfortunately, there are no concrete guidelines and such an assessment is discretional. Thus, self-employed persons should do a risk analysis before they start anything.

Sometimes, however, it can make sense to set up a GbR. This is especially true if synergies are foreseeable.

For Freiberufler working together, the GbR is a great option.

 

[BEGIN: Insert an Image between this tag]

Andreas Munck

[END insert Image]

Still got questions about setting up a business in Germany?

  • Startup expert
  • 10+ years experience

Hi, I’m Andreas and I’ve been advising businesses in Germany for over a decade. I’d be happy to call you and answer any questions you have in a one-on-one consultation.

 

Want to learn everything you can about the GbR?

Our GbR series has you covered: 

 

1. What is the GbR?
2. The pros and cons of the GbR
3. The unwanted GbR<<<
4. How to start a GbR

 

The Master list of all Company Formation articles can be found here.

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