GbR establishment: Kickstart your enterprise with firma.de

Partners of a GbR are fully liable for damages with their private assets. There is no liability limitation as in the case for UG or GmbH shareholders.

It is important to consider all the potential financial consequences before forming a GbR.

As a general rule, the GbR partners are automatically the managers of the business. The partners can choose one or more partners to look after the day-to-day management of the GbR.

In comparison to other corporate forms, the formation costs of a GbR are much lower.

Unlike incorporated companies, there are no fees for notary services or for entry into the Handelsregister (commercial registry).

Notarised articles of association are not mandatory like with the GmbH, but a partnership agreement still needs to be made. Although a verbal agreement is legally recognised, it is highly recommended to have it in writtginn to avoid disputes.

Your partnership agreement should include:

• a definition of the individual shares
• how profit and losses are to be distributed
• regulations concerning working hours, vacation and illness
• decision-making processes
• rules concerning share transfers

We strongly recommend that all parameters of the partnership agreement be set out in a GbR contract before starting your business. Using a template can be an excellent way to streamline this process.

All commercial GbR must register at their local trade office (Gewerbeamt) and submit a tax questionnaire to the tax office (Finanzamt) to receive a sales tax identification number (Umsatzsteuer-Identifikationsnummer).

If the GbR is non-commercial, registering the partnership only at a local tax office (Finanzamt) is sufficient.

As a point of difference to its incorporated counterparts, GbRs are not listed in the Handelsregiser (commercial register). The only exception is when a GbR’s annual turnover hits € 500,000. In this event, the GbR must convert into a general partnership (offene Handelsgesellschaft [oHG]) and enter into the commercial register (Handelsregister).

Both the GbR and its respective partners’ income are taxable.

A GbR is subject to trade tax unless its profit remains below €24,500 within the financial year.

If its business profit is higher than € 17,500 within a fiscal year, VAT is also applicable.

The respective partners have to pay income tax on the profit that they personally receive from the GbR.

Pros:

• no mandatory minimum share capital
• easy formation process with fewer formalities
• notarisation is not necessary
• entry into the commercial register (Handelsregister) is not required
• accounting exemptions

Cons:

• personal liability