What is a GbR? - Everything you should know about civil law companies

What is a GbR? - Everything you should know about civil law companies

What is a GbR? – Everything you should know about the civil law company

A civil law partnership, or GbR for short, is a form of partnership in which two or more people come together to operate a joint company. The GbR is one of the oldest and most popular legal forms in Germany and is often chosen by freelancers, small companies and start-ups. In this article we will go into detail about the most important aspects of a GbR and provide all the relevant information you should know about it.

Definition of a GbR

A GbR arises automatically when two or more people carry out a joint business activity without the need for a formal contract. This means that a GbR already exists when two or more people decide to set up a company together without any further contractual provisions being made. However, a GbR can also be founded by concluding a written partnership agreement.

Characteristics of a GbR

A GbR is characterized by certain features that distinguish it from other legal forms:

1.Joint business activity: In a GbR, all partners work actively and equally in the business activities. There must be no separation between labor and capital.

2.Joint profit and loss ratio: The partners share the profits and also bear the losses according to their agreed share.

3.Liability of the shareholders: In a GbR, the partners are personally and unlimitedly liable for the company's liabilities. This means that they are liable for the debts of the GbR with their entire assets.

4.Not a legal entity: In contrast to a GmbH or AG, a GbR is not a legal entity. The shareholders act in their own name and are personally responsible for their actions.

Formation of a GbR

A GbR is founded either automatically by starting joint business activities or by concluding a written partnership agreement. Although a partnership agreement is not required by law, it is often drawn up to clearly define the rights and obligations of the partners.

A partnership agreement can contain various provisions, such as:

– Names and places of residence of the partners
– Company name of the GbR
– Business purpose
– Participation relationships
– Profit and loss distribution

The partnership agreement should be in writing and signed by all shareholders. It is advisable to consult a lawyer or notary to ensure that the contract complies with legal requirements.

Rights and obligations of the shareholders

The shareholders of a GbR have certain rights and obligations that are set out in the partnership agreement or the law. Some of these rights and responsibilities include:

–Obligation to cooperate: Every partner is obliged to actively participate in the business activities of the GbR and to make an active contribution.

–Obligation to provide information: The shareholders have an obligation to inform each other. This means that you have to find out about all important matters relating to the GbR.

–Duty of loyalty: Every partner is obliged to protect the interests of the GbR and not to act against them. It is important that all shareholders act in the interests of the GbR and do not pursue their own interests.

–Right to vote: When making decisions within the GbR, the shareholders have the right to vote and clarify differences of opinion. As a rule, the principle of unanimity applies, i.e. all shareholders must agree to a decision.

Liability in a GbR

Liability in a GbR is an important aspect that should be taken into account when choosing this legal form. Since shareholders of a GbR have personal and unlimited liability, there is a risk to their personal assets.

This means that the shareholders are liable with their entire assets in the event of liabilities of the GbR. This liability cannot stop at the private home or the shareholders' bank account. One way to minimize liability risk is to set a liability limitation in the partnership agreement.

Taxation of a GbR

A GbR is treated for tax purposes as a so-called “atypical silent partnership”. This means that the profits and losses of the GbR are allocated individually to the shareholders. The partners must declare and pay tax on their shares of the profit or loss in their personal tax return.

There is no separate taxation at the level of the GbR itself. Instead, the income and costs are divided among the individual shareholders and taxed individually. Each partner must prepare a profit and loss account for his participation in the GbR.

Termination of a GbR

A GbR can be terminated in different ways:

1.Termination: Any partner can terminate the GbR at any time. Termination must be made in writing and is effective immediately, unless otherwise agreed in the partnership agreement.

2.Death of a partner: The death of a partner usually leads to the dissolution of the GbR. However, the remaining partner can continue the business activity alone or set up a new GbR with a new partner.

3.Achieving the GbR purpose: If the purpose of the GbR has been achieved or the conditions for continuing the business are no longer met, the GbR can be dissolved.

Frequently Asked Questions (FAQs)

1. Is a GbR the right legal form for my company?

A GbR is suitable for many small companies, freelancers and start-ups. If you want to start a company together with other people and are looking for a simple and flexible legal form, a GbR could be the right choice.

2. Can a GbR act as an employer?

Yes, a GbR can act as an employer and employ employees. The GbR is then responsible for fulfilling all obligations under employment law.

3. How high can the profit be in a GbR?

The profit in a GbR is not legally limited. It depends on the type and scope of the business activity.

4. How are profits and losses distributed in a GbR?

The profits and losses are usually distributed according to the shareholding ratios agreed in the partnership agreement.

5. Can the shareholders of a GbR also be employees?

Yes, the shareholders of a GbR can also be employees. However, you cannot act as a shareholder and an employer at the same time.

Conclusion

A civil law partnership (GbR) is a popular legal form for small companies, freelancers and start-ups. It offers a flexible and easy way to set up and run a business together with other people. The partners have a joint business activity, share the profits and bear the losses according to their shareholding. Liability is personal and unlimited, which represents a risk to the private assets of the partners. A GbR can be founded either by starting joint business activities or by concluding a written partnership agreement. It is advisable to consult a lawyer or notary to draw up the contract. When deciding on a GbR, all relevant factors such as liability, taxation and termination should be taken into account.