GbR

The Gesellschaft bürgerlichen Rechts (GbR) is the simplest form of partnership under German law: at least two people join together to pursue a common purpose, without needing minimum capital, notarized formation, or mandatory registration. All partners are personally, jointly and severally, and unlimitedly liable with their private assets for the partnership's obligations.

What is a GbR?

The GbR is governed by the German Civil Code (Sections 705 et seq. BGB) and is the default legal form that at least two people automatically fall into as soon as they jointly pursue an activity that isn't run as a commercial trading business — for example, a shared office of freelancers, a partnership of several self-employed professionals, or a small joint business. Once the business reaches a scale and structure that requires commercial-style organization, a GbR automatically becomes an OHG. In business succession, the GbR often appears with smaller family businesses, groups of freelance professionals, or as a holding layer above an operating company.

How do you form a GbR?

A GbR is formed informally as soon as at least two people join together to pursue a common purpose — a written partnership agreement is not legally required, but is strongly recommended in practice to clearly set out management authority, profit distribution, termination, and succession. No minimum capital is required. Since the reform under the Act on the Modernization of Partnership Law (MoPeG), effective January 1, 2024, a GbR can additionally register voluntarily in the new partnership register and then carries the designation "eGbR" (registered GbR).

How does liability work for a GbR?

The partners of a GbR are personally, jointly and severally, and unlimitedly liable with their entire private assets for all of the partnership's obligations — creditors can pursue either the partnership or any individual partner for the full amount. This unlimited liability is the key difference from capital companies such as a GmbH or UG, and one of the main reasons growing GbRs are often converted into a GmbH, UG, or GmbH & Co. KG.

What changed for the GbR under the MoPeG?

The MoPeG fundamentally modernized the legal status of the GbR as of January 1, 2024. Central to this is the explicit statutory recognition of the GbR's legal capacity: it can now acquire rights, incur liabilities, sue and be sued in its own name, provided it participates in legal transactions. Also new is the option of voluntary registration in the partnership register as an eGbR — this registration is not mandatory, but becomes necessary once the GbR itself wants to acquire rights that require registration, such as owning real estate or holding shares in a GmbH. For business succession, this matters because an eGbR can act as a clearer, more legally secure acquirer or shareholder than the previously unregistered GbR.

GbR vs. OHG vs. sole proprietorship: what's the difference?

What are the advantages and disadvantages of a GbR?

The main advantage is informal, low-cost formation with no minimum capital and no mandatory notarization — ideal when several people want to join forces without complication. The MoPeG has also, for the first time, clearly established the partnership's own legal capacity in statute. The key disadvantage remains the unlimited personal liability of all partners, which — unlike with a GmbH or UG — cannot be capped at the partnership's assets. As business volume or liability risk grows, converting into a capital company or a GmbH & Co. KG is therefore often advisable.