The Limited Partnership in Germany

The Limited Partnership in Germany

Updated on Tuesday 24th January 2023

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The German Commercial Code recognizes several types of companies, among which partnerships. Foreign investors can set up two types of partnerships:
  • -          general partnerships,
  • -          limited partnerships.
The limited partnership (Kommanditgesellschaft, KG) is employed not only in Germany, but also in Austria and several other European countries. For details about both types of partnerships you can refer to our German lawyers.

The characteristics of German limited partnerships

A German limited partnership must be formed by at least two partners. One of the partners, called a general partner (Komplementär) has unlimited liability for the German company’s debts and obligations. The other partner, called a limited partner (Kommanditisten), will have a limited liability which will be restricted to their contribution to the company. The name of the company must contain the legal form of the business.
In order to set up a German KG, the partners must draft the Articles of Association or a partnership agreement as for any other type of company. No minimum share capital is required when opening a limited partnership. However, the KG must be registered with the German Companies Registry. The German KG will be regarded as a trading company.

Taxation of German limited partnerships

As any other German company, the limited partnership has the legal obligation of keeping accounting books. At the end of every fiscal year, the German KG will be required to prepare a balance sheet and the profit and loss account and submit them with the Trade Register.
Limited partnerships are not required to have their statements audited, but they will be required to add explanatory notes to their annual financial documents in order to provide an accurate image about the company’s assets and financial situation.
Partnerships are subject to lighter accounting and reporting requirements compared to a corporation registered in Germany. Nonetheless, it is essential to understand the tax reporting and payment principles that will continue to apply to the partners, as part of their individual taxation requirements. Our accountants in Germany can help you with complete information. 
From a taxation point of view, the German limited partnership is not itself subject to the income or the corporate tax. Its profits will be calculated in a specific way. The partners will be assessed and taxed individually for their profits.
For more information about the taxation of the KG you can ask our German law firm.
You can also contact us if you need assistance in setting up a German limited partnership.