Legal form: GmbH or GmbH & Co KG?

The first step before founding the company is to find the legal form in other words to determine whether you prefer a corporate structure such as a limited liability company (GmbH) or a limited partnership (GmbH & Co KG).

1. Legal form – Limited Liability

Both alternatives provide limited liability.

2. Legal form – Structure

The GmbH is one company (the GmbH) who has one or more shareholder. The shareholders are not liable for losses of the GmbH. In other words: The worst case is that the shareholders lose their paid in capital and, if any, their claims against the GmbH.

The GmbH & Co KG is a KG (Kommanditgesellschaft) who has one or more shareholder. But one of these shareholders is liable without limitation. This could also be a natural person but in case of a GmbH & Co KG it is a GmbH. So in the worst case the GmbH will be liable for all losses of the GmbH & Co KG. Therefore, you would only put the minimum capital in the GmbH, so only this could be lost.

3. Legal form – Management

The GmbH can have one or more directors. The director does not have to live in Germany. In case of the GmbH & Co KG the director of the GmbH is in charge of the GmbH & Co KG by law but additional directors can be appointed.

4. Legal form – Tax differences

Details regarding the tax treatment you can find below in one of the next articles “German tax law for companies”.

5. Legal form – Founding capital

Founding capital for the GmbH is EUR 25.000 (EUR 12.500 have to be paid at the beginning). In case of the GmbH & Co KG you need just a symbolic founding capital, such as EUR 100. Additionally, as mentioned before, you need to take care of the founding capital of the GmbH which you need as an unlimited shareholder.

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Krischan TreydePlease contact me if I may give you further explanations.
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Best regards

Krischan (Kris) Treyde (CV)
Lawyer and Tax Consultant