Civil-law corporations (German: GbR / BGB-Gesellschaft)

I. Terminology and essential features

I. A. Terminology:

A trade exists in the case of an independent legal activity recognisable to the outside designed for lastingness and achievement of a profit which is not a freelance profession (e.g. doctors, lawyers, tax counsellors etc.) and is not primary production (agriculture etc.).

In Germany, we have freedom of trade. Everyone who wishes to exercise a trade has the right to do so as a matter of principle.

The GbR is a partnership based on a partnership agreement without legal capacity in order to support a purpose jointly pursued by the partners. Sections 705-740 BGB (German Civil Code) contain the law of the GbR in general. In Germany, a GbR can also operate a trade aimed at achievement of a profit.

An enterprise running a trade can be organised in two different ways and its legal situation can be regulated according to different laws. Like any enterprise running a trade, the GbR must also pay attention to the regulations of the Trades Regulation Act (GewO). Enterprises from a certain order of magnitude and also enterprises voluntarily entered in the Register of Commerce are also covered by the organisation law regulations of the German Commercial Code (HGB). The HGB calls them merchants, regardless of whether they are operating commercial trade in the closer, conventional sense.

Merchants are obliged to have themselves entered in the Register of Commerce. Enterprises running a business operation which need not be set up in a commercial manner according to its nature and scope need not be entered in the Register of Commerce. On the other hand, they are only obliged to register a trade with the responsible trades office. As a distinction from a merchant, these enterprises of a smaller order of magnitude are referred to as petty traders or also simply traders. These enterprises running a business operation according to its nature and scope, which need not be set up in a commercial manner, can have themselves entered in the Register of Commerce (voluntarily) and are thus deemed merchants with all rights and duties. A GbR becomes a general partnership (oHG) as a result of the entry.

If a plurality of persons are the proprietors of an enterprise running a petty trade, this corporate structure is referred to as a civil-law partnership (GbR).

A community of merchants formed by a plurality of persons on the other hand is called OHG (general partnership).

The following explanations relate exclusively to an enterprise running a trade which has organised itself in the form of a GbR.

As very few mandatory statutory directives exist for a GbR, there is a very broad area for organising the individual case. As a result of this extraordinary adaptability and because no particular formal or examination directives have to be fulfilled to set it up, its scope of application is to be regarded as very broad. The main disadvantage is the unlimited liability of all the partners.

I. B. Essential features

Corporate form

The GbR is the basic form of all partnerships. It is a partnership of the simplest type. At least two petty traders can merge for joint exercising of their trade in it.


The corporate assets are part of the partners’ assets (jointly owned).

Constitution, executive organs

The GbR has no legal personality. It is thus not the bearer of any rights and duties itself. Instead, the rights and duties affect the individual partners personally. The partners attend to the management jointly.

Legal situation of the partners, liability

The partners themselves are not merchants. The corporate assets are liable for corporate debts, likewise all the partners personally and without limitation with their private assets as joint and several debtors. A limitation of liability is possible, but only applies towards informed third parties.

Like all freelance workers in Germany, the members of a GbR are normally not liable to social insurance (pension, health, social care and unemployment insurance). Voluntary further insurance in statutory health insurance schemes is possible for former salaried employees. In addition, there is the possibility of applying for compulsory or voluntary insurance in the statutory pension insurance scheme. In some branches, an entrepreneur is also subject to insurance in statutory accident insurance (employers’ accident insurance scheme) if he does not have any employees.

II. Formation of a GbR

II. A. Most important requirements  


A GbR originates through a partnership agreement of no less than two partners. Partners can be natural and legal entities, also foreign ones. Business partnerships can also have holdings as partners.

A change of partners is only possible with the consent of all partners unless the agreement determines otherwise.


A minimum capital is not necessary.


Any purpose permitted by law can be considered as the object (e.g. also handicraft and other services). Unlike a general partnership and a limited commercial partnership, a GbR does not operate a commercial enterprise.

A GbR runs a trade, which need not be managed commercially according to the nature and scope if its business operation has only reached a slight size. This is the case if the partners are active alone or with only a few employees or not on a full-time basis, the turnover or the taking of loans is slight, the business procedures have not reached any particular dimension overall. For the assessment of whether an enterprise has to be managed commercially, the annual turnover, nature and scope of the business processes, taking of loans, size of the business premises, number of employees, nature of accountancy etc. are of particular importance. If an order of magnitude, which differs depending on the branch, is exceeded (e.g. because the business volume has increased in the course of the years), the GbR automatically becomes a general partnership (oHG) without an entry into the Register of Commerce being of the essence. The organisational law directives of the HGB are then to be applied to it. It is obliged to have itself entered in the Register of Commerce.

Name of the company

A GbR does not have a corporate name. The letterheads are to contain the surnames and at least one complete first name of each of the partners and the address under which they can be summonsed (P.O. Box is not sufficient). Although there is no longer any central directive of trade law demanding these statements on letterheads due to the abolition of § 15 b Trades Regulation Order (GewO), the necessity of providing these statements on letterheads can however result - depending on the individual case - from competitive law (misleading business situation, § 5 sub-section 1 sentence 2 no. 3 Unfair Competition Act - UWG -) and corporate law directives (§§ 18, 37 HGB). In the use of business documents and invoices, this follows from fiscal directives, § 14 sub-section 4 in combination with § 14 a sub-section 5 UStG (German Turnover Tax Act).

The Service Information Duties Ordinance (DL-InfoV) of March 12, 2010, also requires a service renderer to provide his first name and surname in a clear and comprehensible form before the conclusion of a written contract or rendering of a service. In addition, the address, telephone number (fax), e-mail.

Additions in the form of a logo or an establishment designation are admissible as long as they do not arouse the impression that it is a question of a company entered in the Register of Commerce.

II. B. Formal and publication directives

Partnership agreement

No form has been prescribed for the conclusion of the partnership agreement. It is not even necessary for a written agreement to be concluded. However, this is to be recommended for reasons of legal security. As no formal directives exist, the GbR originates towards the outside no later than the public appearance (participation in the market).

The partnership agreement should regulate the following: object, nature and scope of the partners’ contributions, management and representation power, allocation of profits and losses, ending of the company and departure of partners.

> Sample agreement for a GbR

Partners’ resolutions are to be passed unanimously if the partnership agreement does not provide otherwise.

Provision with capital

The corporate assets as jointly owned assets form independent funds in relation to the assets of the individual shareholders.

A partner’s contribution can be cash, contributions in kind or the rendering of services.

Appointment of executive organs

Alongside the partners, no specific management organs exist.

Fulfilment of publication directives

A GbR cannot be entered in the Register of Commerce.

III. Mode of function of a GbR

III. A. Management of the GbR

Acting executive organs

Management to the inside

Management is attended to jointly (principle of self-organisation). A power of joint management applies. The approval of all partners is necessary for any transaction as a matter of principle. In addition, it is possible for the partners to entrust one or more partner(s) with attendance to certain transactions in the individual case. Other agreements can also be made.

Representation to the outside

Representation to the outside towards third parties is done by the partners. The scope of the representation power matches the agreements made. It can be limited at will. Possible limitations of the representation power must be recognisable for third parties. If not determined differently, a joint representation power exists matching the joint management. Thus, legal transactions are only binding if they are concluded jointly by all the partners. If the partnership agreement provides for single management, this can also mean single representation.


III. B. Control and annual financial statements

Control by the partners

Non-managerial partners also have a right to personal notification about the company’s affairs. For this purpose, they can have insight into the business books and papers.

Accountancy and annual financial statements

As a non-commercial enterprise, a GbR is not obliged to keep commercial books. It can also document its business procedures (in particular for the Inland Revenue Office) in the form of a cash journal or by a cash accounting method.

IV. Taxes

A GbR is a partnership. Partnerships themselves are not subject to income tax or corporation tax. Instead, the profits are established separately in a standardised way and directly ascribed to the partners. The partners’ shares of the profits are subject to income tax or also corporation tax, depending on their legal form.

Further information can be found in our brochure Accounting and Taxes – Information for People Setting Up a Business.