GbR: the meaning of the German civil law partnership explained simply

Want to form a GbR? With us, you get the partnership agreement from a lawyer at a fixed price of €259 net.

GbR: meaning of the abbreviation

GbR stands for "Gesellschaft bürgerlichen Rechts", a partnership under civil law. The name comes from the fact that it is governed by the German Civil Code (Bürgerliches Gesetzbuch, BGB), which is why it is also called a BGB partnership. The provisions are in Sec. 705 to 740c BGB.

The GbR is the basic form of all partnerships. The OHG (general partnership) and the KG (limited partnership) build on it: the rules on the GbR apply to the OHG unless the HGB provides otherwise (Sec. 105 (3) HGB).

Profile of the GbR

Feature	GbR
Legal basis	Sec. 705 to 740c BGB
Partners	at least two; natural persons, legal entities or partnerships with legal capacity
Formation and form	partnership agreement, generally no particular form required, written form strongly recommended
Notary	not needed (exception: real estate in the agreement, application for an eGbR)
Register	no obligation; voluntary entry in the partnership register (eGbR)
Minimum capital	none
Legal capacity	yes, if it participates in legal transactions (Sec. 705 (2) BGB)
Liability	partnership assets and all partners personally, fully, jointly and severally (Sec. 721 BGB)
Management	all partners jointly, unless the agreement provides otherwise (Sec. 715 BGB)
Name and suffix	without registration no statutory mandatory suffix, as an eGbR the suffix "eGbR" is mandatory
Taxes	income tax for the partners, trade tax and VAT for the GbR
Bookkeeping	cash-basis accounting, books only above the thresholds of Sec. 141 AO
Transparency register	only the eGbR is required to report (Sec. 20 (1) GwG)

The 3 features of a GbR

If these three features are met, a GbR exists, whether the people involved know it or not.

1. At least two partners. There is no such thing as a one-person GbR. If only one partner remains, the GbR ceases to exist and its assets pass to that partner (Sec. 712a BGB).
2. A partnership agreement. It can be concluded in writing, orally or by conduct. A form requirement only applies if the agreement itself contains obligations that require a particular form, such as the obligation to contribute a piece of real estate (Sec. 311b (1) BGB).
3. A common purpose that everyone pursues. The purpose can be commercial, professional or private. It can be pursued with money, assets or work (Sec. 709 (1) BGB).

There is one limit: if the partnership carries on a commercial business that, by its nature and scope, requires a commercially organised operation, it is no longer a GbR but an OHG (Sec. 1 (2), Sec. 105 (1) HGB).

Is a GbR a legal entity?

No. The GbR is a partnership with legal capacity, but not a legal entity. The BGB expressly distinguishes between the two: an entrepreneur can be a natural person or legal entity "or a partnership with legal capacity" (Sec. 14 (1) and (2) BGB). The Fiscal Code (AO) also counts the GbR among associations of persons without legal personality (Sec. 14a AO).

A GbR with legal capacity can conclude contracts, acquire property, sue and be sued. Unlike with a GmbH or UG, however, there are no ring-fenced assets behind it: the partners are liable too.

• Natural person? No, the GbR is an association of persons.
• Partnership? Yes, its basic form.
• Corporation? No. The GmbH, UG and AG have share capital and limited liability.
• Sole proprietorship? No, not even with employees.
• Firma (company name)? In the legal sense, the Firma is the trade name of a merchant (Sec. 17 (1) HGB). A GbR does not carry on a commercial business and therefore has a name, not a Firma.

The three forms: internal GbR, external GbR, eGbR

The law distinguishes between the GbR without legal capacity and the GbR with legal capacity. The registered GbR is a sub-form of the GbR with legal capacity.

Internal GbR (Innen-GbR): It only governs the relationship between the partners and has no assets of its own (Sec. 740 (1) BGB).

External GbR (Außen-GbR): It participates in legal transactions in accordance with the common will of the partners (Sec. 705 (2) BGB). If it runs a business under a common name, this is presumed (Sec. 705 (3) BGB).

eGbR: Any GbR with legal capacity can be entered in the partnership register at the local court (Amtsgericht); there is no general obligation. In practice, registration is necessary if the GbR is to acquire a right in the land register (Sec. 47 (2) GBO) or be entered in the list of shareholders of a GmbH (Sec. 40 (1) GmbHG). After registration, it must use the suffix "eGbR" (Sec. 707a (2) BGB) and report its beneficial owners to the transparency register (Sec. 20 (1) GwG). Everything about mandatory cases, procedure and costs is in our guide to the eGbR.

Examples: where a GbR is found in everyday life

Typical GbRs are founding teams with an agency, online shop or café, shared practices and office-sharing arrangements, joint ventures (ARGE) of several construction companies, bands, car pools and lottery syndicates, and married couples or families who hold a property together.

The unintended GbR

Because the agreement does not require any particular form, a GbR often comes into being incidentally. Two self-employed people appear under a common name and invoice joint jobs together: that alone can be a GbR with legal capacity, with full mutual liability. If you do not want a partnership, you should agree this and appear separately to the outside world.

Not a GbR

• Community of heirs: It arises by operation of law on inheritance, not by contract. The Fiscal Code lists it separately from the GbR as an association of persons without legal capacity (Sec. 14a (3) AO).
• Co-ownership by fractional shares: Co-owners of a car or a flat without a common purpose form a community by fractional shares (Bruchteilsgemeinschaft) (Sec. 741 BGB, Sec. 14a (3) AO).
• Sole proprietorship with employees: Employees are not partners.

How does a GbR come into being?

The partnership agreement is enough for formation. Put it in writing anyway: only then is it clear what applies to profit, management and leaving. If the GbR carries on a trade, each partner usually registers the trade (Sec. 14 GewO); liberal professions only register with the tax office. This is followed by the tax registration questionnaire. The fee for trade registration depends on the municipality: in Berlin, for example, €26 per partner in person and €15 online, and on the North Rhine-Westphalia state portal €26 online for natural persons (as of 10 Nov 2026). Notary and register costs only arise for the eGbR. You can find all steps, costs and a checklist on our page Form a GbR.

Name of the GbR

The unregistered GbR usually appears under the surnames of its partners, often supplemented by a business designation and the suffix "GbR", for example "Meier & Yilmaz GbR, Grafikdesign". A purely invented name without the partners' names is reserved for the eGbR, to which the naming rules of the HGB apply (Sec. 707b no. 1 BGB).

Suffixes that suggest limited liability or another legal form, such as "mbH", "AG" or "& Co.", are not permitted. Invoices must state the full name and address of the supplying business (Sec. 14 (4) no. 1 UStG), so for a GbR, the name of the partnership.

Management and representation

Without a provision in the agreement, the statutory default applies: all partners manage the business jointly (Sec. 715 (1) and (3) BGB) and can only represent the GbR jointly (Sec. 720 (1) BGB). For a team that makes decisions every day, this is impractical. Almost every partnership agreement therefore provides for sole management and sole representation, often with value limits.

Two safeguards always remain: if the partners authorised to manage are prevented and delay would put the partnership at risk, any partner may act (emergency management, Sec. 715a BGB), and every partner may inspect the records and request information (Sec. 717 (1) BGB).

Does a GbR have a managing director?

Not in the sense of a GmbH. Management and representation lie with the partners themselves (the principle of self-management, Selbstorganschaft). An outsider can only act for the GbR with a power of attorney, not as one of its bodies.

Who is liable in a GbR?

The GbR's assets are liable for its debts, and alongside them every partner personally with their private assets, fully and jointly and severally (Sec. 721 BGB). The creditor can choose from whom to demand the full amount. An agreement between you that excludes liability has no effect towards third parties (Sec. 721 sentence 2 BGB).

Three rules surprise many people:

• New partners are liable for old debts. Anyone who joins is also liable for obligations that arose before they joined (Sec. 721a BGB).
• Former partners remain liable. Anyone who leaves remains liable for the debts incurred up to that point if they fall due within five years of leaving and the creditor has them established by a court or enforced, or the former partner acknowledges them in writing (Sec. 728b BGB).
• Limited liability only in individual cases. A limitation to the partnership's assets only takes effect if you agree it with the individual contractual partner.

If you do not want to bear this risk, you need a legal form with limited liability. For teams with little capital, this is often the UG; more on this in the guide What is a UG?.

Who owns the GbR's assets?

The partnership itself. The partners' contributions, everything acquired for the GbR and its liabilities are assets of the partnership (Sec. 713 BGB). The old model of assets held "jointly" (zur gesamten Hand) by the partners no longer exists in the BGB. Since 2024, a GbR can only acquire new real estate as an eGbR (Sec. 47 (2) GBO).

Profit distribution in the GbR

The law sets an order of priority (Sec. 709 (3) BGB):

1. The agreed shareholding ratios are decisive.
2. If there are none, the ratio of the agreed values of the contributions applies.
3. If nothing has been agreed on that either, everyone receives an equal share, regardless of their contribution.

The same order applies to losses and voting power. In case of doubt, accounts are settled at the end of each calendar year (Sec. 718 BGB).

Example: If two partners agree on a 60 to 40 split, a profit of €50,000 is divided into €30,000 and €20,000. If there is no agreement at all, it is €25,000 to €25,000, even if one of them works much more. Who may withdraw what and when also belongs in the agreement.

What taxes does a GbR pay?

Income tax

The GbR itself does not pay income tax. Its profit is determined separately and uniformly (Sec. 180 (1) sentence 1 no. 2 (a) AO), and each partner pays tax on their share at their personal tax rate.

Trade tax

If the GbR carries on a trade, it pays trade tax. For partnerships, there is an allowance of €24,500 (Sec. 11 (1) sentence 3 no. 1 GewStG). The partners can largely credit trade tax against their income tax, at four times their proportionate base amount (Sec. 35 (1) EStG). Be careful with GbRs of liberal professionals: if the partnership carries on even a partly commercial activity, its entire activity is deemed to be a commercial business (Sec. 15 (3) no. 1 EStG).

VAT

For VAT purposes, the GbR itself is the business and can deduct input tax. The small business VAT exemption applies if total turnover did not exceed €25,000 in the previous year and does not exceed €100,000 in the current year (Sec. 19 (1) UStG, version since 2025). Anyone using it does not show VAT and cannot deduct input tax (Sec. 15 (2) sentence 1 no. 1 UStG).

Bookkeeping

As a rule, cash-basis accounting is sufficient. A commercial GbR must keep books and prepare balance sheets if it generates more than €800,000 turnover or more than €80,000 profit a year and the tax office notifies it of this (Sec. 141 AO).

What does a GbR cost per year?

There are hardly any fixed mandatory fees; the ongoing costs depend on the sector and size.

Item	Amount per year	Note
Chamber of commerce (IHK) or chamber of crafts contribution	depends on trade income	only for commercial activity
Tax advice and declaration of partnership profits	depends on scope and bookkeeping	the declaration is mandatory, the adviser is not
Business account	depending on the bank	separates private and partnership money
Insurance	depending on risk	business or professional liability insurance
Employers' liability insurance association (Berufsgenossenschaft)	depending on sector and payroll	mandatory as soon as you employ staff
eGbR only: transparency register and register changes	report at Recht 24/7 €129 net, changes according to notary and register fees	only if registered

The one-off formation costs are on our page Form a GbR.

GbR, OHG, UG or GmbH?

Feature	GbR	OHG	UG (haftungsbeschränkt)	GmbH
Minimum number of partners or shareholders	2	2	1	1
Minimum capital	none	none	€1 (Sec. 5 (2), Sec. 5a GmbHG)	€25,000 (Sec. 5 (1) GmbHG)
Notary	no (eGbR: certification of the application)	certification of the application	notarisation of the articles	notarisation of the articles
Register	voluntary partnership register	commercial register	commercial register	commercial register
Liability	personal, unlimited	personal, unlimited	company assets	company assets (Sec. 13 (2) GmbHG)
Bookkeeping	usually cash-basis accounting	balance sheet as a merchant (Sec. 6 (1), Sec. 238 (1) HGB)	balance sheet	balance sheet
Trade tax allowance	€24,500	€24,500	none	none
Formation at Recht 24/7	€259 net, eGbR €369 net	€369 net	€259 net	€319 net

For the UG and GmbH, notary and register costs are added.

When does a GbR become an OHG?

Automatically, as soon as the business requires a commercially organised operation (Sec. 1 (2), Sec. 105 (1) HGB). The law does not set a fixed turnover or staff threshold, but from then on there is an obligation to register in the commercial register. Any partnership with a commercial business can voluntarily register as an OHG (Sec. 107 (1) HGB). Our page Form an OHG describes how to get there.

Advantages and disadvantages of the GbR

Advantages	Disadvantages
formation without a notary and without a register	personal, unlimited liability of all partners
no minimum capital	liability also for mistakes made by fellow partners
partnership agreement can be freely designed	without an agreement, joint management and unanimous resolutions (Sec. 714 BGB)
usually simple bookkeeping	shares only transferable with everyone's consent (Sec. 711 (1) BGB)
trade tax allowance of €24,500	not very attractive for investors and banks
ready to start quickly	real estate and GmbH shares only as an eGbR

Who is a GbR worthwhile for?

For small teams with a manageable liability risk: liberal professionals, creatives, consultants, shared practices and founders who want to test an idea. Less so for teams with loans, a warehouse of stock or large contracts, and not for founders who want to take on investors or sell shares.

What did the MoPeG change in 2024?

The Act on the Modernisation of Partnership Law (MoPeG) rewrote GbR law with effect from 1 January 2024:

• The legal capacity of the GbR is now in statute (Sec. 705 (2) BGB).
• There is the partnership register and with it the eGbR (Sec. 707 et seq. BGB).
• The assets belong to the partnership itself (Sec. 713 BGB).
• Death and termination lead to withdrawal, no longer to dissolution (Sec. 723 BGB).
• Profit, loss and voting power are based first on the shareholding ratios (Sec. 709 (3) BGB).

The reform also applies to GbRs formed before 2024. All changes, with a before-and-after table, are in the guide to the MoPeG. Is your agreement from before 2024? We draft a new version via Have a contract drafted for €499 gross.

Leaving, death and dissolution

If a partner dies, gives notice of termination of their membership, becomes insolvent or is excluded, they leave. The GbR continues with the remaining partners, unless the agreement provides for dissolution in these cases (Sec. 723 (1) BGB). The departing partner receives appropriate compensation and is released from the partnership's debts (Sec. 728 BGB). If the GbR was entered into for an indefinite period and the agreement says nothing, a partner can give three months' notice to the end of the calendar year (Sec. 725 (1) BGB). If an heir is to take over, the agreement must provide for this (Sec. 711 (2) BGB). Exception: the internal GbR still ends on the death of a partner (Sec. 740a (1) no. 3 BGB).

A GbR with legal capacity is dissolved, for example, by expiry of its term, a dissolution resolution, termination of the partnership, its insolvency or achievement of its purpose (Sec. 729 BGB). Liquidation then follows: wind up the business, satisfy creditors, distribute the remaining assets (Sec. 736d BGB). For an eGbR, the liquidators then register the extinction with the partnership register (Sec. 738 BGB). Claims against the partners for debts of the extinct GbR become time-barred after five years, unless the claim against the GbR becomes time-barred sooner (Sec. 739 BGB).

Common misconceptions about the GbR

"Without a written agreement, there is no GbR." Wrong: an oral or tacit agreement is also enough.

"With 'GbR mbH', we are not liable privately." Wrong: neither a suffix nor the partnership agreement excludes liability (Sec. 721 BGB).

"If a partner dies, the GbR is dissolved." For a GbR with legal capacity, this has as a rule been wrong since 2024 (Sec. 723 BGB).

"Without an agreement, profit is split per capita." Only if neither shareholding ratios nor values of the contributions have been agreed (Sec. 709 (3) BGB).

"A GbR must be entered in the commercial register." Wrong. Voluntary entry in the partnership register is possible; only the OHG belongs in the commercial register.