What is an OHG? The German general partnership explained

What is an OHG? Definition explained simply

OHG stands for "offene Handelsgesellschaft", which translates as general partnership; the spelling oHG is also common. The statute defines it as follows: a partnership whose purpose is to operate a commercial business under a joint company name is an OHG if none of the partners has limited liability towards the creditors (Sec. 105 (1) HGB).

Put simply: two or more persons run a commercial business together, appear under a common name and all stand behind it with their entire assets. Who the partners are is shown in the commercial register (Sec. 106 (2) no. 2 HGB).

The OHG is a partnership, not a corporation. It can itself acquire rights and enter into obligations (Sec. 105 (2) HGB), so it can conclude contracts, acquire property, sue and be sued. Even so, it is not a legal entity like the GmbH (Sec. 14 (1) and (2) BGB). Where the HGB contains no rule, the provisions on the civil law partnership (GbR) apply accordingly (Sec. 105 (3) HGB). The OHG is therefore the commercial sister of the GbR. How partnerships and corporations differ in principle is explained in the guides Partnerships and Corporations. You can find a short definition in the glossary under OHG.

Features of the OHG at a glance

Feature	OHG
Legal basis	Sec. 105 to 152 HGB, supplemented by Sec. 705 et seq. BGB
Partners	at least 2, natural persons, legal entities or partnerships with legal capacity (Sec. 106 (2) no. 2 HGB)
Minimum capital	none; contributions freely agreed, also in the form of work (Sec. 709 (1) BGB)
Liability	all partners personally, without limit, jointly and severally (Sec. 126 HGB)
Register	commercial register, division A (Sec. 3 (2) HRV), application by all partners (Sec. 106 HGB)
Name	company name (Firma) with the suffix "offene Handelsgesellschaft" or "OHG" (Sec. 19 (1) no. 2 HGB)
Management	every partner alone, extraordinary transactions only with a resolution of all partners (Sec. 116 HGB)
Representation	every partner alone, joint representation can be agreed (Sec. 124 HGB)
Partnership agreement	no form prescribed by law, notarisation only for content that requires a particular form, such as contributing a piece of real estate (Sec. 311b (1) BGB); written form strongly recommended
Bookkeeping	balance sheet and annual financial statements under the HGB (Sec. 6, 242 HGB)

When is a partnership an OHG?

Whether you are an OHG depends first on your business, not on your agreement.

By operation of law: If your trade, by its nature or scope, requires a commercially organised business operation, it is a commercial business (Sec. 1 (2) HGB). You are then an OHG, even if you consider yourselves a GbR, and you must apply for entry in the commercial register (Sec. 106 (1) HGB). The law does not set a fixed turnover or staff threshold; what counts is the overall picture, such as turnover, staff, stock and the number of business transactions.

By voluntary registration: A small-business or purely asset-managing partnership becomes an OHG when its company name is entered in the commercial register (Sec. 107 (1) sentence 1 HGB). This is a right, not an obligation (Sec. 107 (2) sentence 1 HGB). Since the MoPeG took effect on 1 January 2024, this also applies to liberal professionals, where their professional rules permit registration (Sec. 107 (1) sentence 2 HGB). What makes a small business (Kleingewerbe) is explained in its own guide.

Back to the GbR: after registration, this is only possible through a change of status (Statuswechsel) to the partnership register (Sec. 107 (2) sentence 2 HGB, Sec. 707c BGB). Conversely, a GbR that is already registered, the eGbR, applies for the change to an OHG at its existing register (Sec. 106 (3) HGB).

When does the OHG come into existence? Towards third parties, it comes into existence on entry in the commercial register. If it participates in legal transactions with the consent of all partners before then, it comes into existence at that point, unless it only becomes an OHG through registration, like the small-business partnership (Sec. 123 (1) HGB). An agreement that the partnership is only to come into existence later has no effect towards third parties (Sec. 123 (2) HGB).

Liability in the OHG: who is liable for what?

Liability is the defining feature of the OHG. First, the OHG is liable for its debts with the partnership's assets. Alongside it, all partners are liable to the creditors personally as joint and several debtors (Sec. 126 sentence 1 HGB). An agreement to the contrary has no effect towards third parties (Sec. 126 sentence 2 HGB).

In detail, this means:

• Personally and without limit: Every partner is liable with their private assets, including savings, car or flat, and for the full amount, not just up to the amount of their share.
• Jointly and severally: The creditor can choose from whom to demand how much until the debt is paid.
• Defences and enforcement orders: The partner can raise any defence that the OHG could also raise (Sec. 128 HGB). To enforce against the partner, the creditor needs an enforcement order (Titel) against the partner personally; a judgment against the OHG is not enough (Sec. 129 HGB).
• New partners are also liable for debts that arose before they joined (Sec. 127 HGB).
• Former partners remain liable for the debts incurred up to their departure if these fall due within five years and the creditor has them established by a court or enforces them within that time. The five years begin as soon as the creditor knows of the departure or it is entered in the commercial register (Sec. 137 (1) HGB).

Example: Anna and Ben run a trading OHG, each with a 50% share. A supplier has a due invoice for €40,000, and the business account is empty. The supplier can demand the full €40,000 from Ben, even if Ben never saw the order. If Ben pays, he can claim reimbursement from the OHG (Sec. 716 (1) BGB) and, if there is nothing to be had there, Anna's share of €20,000 from Anna.

In the event of death, the share of a deceased partner passes to their heirs if the agreement provides for this (Sec. 711 (2) BGB in conjunction with Sec. 105 (3) HGB); otherwise the deceased partner leaves (Sec. 130 (1) no. 1 HGB). Each heir can then apply to be given the position of a limited partner (Kommanditist) with limited liability; if the other partners do not accept the application, the heir can give notice without a notice period. Both are only possible within three months of the heir learning that the inheritance has passed to them (Sec. 131 (1) to (3) HGB). How a limited partner is liable is explained in the guide What is a KG?.

Management and representation in the OHG

Management (internal): All partners are entitled and obliged to manage the business, each of them alone (Sec. 116 (1) and (3) HGB). If another managing partner objects, the transaction must not go ahead (Sec. 116 (3) sentence 3 HGB). The authority only covers what the ordinary course of business entails; extraordinary transactions require a resolution of all partners (Sec. 116 (2) sentence 1 HGB). By law, partner resolutions must be passed unanimously (Sec. 109 (3) HGB); the agreement can provide for majority decisions.

Representation (external): Every partner may represent the OHG externally alone, unless the agreement excludes them (Sec. 124 (1) HGB). The agreement can provide for joint representation, for example that two partners may only sign together (Sec. 124 (2) HGB). It cannot limit the scope of the power of representation externally: it covers all transactions, including real estate transactions and the granting of Prokura (Sec. 124 (4) HGB). An internal limit, such as "contracts over €20,000 only after consultation", only binds the partners among themselves.

Prokura: Appointing an authorised signatory (Prokurist) requires the consent of all managing partners, and any one of them can revoke it (Sec. 116 (2) HGB). What an authorised signatory may do is explained in the guide Prokura.

Non-compete obligation: Without the consent of the others, no partner may conduct business of their own in the OHG's line of business or join a similar partnership as a personally liable partner (Sec. 117 HGB).

Profit distribution in the OHG

At the end of each financial year, the managing partners prepare the annual financial statements and determine each partner's share of the profit or loss (Sec. 120 (1) HGB). Sec. 709 (3) BGB applies in three stages:

1. according to the agreed shareholding ratios,
2. if there are none, according to the ratio of the agreed values of the contributions,
3. if there are none of those either, in equal parts, regardless of the contribution.

The former statutory rule, under which each partner first received 4% on their capital share and the rest was divided per capita, has no longer been in the HGB since 2024. Older accounts sometimes still show the old calculation.

Example: Anna and Ben's OHG makes an annual profit of €120,000.

Case	Anna	Ben
60% to 40% shareholding agreed	€72,000	€48,000
no shareholding agreed, contributions with a value of €30,000 (Anna) and €10,000 (Ben) agreed	€90,000	€30,000
neither shareholding nor contribution values agreed	€60,000	€60,000

Losses are distributed using the same key. Profit is credited to the capital share, a loss is written off against it (Sec. 120 (2) HGB). Every partner can demand payment on the basis of the approved annual financial statements, unless the payment would obviously harm the partnership or they have not made their contribution that is due (Sec. 122 HGB). Because the partners usually live off their work in the OHG, withdrawals and remuneration for their work belong in the partnership agreement.

Advantages and disadvantages of the OHG

Advantage	Disadvantage	What helps
no minimum capital, low formation costs	full personal liability of all partners, also for mistakes made by fellow partners	choose a form with limited liability, such as the GmbH & Co. KG
high creditworthiness, because creditors can access private assets	liability for existing debts on joining and five years of continuing liability on leaving	check the level of debt before joining, have the departure registered immediately
partnership agreement without a notary, a lot of freedom of design (Sec. 108 HGB)	without an agreement, unanimity and equal profit distribution apply	conclude an agreement with shareholding, majorities and withdrawals
quick decisions, because everyone may act alone	one partner can bind the OHG alone	agree joint representation or a list of transactions requiring consent
protected company name in the commercial register	obligation to keep books and prepare balance sheets under the HGB	plan tax advice from the outset
profit is only taxed at the level of the partners	trade tax at the level of the OHG	have the allowance and the credit checked

If you want the advantages of a partnership without full liability, you will usually end up with the GmbH & Co. KG. We support the formation for €519 net plus VAT, notary and court fees, IHK and trade registration costs.

OHG, GbR, KG and GmbH compared

Feature	GbR	OHG	KG	GmbH
Legal basis	Sec. 705 et seq. BGB	Sec. 105 et seq. HGB	Sec. 161 et seq. HGB	GmbHG
Purpose	any permitted purpose, no commercial business	commercial business or registration under Sec. 107 HGB	as OHG	any permitted purpose
Partners or shareholders	at least 2	at least 2	at least 1 general partner and 1 limited partner	from 1
Minimum capital	none	none	none, liability amount freely chosen	€25,000 (Sec. 5 (1) GmbHG)
Liability	all personally (Sec. 721 BGB)	all personally (Sec. 126 HGB)	general partner fully, limited partner up to the liability amount (Sec. 171 HGB)	company assets only (Sec. 13 (2) GmbHG)
Register	partnership register, voluntary (Sec. 707 BGB)	commercial register	commercial register	commercial register
Notary	only for registration as an eGbR	certification of the application	certification of the application	notarisation of the agreement (Sec. 2 (1) GmbHG)
Bookkeeping	usually cash-basis accounting	balance sheet under the HGB	balance sheet under the HGB	balance sheet under the HGB
Fixed price at Recht 24/7	from €259 net	€369 net	€469 net	€319 net

Formation prices are net plus VAT in each case; for the GbR plus IHK and trade registration costs, for the eGbR plus notary and register costs; for the OHG and KG plus notary fees for certifying the signatures, court fees, IHK and trade registration costs; for the GmbH plus notary and court fees, IHK and trade registration costs.

OHG or KG? The only legal difference in the definition: in a KG, at least one partner is only liable up to a liability amount (Sec. 161 (1) HGB). Otherwise, the rules of the OHG apply to the KG (Sec. 161 (2) HGB). The role of the fully liable partner is explained in the guide General partner, and the KG as a whole in the guide What is a KG?.

GmbH & Co. OHG and AG & Co. OHG: The partners of an OHG can also be corporations. If the only partners are GmbHs or AGs, no natural person is liable; the company name must indicate this, for example "GmbH & Co. OHG" (Sec. 19 (2) HGB). Business letters must then also contain the details of the partners (Sec. 125 (1) HGB).

Taxes and bookkeeping of the OHG

For tax purposes, the OHG is transparent: its profit is determined uniformly and separately and allocated to the partners as income from business operations (Sec. 15 (1) sentence 1 no. 2 EStG). Each partner pays tax on their share at their personal income tax rate. The OHG itself pays trade tax; for partnerships, there is an allowance of €24,500 (Sec. 11 (1) sentence 3 no. 1 GewStG). The partners' income tax is reduced by four times their proportionate trade tax base amount, at most by the trade tax actually paid (Sec. 35 EStG). On application, the OHG can opt to be taxed like a corporation (Sec. 1a KStG). VAT is payable as for any business.

As a commercial partnership, the OHG is subject to the rules for merchants (Sec. 6 (1) HGB) and must keep books (Sec. 238 HGB) and prepare an opening balance sheet and, every year, annual financial statements consisting of a balance sheet and a profit and loss account (Sec. 242 HGB). The exemption for small businesses only applies to sole traders (Sec. 241a HGB), not to the OHG.

Leaving, termination and dissolution

• Termination: If the partnership was entered into for an indefinite period, every partner can give six months' notice to the end of the financial year (Sec. 132 (1) HGB), and without notice for good cause (Sec. 132 (3) HGB).
• Leaving instead of dissolution: Death, termination, insolvency of a partner, termination by their private creditor or exclusion by court judgment only cause that partner to leave; the OHG continues unless the agreement provides otherwise (Sec. 130 HGB).
• Compensation: The departing partner receives appropriate compensation for the value of their share and is released from liability, unless the agreement provides otherwise (Sec. 135 HGB).
• Dissolution: by expiry of the term, insolvency of the partnership, a court decision or a resolution (Sec. 138 (1) HGB); the OHG is then wound up, unless insolvency proceedings have been opened (Sec. 143 (1) HGB). If only one partner remains, it ceases to exist without liquidation (Sec. 712a (1) BGB in conjunction with Sec. 105 (3) HGB).

Forming an OHG: procedure and costs

Forming an OHG is leaner than forming a GmbH, because the agreement does not have to go to a notary.

1. Conclude the partnership agreement: purpose, company name, registered office, contributions, shareholding, management and representation, profit distribution, withdrawals, termination and compensation.
2. Choose the company name: a name based on persons, on the business activity or an invented name, with the suffix "OHG" (Sec. 19 (1) no. 2 HGB); check beforehand for risk of confusion and trade marks. More on this in the glossary under company name (Firma).
3. Apply to the commercial register: All partners register the company name, registered office, business address, details of each partner and the power of representation (Sec. 106 (2) and (7) HGB). The application must be publicly certified, that is via a notary, also by video communication (Sec. 12 (1) HGB). What the register contains is explained in the glossary under commercial register.
4. Register the trade with the municipality.
5. Tax registration with the tax office.

Item	Amount	Basis
Register court, first registration with up to 3 partners	€200	€150 (no. 1101 of the fee schedule of the HRegGebV) plus one third retrieval fee €50 (no. 6000)
each additional partner from the fourth	€80 more at the register	€60 (no. 1102) plus one third €20 (no. 6000)
Notary drafts the application (2 partners)	approx. €153 incl. VAT	business value €45,000 (Sec. 105 (3) no. 2 GNotKG); draft €77.50 (no. 24102 KV), XML €31 (no. 22114 KV), expenses €20 (no. 32005 KV), €128.50 net
Notary only certifies a finished draft (2 partners)	approx. €177 incl. VAT	certification €31 (no. 25100 KV), transmission €20 (no. 22124 KV), XML €77.50 (no. 22125 KV), expenses €20 (no. 32005 KV), €148.50 net

By our calculation, registering an OHG with two partners therefore costs around €350 to €380 in fees, plus trade registration, the fee for which is set by the municipality. With each additional partner, the business value at the notary increases by €15,000 (Sec. 105 (3) no. 2 GNotKG).

At Recht 24/7, the partnership agreement and the application are ready within 24 hours, and registration usually takes 5 to 16 days (form an OHG for €369 net plus VAT, notary fees for certifying the signatures, court fees, IHK and trade registration costs).