How to Open a General Partnership GbR in Germany

Starting a company in Germany can feel overwhelming especially when deciding on the right legal structure. One of the simplest, most flexible options for two or more founders is the General Partnership GbR in Germany (Gesellschaft bürgerlichen Rechts). Also known as a Civil Law Partnership GbR, this form is widely used by freelancers, micro‑enterprises, joint ventures, and informal business alliances.

In this guide, we explore what a General Partnership GbR in Germany is, why you might choose it, the steps to set it up, legal and tax considerations, recent legal changes, advantages and disadvantages, and strategic tips before wrapping up with how Ease to Compliance supports the formation and compliance of GbRs.

What Is a General Partnership GbR in Germany?

A General Partnership GbR in Germany, or Civil Law Partnership GbR, is one of the most basic legal business structures under German law. It exists when two or more people agree to pursue a common purpose such as freelancing together or sharing a project without forming a more complex company like a GmbH.

Key characteristics:

• No minimum capital required just mutual agreement and contributions (money, assets, labor)

• Can be created verbally or via a simple written agreement

• Automatically forms upon agreement, especially if engaging in shared business activity

• Partners share unlimited personal liability both private and business assets can be pursued for debts

This flexibility makes the General Partnership GbR in Germany a popular first step for small-scale collaborations.

Who Uses a Civil Law Partnership GbR?

The Civil Law Partnership GbR suits a diverse range of situations:

• Freelancers & small tradespeople: Creative duos, designers, photographers, and micro-businesses

• Joint practices: Doctors, lawyers, architects often choose GbRs for ease and trust

• Project partnerships: Temporary alliances for instance, an event organizers or construction sub-contract teams

• Startups in formation: Pre-GmbH/UG stage, to collaborate cheaply before scaling

• Property co-ownership: Holding shared real estate under GbR (e.g., house flips or rentals)

GbRs are especially common for groups starting small with minimal cost and complexity.

How to Form a General Partnership GbR in Germany

1. Choose Your Purpose and Partners

• At least two partners (individuals or legal entities) are required

• Define a common goal (e.g., “provide consulting services in digital marketing”) and what each partner contributes money, skills, or assets

2. Draft a Partnership Agreement

Although not legally required, a written agreement is strongly recommended to avoid disputes. A good agreement should include:

• Purpose of the GbR

• Each partner’s contributions (cash, assets, services)

• Management and representation rules

• Profit/loss sharing ratios

• Decision-making procedures

• Entry and exit clauses

• Procedures for dissolution

3. Register with Relevant Authorities

• Trade Office (Gewerbeamt): Required if the GbR operates as a business (non-freelancer activity)

• Tax Office (Finanzamt): Must register to obtain a tax number

• VAT Registration: Necessary if not using the small business exemption

• Chamber of Commerce: Sometimes required depending on the business activity

• eGbR Option: As of 2024, registration in the new Gesellschaftsregister (Company Register) is available, creating an “eingetragene GbR” (eGbR) with legal capacity

4. Open a Business Bank Account

While not mandatory, it’s highly recommended to open a business bank account in the name of the GbR to keep finances separate and transparent.

5. Set Up Accounting

The GbR usually uses Einnahmenüberschussrechnung (EÜR), a simple cash-based accounting method. However, if turnover exceeds certain thresholds, full accounting may be required.

Recent Legal Changes: MoPeG 2024

The Modernization of Partnership Law (MoPeG) came into effect on January 1, 2024, bringing several key updates:

• GbRs now have recognized legal capacity, allowing them to hold property and enter into contracts independently

• The new Company Register (Gesellschaftsregister) allows voluntary registration of GbRs as eGbRs

• eGbRs gain the ability to participate in legal proceedings, own real estate, and appear in public records

• Changes in partnership structure (e.g., entry or exit of partners) no longer automatically dissolve the GbR unless specified

• Transfer of partnership interests is now easier with the consent of all partners

These changes make the General Partnership GbR in Germany a more attractive and flexible legal form for many entrepreneurs.

Advantages of a General Partnership GbR in Germany

1. Easy and Fast Formation
   No notarization or capital requirements make it one of the fastest business structures to set up.

2. Low Cost
   Minimal administrative and legal costs make it ideal for small or freelance ventures.

3. Flexibility in Structure
   Partners can define their own management, decision-making, and profit-sharing rules.

4. Tax Transparency
   The GbR itself is not taxed on profits. Instead, each partner pays personal income tax on their share.

5. Ideal for Trusted Partnerships
   Works well for founders who know and trust each other, such as co-founders or spouses.

6. Suitable for Small Ventures
   A perfect legal form for temporary collaborations, pilot projects, or creative joint ventures.

Disadvantages of a Civil Law Partnership GbR

1. Unlimited Personal Liability
   Each partner is personally liable for the debts of the GbR with their private assets.

2. Not Suitable for All Businesses
   Businesses requiring high investment or limited liability protection may find the GbR structure risky.

3. Challenging to Raise Capital
   Investors usually prefer limited liability structures like UG or GmbH.

4. Informality Can Be a Limitation
   Some clients or suppliers may prefer to work with companies that have a more formal legal form.

5. Trade Tax Applies for Commercial Activities
   If the GbR is considered a commercial business rather than a freelance practice, trade tax (Gewerbesteuer) applies.

6. Conflicts Can Arise Without Clear Agreements
   In the absence of a detailed partnership agreement, disputes may be difficult to resolve.

GbR vs. Other Legal Forms

UG (Entrepreneurial Company) vs. GbR

• Formation: GbR is faster and cheaper; UG requires notarization and share capital.

• Liability: GbR has unlimited liability; UG has limited liability.

• Taxes: GbR profits are taxed at partner level; UG is subject to corporate tax and trade tax.

• Credibility: UG is seen as more formal and trustworthy for investors and institutions.

GbR vs. GmbH (Limited Liability Company)

• Formation Cost: GmbH requires at least €25,000 in share capital and notary fees.

• Liability: GmbH protects personal assets; GbR does not.

• Suitability: GmbH is better for high-revenue or high-risk businesses, or when external funding is required.

In summary, the General Partnership GbR in Germany is ideal for simple, trust-based ventures with low risk and minimal regulatory needs. For larger or riskier businesses, UG or GmbH may be more appropriate.

Legal and Tax Considerations

• Tax Identification: Partners must register with the tax office and receive a tax number.

• VAT: The GbR can apply for VAT exemption under the small business regulation (if revenue is below €22,000 in the previous year and expected to be below €50,000 in the current year).

• Trade Tax: Freelancers are exempt, but businesses engaging in trade are liable.

• Accounting: Simple cash-based accounting is sufficient unless turnover exceeds thresholds.

• Reporting: No annual reports or disclosures unless the GbR registers as an eGbR or operates commercially.

When Should You Register as an eGbR?

Registering as an eGbR (eingetragene GbR) is optional but offers several benefits:

• Legal personality: The GbR can appear in public registers, hold property, and be a party in legal proceedings.

• Real estate transactions: Registration is required if the GbR wants to buy property.

• Credibility: Enhances the reputation of the GbR for clients, partners, and financial institutions.

eGbR registration involves filing with the local district court (Amtsgericht) and updating the partnership agreement to reflect the new status.

Practical Tips for Forming a GbR

• Draft a comprehensive written agreement covering roles, responsibilities, and financials.

• Get insured against liabilities and risks to reduce exposure.

• Maintain clear financial records and open a separate bank account for the GbR.

• Keep turnover and profit thresholds in mind to remain within simple tax rules.

• Plan for the future think about converting to UG or GmbH if the business scales.

Sample Timeline for GbR Formation

Why Choose a General Partnership GbR in Germany?

To recap, here’s why many entrepreneurs choose this form:

• Quick and affordable setup

• No capital requirements

• Maximum operational freedom

• Low administrative burdens

• Flexible and partner-friendly

• Now strengthened legally thanks to 2024 MoPeG reforms

For freelancers, co-founders, and small project teams, the General Partnership GbR in Germany offers a compelling balance of simplicity and legal structure.

How Ease to Compliance Can Help

At Ease to Compliance, our firm assist entrepreneurs, freelancers, and small teams in launching and managing their Civil Law Partnership GbR with confidence. Here’s how our team helps:

• Drafting professional and customized partnership agreements

• Handling trade and tax office registrations

• Advising on eGbR registration and documentation

• Setting up banking, accounting systems, and compliance schedules

• Providing ongoing legal, tax, and administrative support

Let us simplify your journey to forming a compliant and efficient General Partnership GbR in Germany so you can focus on what matters most: growing your business.

Need help setting up your GbR? Contact Us today and take the first step toward business success in Germany.

FAQs On General Partnership GbR in Germany

Question 1. Can a foreign national start a General Partnership GbR in Germany?
Answer: Yes, foreign nationals can form a GbR in Germany, but they may need a valid residence permit and must comply with local immigration and trade laws.

Question 2. Is it possible to convert a GbR into a UG or GmbH later?
Answer: Yes, a GbR can be converted into a UG or GmbH if the business grows. This involves formal dissolution of the GbR and forming a new legal entity with notarization and capital requirements.

Question 3. Can a GbR hire employees or interns?
Answer: Yes, a GbR can hire employees, but it must register as an employer with social security authorities and comply with German labor laws, including payroll tax and insurance obligations.