German Limited Partnership with a GmbH as General Partner
German Limited Partnership with a GmbH as General PartnerUpdated on Friday 10th April 2020
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What is the German GmbH & Co.KG?
There are several forms of partnerships in Germany, the limited partnership (Kommanditgesellschaft, KG) with a limited liability company as the second associate being a partnership in which the general partner is a limited liability company (Gesellschaft mit beschränkter Haftung, GmbH). In this case the limited liability company will be fully responsible for the GmbH & Co. KG’s debts and liabilities. The limited partnership with a limited liability company as a general partner in Germany can have one or more limited partners who will be liable for the company’s debts and liabilities only to the extent to their capital contributions.
This type of German company is appropriate for enterprisers wanting to limit their liability while benefiting from the flexibility of a non-incorporated company. GmbH & Co. KGs are usually employed for medium-sized companies and family businesses.
How to set up a GmbH & Co. KG in Germany
The German limited partnership with a limited liability company as a general partner is a hybrid form of company which is established by concluding a partnership agreement between the general partner and the limited ones. It is advisable to conclude this agreement in writing before a German public notary. Our lawyers in Germany also provide notary services.
Just like the German limited partnership, the GmbH & Co. KG must be registered with the Companies Registry. The liability of the limited partner will become limited only after the registration with the German Trade Register. The application must be submitted by all the partners.
The taxation of GmbH & Co. KG in Germany
The taxation of the limited partnership with a limited liability company as a general partner in Germany is similar to the taxation of all other forms of partnerships. The profits of the GmbH & Co. KG will taxed individually for each partner. Every partner in the company will be required to report and pay the taxes on their share profits through their personal income tax returns in Germany. The income of the limited liability company could, however, be subject to the trade tax.
If you need assistance in setting up any type of partnership you can request the services of our law firm in Germany. You can also contact us for more details on the taxation of partnerships.