Civil Law Partnership (BGB-Gesellschaft)


The reform of partnership law came into force on January 1, 2024. The reform is based on the Personengesellschaftsrechtsmodernisierungsgesetz (MoPeG). This has resulted in many new regulations, particularly with regard to the GbR, as the GbR has been fundamentally redesigned. The current regulations, which apply to all existing companies without a transitional period, are presented below.

A GbR exists when several people join together to run a small buisness. The legal basis can be found in the German Civil Code (BGB).

To establish the company a verbal agreement is sufficient. A written contrag is not required. Nevertheless, it is strongly recommended that the key points of the merger are set out in writing, particularly in the case that ambiguities or differences of opinion arise at a later date.

I.Terminology and essential features

I. A. Terminology:

The GbR is an association of persons based on a partnership agreement for the support of a purpose jointly pursued by the partners. After the reform, it can be structured with or without legal capacity

In contrast to a GbR without legal capacity, a GbR with legal capacity actively participates in legal transactions and can establish its own rights and obligations. In particular also enter into company commitments. It can also have company assets and be entered in the company register.

The internal company without legal capacity is primarily used to structure only internal legal relationships between the associates.

A GbR with legal capacity exists if the company participates in legal transactions according to the will of all partners. If there is no common will, the company is not a GbR with legal capacity. It is advisable to express the common will through corresponding agreements in the partnership agreement. The common will to participate in legal transactions is also presumed if the object of the GbR is the operation of a company under a joint name.

The GbR is regulated in §§ 705-740 BGB.

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 assets are assigned to the GbR with legal capacity as the legal entity. The assets dedicated to the common purpose, as well as the assets acquired upon fulfillment of the purpose, do not belong to the partners jointly but to the company itself. Therefore only the company itself can dispose of the company assets via the partners who are authorized to represent it.

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. However, according to the latest case law of the BGH, legal personality is partially assumed. According to the BGH, this should be the case if the GbR has become active externally.
Such an external company is equivalent to the other company forms under German law, it can be the legal owner itself and can be sued.

Legal situation of the partners, liability

The GbR is formed by a partnership agreement between at least two partners. Partners can be natural persons and legal entities, including foreign ones. Commercial partnerships may also participate as partners.

A change of partners is only possible with the consent of all partners, unless the contract says something different.
The death or termination of a partner's membership only leads to their departure and not to the dissolution of the company

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.

All partners are personally and unlimitedly liable for company debts with their private assets as joint and several debtors for the full amount of the company's liabilities. The GbR itself is also liable for the company liabilities of a GbR with legal capacity with the company's assets.
Liability oft he shareholders towards third parties cannot be limited.

However, an individual agreement between the individual shareholder or the company and a specific creditor of the company itself is possible. In case of doubt, it must be assumed that such an agreement is not permitted within the framework of general terms and conditions.

§ 728b BGB limits the subsequent liability of shareholders who have already left the company. They are only liable for the company's liabilities incurred prior to their departure if they fall due within five years of their departure and the claim has been legally established, for example

II. Formation of a GbR

II. A. Most important requirements  

Registered office of the company

A distinction is made between the administrative seat (the place where the business of the GbR is actually conducted) and the contractual seat (a different place in Germany agreed as the seat in the articles of association).
In the case of an unregistered GbR, the registered office of the company is always the administrative office. A different registered office cannot be determined by agreement in the articles of association.
In contrast, a GbR entered in the company register can exercise a right to choose the registered office, § 706 BGB. This enables the GbR to conduct business outside Germany via a formal contractual registered office in Germany and an administrative registered office abroad.


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.

This should not be confused with entry in the company register. A GbR with legal capacity can also be (voluntarily) entered in the company register. The company register is only intended for the registration of GbRs. In contrast to entry in the commercial register, the GbR retains its legal form when entered in the company register and does not become an OHG (general partnership).

Name of the company
The GbR does not have a corporate name like other company forms but a name. Even after a GbR is entered in the company register, it does not have a corporate  name, but only a 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).
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.

A registered GbR is free to choose its name as long as the applicable principles of company truth (§ 18 HGB) and company clarity (§ 30 HGB) are observed, § 707b No. 1 BGB.

Upon registration, the GbR is obliged to bear the addition "eingetragene Gesellschaft bürgerlichen Rechts" or "eGbR". If no natural person is liable as a partner in the registered GbR, the name must also contain a designation that indicates the limitation of liability, e.g. GmbH & Co. eGbR.

When choosing a name, it should also be noted that omitting the name affix is not sufficient to distinguish between a registered and a non-registered GbR. For example, a registered GbR could take action against a non-registered GbR with the same name but without the name affix in accordance with Section 12 BGB for the unauthorized use of its name.

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 there are no formal requirements, the GbR is regularly created externally in accordance with § 719 Abs.  1 by participating in legal transactions with the consent of all partners. Participation in legal transactions also includes preparatory legal transactions such as setting up a bank account in the name of the company.

If a GbR is voluntarily entered in the company register, it comes into existence towards third parties at the latest when it is entered in the company register.

The partnership agreement should regulate the following: object, joint intention to participate in legal transactions, type and scope of the partners' contributions, management and representation powers, distribution of profits and losses, termination of the company and withdrawal of partners, in the case of a registered GbR also the registered office of the company


Provision with capital
The company assets of the GbR constitute independent assets in relation to the private assets of the individual partners.
Company assets include the contributions of the partners as well as the rights and liabilities of the company.
The contribution of a partner can consist of any support for the common purpose, for example in the form of money, material assets or the provision of services. The modalities of the contributions can be freely agreed.

Appointment of executive organs

Alongside the partners, no specific management organs exist.

Fulfilment of publication directives
The GbR can - but does not have to - be entered in the newly introduced company register. The company register is kept by the relevant local court and is used exclusively for the voluntary registration of GbRs. It is modeled on the commercial register and the partnership register and refers in principle to the provisions of the Commercial Register Ordinance.

In principle, registration is possible for both GbRs with legal capacity and GbRs without legal capacity. However, a GbR without legal capacity automatically becomes a GbR with legal capacity upon registration.

Although registration is not mandatory, it is required if the GbR with legal capacity is to be entered in other registers, such as in a list of shareholders in the commercial register or in the land register.

An advantage of registration is also the possibility to dispose of the shareholders' power of representation with publicity effect, as the content of the company register enjoys the public protection of good faith in the accuracy of the content.

The application for entry in the company register must be made by all shareholders. It must contain the surname, first names, date of birth and place of residence of the partners or their company name, legal form, registered office, the relevant register and the register number if the partner is a legal entity. In addition, the name of the GbR, its registered office and address must be stated, as well as the power of representation of the partners. Finally, it must be ensured that the company is not already entered in the commercial or partnership register.

Registration is carried out electronically by a notary in a publicly notarized form. The shareholders authorized to represent the company must sign the company together with their name.

Registration also has no influence on its status as a small business and does not result in it being considered a commercial business. In particular, it does not become a merchant within the meaning of the German Commercial Code (HGB) after registration.

Once the GbR has been registered, it is not possible for this GbR to return to a non-registered GbR - for example by simply deleting it from the company register. Deletion is only possible when the GbR ceases to exist. This usually takes place after liquidation has been completed. However, the GbR may take on a different legal form.

An entry in the company register enables the GbR to convert to another legal form within the meaning of the Umwandlungsgesetzes (UmwG), as the eGbR is a legal entity capable of conversion in accordance with § 3 Abs. 1 Nr. 1 UmwG. In addition to a change of legal form, other transformations such as a demerger or merger are also possible.

In addition, a change of status that preserves the company's identity is also possible by applying for a "transfer" from the company register to the commercial register.

It should be noted that the eGbR is subject to the obligation to report to the transparency register after registration. Details of the beneficial owner(s) as well as any related changes must be entered in the transparency register

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.
Adoption of resolutions
In contrast to the management, the internal decision-making and decision-making of the GbR takes place by means of a resolution of the shareholders. The procedure is informal.
In principle, every shareholder has the right to vote regardless of the size of their shareholding. In individual cases, the exclusion of voting rights is regulated by law. This concerns serious conflicts of interest.
As a rule, the law stipulates a unanimous shareholder resolution in § 714 BGB, but a simple majority resolution can also be agreed in the articles of association. If necessary, this can also be done tacitly by constantly tolerating majority resolutions.

However, some standards contain special provisions according to which the law stipulates that resolutions must be passed with a majority of at least three quarters of the votes cast, even if the articles of association stipulate that a simple majority of votes must be cast. This is generally provided for in the case of resolutions that are classified as particularly important and require greater protection of the shareholders due to the significance of the resolved transaction. Such a regulation can be found in the context of the resolution to dissolve the company (§ 732 BGB) or the resolution to continue the company (§ 734 Abs. 2).

It should therefore be noted that shareholder resolutions must generally be passed unanimously, unless the articles of association stipulate otherwise, in which case special statutory regulations regarding certain resolutions may have to be observed.

It should also be noted that the newly introduced law on defective resolutions applies exclusively to commercial partnerships and therefore not to GbRs. However, application can be expressly agreed in the articles of association.

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
Each individual shareholder has an individual right to information from the company in accordance with § 717 Abs. 1 BGB. This means that non-managing shareholders also have the right to inspect company documents such as accounts and papers and to make extracts. If inspection of the company documents is not sufficient, the shareholder also has the right to be personally informed about the company's affairs.
In addition, the shareholders are also the addressees of the collective right to information under § 717 Abs. 2 BGB. This regulates the company's right to information on company matters from the managing directors authorized to manage the company.

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.