Gesellschaft bürgerlichen Rechts GesbR (Civil-law Partnership)
The Gesellschaft bürgerlichen Rechts GesbR does not have legal personality, meaning it cannot sue or be sued and cannot act as owner. It is always the partners who act as contract partners and exercise rights and duties.
At a glance
- swift formation, no costs involved
- freedom in drafting the Articles of Association, need not be in writing
- simple cash-based accounting or accrual-based accounting
- no minimum capital contribution
- sharing of work among the partners is possible
- possibly better funding opportunities (as against sole traders)
- as with all partnerships, at least one partner has unlimited liability
- dependent on good cooperation of everyone involved
Articles of Association
A Gesellschaft bürgerlichen Rechts GesbR is founded by a contractual agreement between two or several partners. There is no mandatory form required by law. It is however recommended to conclude the Articles of Association in writing. The company may also come into being on the basis of an oral agreement or the tacit cooperation of all partners. Partners retire or are admitted by amendment of the Articles of Association.
The Gesellschaft bürgerlichen Rechts GesbR is considered the basic form of partnership. Unless any other company form is explicitly chosen, the Articles of Association establish a GesbR.
A Gesellschaft bürgerlichen Rechts GesbR may pursue a gainful purpose as well as a non-lucrative objective. According to the General Civil Code (Allgemeines Bürgerliches Gesetzbuch ABGB), a GesbR may pursue any purpose allowed and engage in any activity permitted.
The company is managed jointly by the partners. The Articles of Association may lay down provisions to the contrary, an external manager may also be appointed. Any limitation of the power to represent the company as laid down in the Articles of Association does not release a partner from his or her liability.
The partners are liable with their private assets without limitation. Even after leaving a Gesellschaft bürgerlichen Rechts (GesbR), a partner is liable for debts which may have existed at the moment of resignation.
Contributions / Profits
According to the Articles of Association, the partners provide capital, in-kind contributions and work for the company. Unless otherwise agreed, the profits and losses are divided on a pro-rata basis of the individual contributions.
The company’s assets are co-owned by the partners. A minimum contribution is not required.
If the exercise of the partnership’s activity is subject to the Trade Code (Gewerbeordnung), all partners must have a required trade licence. Artistic, literary and journalistic activities however do not fall under the Trade Code.
TaxationThe GesbR has no legal personality, therefore there is no corporate income tax liability. Profit shares of the company have to be taxed by the partners themselves (income tax). There is an exception for sales tax. Here, the GbR is a taxable entity and can itself be liable to VAT without the partners being liable to VAT.
The partners are subject to mandatory insurance under the Social Insurance Law for Commerce and Trade.
A Gesellschaft bürgerlichen Rechts (GesbR) does not have a company name and cannot be recorded in the companies register. In correspondence, you must always indicate the names of all partners with an address for postal delivery, in addition to a possible joint business name.
Accounts / Financial statements
In order to ascertain the financial results of a Gesellschaft bürgerlichen Rechts (GesbR), it is sufficient to keep a simple cash-based system of accounting.
If the revenues in two consecutive years exceed EUR 700,000, the company must be run as an Offene Gesellschaft (OG) (general partnership) or as a Kommanditgesellschaft (KG) (limited partnership) and recorded in the companies register. The company then is under an obligation to keep accrual-based accounts and to prepare financial statements; cash-based accounting is no longer sufficient. If revenues exceed EUR 1 million, the obligation to register the company in the companies register and to keep accrual-based accounts and prepare financial statements already applies in the next following year. An exemption is made if the partners have joined for a limited period of time for one single, defined project.
Reasons for dissolving the company include: the joint project has come to its end, the purpose of the partnership has been attained; Articles of Association which have been agreed on for a limited period of time have expired; a partner has terminated the Articles of Association which had been concluded for an unlimited period of time; a partner has resigned for an important reason, or was excluded for an important reason, or has died. A formal act is not necessary.