General Partnerships in Germany
General Partnerships in GermanyUpdated on Monday 14th September 2015
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The German general partnership
General partnerships are considered legal entities according to the German Commercial Code. The purpose of a general partnership is to establish trade relationships which is why all partners are held accountable with their personal assets for the company’s debts. German general partnerships are usually employed to set up small or medium-sized enterprises. The German Commercial Law allows general partnerships to conduct trading activities, but merchant activities also.
Partnerships may also be regarded as civil-law partnerships according to the German Civil Code.
The legal obligations of partners in German general partnerships
The general partnership does not have its own legal status and it depends on the partners’ legal status. However, a general partnership can be considered a legal entity when it comes to its legal responsibility before a German court of law. Partners in general partnerships in Germany have the equal rights in managing and representing the company.
German sole traders entering a general partnership are not required to register for social security obligation, but may choose to register voluntarily.
How to form a general partnership in Germany?
General partnerships may be established by at least two natural individuals or corporate entities. It is also possible for foreign citizens or legal entities to set up general partnerships in Germany. There are no minimum requirements when it comes to the share capital of a German partnership and the amount can be agreed upon by the founding members.
As any other company conducting business activities, general partnerships must register with the German Trade Register. The name of a German general partnership must always contain the last name of at least one partner and the legal form “oHG” (offene Handelsgesellschaft), meaning general partnership.
The partnership agreement in Germany
General partnerships in Germany are formed by concluding a partnership agreement which must contain the following information:
- - the object of the partnership,
- - the name of the partnership,
- - the nature of the partners’ contributions, which may be in cash or kind,
- - the representative of the company,
- - how the profits and losses will be divided,
- - details about company winding up.
For information about the taxation of general partnerships please contact our law firm in Germany.