Private Limited Partnership

General Information

The private limited partnership is a company whose purpose is to conduct a trade business under a common corporate name. For at least one of the partners, liability is limited to a fixed amount (limited partner), while at least one other partner’s liability is unlimited (general partner).

The private limited partnership therefore is a special form of the general partnership.

The private limited partnership is of great economic importance since, compared to the general partnership, it has the advantage that the entrepreneurial risk can be restricted by limitation of liability.


The private limited partnership has to be entered into the Commercial Register in order to attain legal capacity. If a trade business proper (Sec. 1 para. 2 of the German Commercial Code [Handelsgesetzbuch - HGB -]) is operated, registration is a condition for the limitation of liability for the limited partner.

If no trade business proper is operated by the company, these rules will not apply to it; it then rather is a civil law partnership which is not governed by the KG rules.

The application for entry into the Commercial Register has to contain the full name, date of birth and place of residence of each partner, the company’s corporate name, of the extent of the power of representation awarded to partners, the names of the limited partners and the amount of contribution of each of these.

Capitalisation and Financing

No minimum contribution must be made at the time of incorporation. However, a contribution to cover liability (amount of contributions of the limited partners as indicated in the Commercial Register) must be made upon application for entry into the Commercial Register. The Commercial Register being public, this information is freely accessible.

Board Structure

Management, to the extent that it does not go beyond the usual management of a trade business, is incumbent upon the general partner, while the limited partners remain mostly excluded from management.

This statutory principle is however not binding and may be modified in the partnership agreement.

The general partner also represents the company in and out of court. Limited partners may be issued special power of representation in the form of Prokura.

Even if a limited partner is entitled to management by virtue of the partnership agreement and also holds (limited) power of representation, this does not affect the limitation of his liability.

Annual Costs

Annual Costs will arise in the form of  legal, information and control costs especially as regards accountancy, auditing and publicity. Other possible items are legal and tax consultancy as well as costs for various supervisory and managing individuals.

The amount of these costs varies and depends on size, structure and equity requirements of the company. Costs tend to be lower for partnership structures than for corporations.

 Corporate Taxation and Financial Accounting

In Germany the taxable income of a private company is determined at enterprise level although the company itself is not a tax subject.

In fact, a piercing of the corporate veil occurs in respect of the partners.

Thus, for tax purposes, profits generated at enterprise level are treated equally to the partner’s other revenue.

The civil law partnership is not obligated to maintain accountancy, but rather has to produce a statement of revenue profits.

Employee Participation in Corporate Bodies