GBR

GbR, short for Gesellschaft bürgerlichen Rechts, is a form of civil-law partnership used in Germany (and in German-speaking countries) for small, cooperative ventures. It is formed by contract between at least two partners who pursue a common business purpose. The GbR has no separate legal personality; the business is conducted by the partners and is not a distinct legal entity from them.

Formation and structure

A GbR can be created by an oral or written agreement, but a written partnership contract is strongly advised. The contract should cover contributions, profit and loss sharing, management and representation, and rules for dispute resolution and dissolution. The partnership may operate under a name that includes the term GbR or the full designation Gesellschaft bürgerlichen Rechts. In practice, the contract determines how decisions are made and how the partnership is represented in dealings with third parties.

Liability and representation

All partners in a GbR generally have unlimited personal liability for the partnership’s obligations. Liability is typically joint and several, meaning a creditor can pursue one or more partners for the full claim, with the partners’ private assets at risk. Each partner usually has authority to manage and represent the GbR in ordinary business; more significant decisions or departures from the ordinary course of business often require consent as set out in the partnership agreement.

Tax and accounting

A GbR itself is not a separate tax entity. Profits and losses flow through to the partners, who pay income tax on their share. The partnership reports its income to the tax authorities, and depending on activity, trade tax may apply at the local level. Partners file their individual tax returns reflecting their share of the GbR’s results.

Dissolution and alternatives

A GbR dissolves by agreement, withdrawal of a partner, death, or insolvency. After dissolution, assets are liquidated and claims settled among the partners. For ventures seeking limited liability, forms such as a GmbH or UG are commonly chosen.