What is the GbR? Everything you need to know about the civil law partnership in Germany

Did you know that the GbR is one of the fastest ways to start a business in Germany?


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Andreas Munck

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Got questions about setting up a business in Germany?

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What is a GbR?

The abbreviation GbR stands for “Gesellschaft bürgerlichen Rechts” (also known as BGB-Gesellschaft) – a civil law partnership for two or more partners. It is a universal business structure that is suitable for Gewerbetreibende (commercial traders) and Freiberufler (liberal professionals). A GbR is the simplest form of partnership – boasting a quick and easy establishment process.

Key features

A legal form but not a legal entity

The GbR is classified as a partnership and is not a legal entity (i.e., an incorporated company like a UG or GmbH).

Any legal entity can be a GbR partner

A legal entity can be part of a GbR, as long as at least one natural person is a partner. In other words, all the GbR partners cannot be companies – there has to be at least one human.

The GbR has unlimited liability

The GbR partners are liable with their private assets. In contrast, partners in a corporation can only be held liable with the company’s assets.


It’s unincorporated status gives the GbR greater flexibility

One advantage of the partnership is that the partners can exert more direct influence on their business than shareholders have over a corporation.

The GbR is subject to the German civil code

In §§ 705 ff. BGB regulate the essential legal basis of a GbR.

There are other partnership legal forms in Germany

In addition to the GbR, legal forms such as oHG (general partnership) or KG (limited partnership) also belong to the category of partnerships.


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Andreas Munck

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Would you like a human to explain what a GbR is?

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  • 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.


The accidental GbR

A GbR can automatically happen by accident. For example, many founders share an office and the necessary office supplies to keep running costs as low as possible. This can give the impression of a GbR, even if there is no active cooperation between the office users. But, the tax office (Finanzamt) will be the judge of that.

In fact, if the Finanzamt thinks that a de facto GbR exists, they may send you a hefty tax bill for back payments.


How to establish a GbR

The GbR can be set up quickly and with little bureaucratic effort. This makes a good fit for founders just starting out or who want to test business ideas. Here is a rundown of what’s involved:

  • Calculate the starting capital according to need only. Unlike incorporated companies such as the GmbH, there are no statutory capital or capital contributions.
  • Agree on a corporate purpose (Gesellschaftszweck) for the business with the other GbR partners. The purpose of the GbR doesn’t necessarily have to be commercial (gewerblich). The GbR could have a non-profit business purpose, or be a GbR of Freiberufler (practising liberal professionals).
  • Conclude a partnership agreement (Gesellschaftervertrag) – also known as a GbR-Vertrag (GbR agreement).This legally doesn’t have to be in writing. A GbR contract can be concluded in writing, orally or even tacitly with a handshake. But, do this at your own risk (see the tip below).
  • All GbRs have to register with the Finanzamt (tax office).
  • Only commercial (gewerblich) GbRs have to register their business at the Gewerbeamt (trade office). More on this below.

Are you seriously thinking of starting a GbR? Then this how-to guide is for you. 

It’s best practice to put the GbR contract in writing and have it notarised. If disputes arise or something very unfortunate happens (e.g. a partner has a serious illness or dies), how to handle them has already been agreed to beforehand.


Commercial GbR (Gewerbliche GbR)

Gewerbeamt (trade office)

If your GbR is a commercial operation, you must first register the company with the trade office. A self-employed GbR does not require a trade registration.

Finanzamt (tax office)

After registering the trade, you must register the GbR with the tax office for tax purposes.

IHK & HWK (industry chambers)

You have to also register with the IHK (chamber of industry and commerce) or the HWK (camber of crafts and small businesses), as membership in one of the chambers is mandatory.

Freiberufler GbRs are exempt from this regulation. For them, compulsory membership with the IHK or HWK does not apply. You must then register with the Berufsgenossenschaft (the professional association that oversees statutory accident insurance) responsible for your professional occupation.



Is there a limitation of liability with the GbR legal form?

No. Some GbRs try to give the impression of limited liability by adding “mbH” to their business names. But, this is an illegal misrepresentation because the GbR can never be a limited liability entity. Others try and limit their liability in the general terms and conditions for their services – which is also unlawful.

Find out more about the liability of GbR partners here and how to protect your private assets.

Is a GbR considered a company (Firma)?

No. You can’t enter a GbR in the Handelsregister (commercial register). And because there is no company name without a commercial register entry, the GbR is not a Firma (company). Why? The GbR is not a legal entity but a partnership legal form.

This also means that a GbR doesn’t have a Firmenname (company name) but an Unternehmensbezeichnung (official business name).

When is a GbR actually an oHG?

Certain circumstances can change your GbR into an oHG (offene Handelsgesellschaft, or General partnership) whether you like it or not. But, the nature of these circumstances is hard to pin down.

The most tangible is when your GbR starts generating a high turnover. If this happens, expect the tax office to convert your GbR into an oHG. With an annual turnover of more than €250,000 and more than five employees, the tax office often assumes that the GbR is a “kaufmännischer Geschäftsbetrieb” (“merchant business”).

In Germany, there are certain business types beyond the incorporated entities such as the GmbH or the UG that have to be entered in the Handelsregister (commercial register). These include Kaufleute (merchants) and Handelsgewerbe (commercial enterprise, or commercial trading business). And, of course, the oHG. Generally, these are bigger businesses rather than small businesses or enterprises, which GbRs usually begin as.

Like their incorporated peers, these legal forms have to follow stricter rules, namely the Handelsgesetze (commercial laws).

If the tax authorities think that the circumstances of your GbR need tighter regulations, they might force it to change into an oHG. It is best to ask your tax adviser if you think this is something likely to happen to you.


Simple bookkeeping (einfache Buchhaltung)

Since a GbR is not entered in the commercial register, its accounting rules are far less stringent. No double-entry bookkeeping required! Simple bookkeeping and an EÜR (income surplus statement) are usually enough.

Set your GbR up in the fastest time possible 

We show you how to do it step-by-step.

GbR partner rights and duties

Partners in a GbR have certain rights and obligations. These are defined in the GbR agreement. Instead of regulations set by the GbR partners, only the statutory provisions apply:

  • Each partner is the joint owner of the GbR and has an equal share in the company. Thus, all the partners bear an equal share of the profits and losses.
  • The partners are jointly and severally liable and unlimitedly liable with their private assets.
  • The partners are subject to a duty of loyalty, which means safeguarding the GbR’s interests and avoiding foreseeable damage.

GbR contracts often allocate areas or activities to individual partners. For example, one partner is responsible for marketing, another for sales.

Business assets (Gesellschaftsvermögen)

Since the assets of the GbR are held jointly by all partners, the individual partners cannot dispose of the share they have contributed. They are also not entitled to demand a division of assets, because they are jointly owned by all partners.

Management (Geschäftsführung)

The joint management is the responsibility of all partners, i.e. the GbR is managed jointly by all partners. In practice, this means that all GbR managing partners must be present at every legal transaction and sign every contract.

Therefore, the GbR agreement often establishes a division of labour. For example, setting a monetary value within which partners can act independently.

Just as the powers and privileges can be given to a partner, so can they be taken away. But, it has to be for a legitimate reason, for example, a gross breach of duty or an inability to manage the business.


Dissolution and liquidation (Auflösung und Liquidation)

No matter the business, there should be a plan for winding it down. The best way to do this is to set the rules in the partnership agreement. From a purely legal standpoint, there are three reasons which can lead to the dissolution of a GbR:

  • The purpose (goal) of the GbR was fulfilled or was impossible to fulfil
  • Insolvency
  • Death of a partner

Automatic dissolution

Specifying the provisions in the event of death or insolvency in the partnership agreement prevents the automatic dissolution of the GbR if they happen.


After a GbR is dissolved it is then liquidated. If liquidation rules are not contractually determined, the statutory regulations kick in:

  1. All current business has to be wound up and all debts repaid.
  2. The partners’ contributions and contributions in kind are refunded and returned.
  3. The remaining assets are divided among the partners.


Conclusion: Who is a good match for a GbR?

A GbR is a legal form for teams that want to start a business with the least amount of capital and red tape possible. Both the lower tax burden and the simple bookkeeping are definitely perks. But, the downside of the GbR is unlimited private liability. Ultimately, the risk profile of your business is likely to be the deciding factor.

An incorporated alternative

If limited liability is a non-negotiable, consider forming a UG (haftungsbeschränkt). Shareholders can benefit from the limitation of liability and regulate the company shares with the help of the articles of association. Although slightly more expensive to set up, the minimum share capital is only one euro per shareholder.

Since the UG has to be entered into the commercial register, its company name is (somewhat) protected. However, entry into the commercial register also comes with more red tape. You’ll have to hire a tax adviser to do your double-entry bookkeeping and publish the official Jahresabschluss (annual accounts) – the company’s financial statements and tax returns.


[BEGIN: Insert an Image between this tag]

Andreas Munck

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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.


Our GbR essential reading


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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