Partnership limited by shares (KGaA) – formation, financing, liability & Co

The partnership limited by shares – abbreviation: KGaA – is a relatively unknown form of corporate law and is formed as a hybrid of the conventional limited partnership – short: Kommandite or KG – plus the classic stock corporation – short: AG. Both the Kommandite and the AG belong to the so-called complete companies and are therefore primarily subject to the German Commercial Code (HGB). The limited partnership belongs beyond that however to the partnerships and has no own legal personality. The stock corporation, on the other hand, is probably the best-known corporation of all and is primarily committed to share trading.

The KGaA adopts the best features of both legal forms: it takes a stock corporation as its basic structure and supplements it with the structure of general partners and limited partners that is characteristic of the KG. Thus, the entrepreneurial management – similar to the AG – is divided into different bodies, whereas the liability risk is distributed among at least one personally liable partner and the remaining partners in the amount of their capital contribution. Although the partnership limited by shares is a limited partnership in name and suggests the legal status of a partnership, beware: it is in fact a corporation by virtue of its legal form, including its own legal personality!

Other typical corporations:

• Stock corporation (AG)
• European Company (Societas Europaea, abbreviated to SE)
• Entrepreneurial company / UG (limited liability)
• Limited liability company (GmbH)

Corporation KGaA – Stock Corporation Act §§ 278 – 290 & §§ 161 – 177a German Commercial Code (HGB)

In principle, the legal basis for partnerships limited by shares is the German Stock Corporation Act (Aktiengesetz, AktG), more precisely: paragraphs 278 to 290, where, among other things, the nature of the KGaA is defined. For the legal position of the individual partners, on the other hand, reference is made to the applicable provisions for conventional limited partnerships, which are found in the German Commercial Code (HGB) – sections 161 to 177a.

Excerpt from the law – § 278 AktG:

(1) A partnership limited by shares is a company with its own legal personality in which at least one partner has unlimited liability to the company’s creditors (general partner) and the others have an interest in the share capital divided into shares without being personally liable for the company’s obligations (limited shareholders).
(2) The legal relationship of the general partners among themselves and vis-à-vis the entirety of the limited liability shareholders as well as vis-à-vis third parties, namely the authority of the general partners to manage and represent the partnership, shall be determined in accordance with the provisions of the Commercial Code on limited partnerships.
(3) In all other respects, the provisions of the First Book concerning the stock corporation shall apply mutatis mutandis to the partnership limited by shares, unless otherwise provided for in the following provisions or in the absence of a management board.

Kommanditgesellschaft auf Aktien – International distribution of the legal form

The partnership limited by shares – abbreviated to KGaA – is where the legal form of a stock corporation and the typical features of a limited partnership meet. The resulting hybrid of a corporation and partnership features has so far been rather rare in Germany, although interest has been slowly but steadily increasing since the end of the 1990s. The partnership limited by shares also appears internationally, for example as a “commercial partnership limited by shares” in English-speaking countries or as a “société en commandite par actions” in France.

International distribution of the KGaA:

• Anglophone region: Commercial partnership limited by shares
• Belgium: Commanditaire vennootschap op aandelen (CommVA)
• Denmark: Partnerselskab (P/S) or Kommanditaktieselskab
• Germany: partnership limited by shares (KGaA)
• France: Société en commandite par actions (SCA)
• Italy: Società in accomandita per azioni (S. a. p. A. / S. A. A.)
• Iceland: Samlagshlutafélag (slhf.)
• Netherlands: Commanditaire vennootschap (CV)
• Poland: SpóÅka Komandytowo-Akcyjna (S. K. A.)
• Portugal: Sociedade em Comandita por acções (SCA)
• Spain: Sociedad comanditaria por acciones

Legal form variant Kapitalgesellschaft & Co KGaA – General partner as legal entity

Sometimes different corporations also appear in combination with a partnership limited by shares (KGaA). For example, family businesses occasionally organise themselves as a Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft auf Aktien – in short: GmbH & Co KGaA. In this case, they form a stock corporation in the legal sense – however, the general partner as personally liable shareholder is not just any natural person, but specifically a limited liability company (GmbH). If the general partner is instead embodied by an AG, it is referred to as an AG & Co KGaA, and in the case of a Societas Europaea, as an SE & Co KGaA.

More about the individual hybrid forms:

• GmbH & Co KGaA – see limited liability company (GmbH)
• AG & Co KGaA – see stock corporation (AG)
• SE & Co KGaA – see Societas Europaea (SE)

CEWE Stiftung & Co. KGaA is a special case: In this company, the general partner is embodied by a foundation. In principle, the partnership limited by shares is possible in all conceivable combinations, as GUB Investment Trust KGaA points out as an example.

Continue reading here on the topic of setting up a family foundation:

• Establish a family foundation

Foundation, company name & organs of a KGaA

The formation process of a partnership limited by shares is based on the formation process of stock corporations. Accordingly, a KGaA is considered a legal entity and can only participate in legal transactions through its executive bodies. Unlike the conventional stock corporation, however, this legal form does not provide for a management board as the governing body, so that the governing bodies of a KGaA are limited to the general meeting – consisting of the total of the limited liability shareholders – and the supervisory board. The management authority and the power to represent the company externally are incumbent on the general partners as personally liable partners.

You can find out here how the process of founding an AG works in detail:

• Formation of a public limited company

A personally liable partner can be either a natural person or a legal entity, which limits his liability to the business assets of the corporation and cleverly avoids personal liability. The limited partners or limited shareholders can also be natural persons or legal entities and are in any case only liable to the extent of their respective share contribution.

To set up your KGaA, you also need the following in brief: a tax identification number (tax ID); the confirmation of registration from the Trade Licensing Office; the shareholders’ agreement aka articles of association together with notarial certification; 50,000 euros of share capital; and finally the entry in the Commercial Register under the company name you have chosen plus the legal form suffix “KGaA”.

Examples of KGaA companies:

• Merck KGaA
• MERKUR PRIVATBANK KGaA

Limited partner & general partner: A question of liability

What is a limited partner and general partner? This is a question many people ask themselves when they first hear about the special characteristics of a limited partnership. This is because, unlike all other partnerships, the partners in a limited partnership are clearly divided into general partners and limited partners. Therefore, a single individual or legal entity can never be a general partner and a general partner at the same time.

Usually, general partners are the personally liable partners of a limited partnership. In a partnership limited by shares, too, a distinction is made between general partner and limited partner, the latter being contextually referred to as limited shareholder. The general partner bears the full risk as a general partner: as with the conventional KG, he is also jointly and severally liable, directly and without limitation with business assets and private assets. The liability risk of the limited shareholders, on the other hand, is limited only to the amount of the mandatory sum that they paid in as a limited partner contribution in the form of shares when the KGaA was formed.

Financing & profit distribution

The financing of a KGaA is advantageous compared to the conventional limited partnership, as equity capital can be raised more easily. Overall, as with the AG, a share capital of 50,000 euros or more is required. With regard to the distribution of profits and loss sharing, there are no special regulations compared to the conventional KG: Either the legal principles come into play or corresponding specifications have been anchored in the articles of association. Profits are distributed in principle to 4 per cent of the capital share plus additional profit “in the appropriate relationship”. Losses are also shared appropriately.

Taxes for company & shareholder: separation principle & transparency principle

Like all other forms of corporate law, the partnership limited by shares is generally liable to pay taxes. It is considered an independent tax subject with regard to corporate income tax and trade tax; all natural persons in the partnership are usually subject to income tax.

Due to its hybrid form, however, special regulations apply to the KGaA under tax law: the taxation of the company itself is based on the separation principle, the taxation of the limited liability shareholders is also based on the separation principle and the taxation of the general partners is compulsorily based on the transparency principle. In the case of taxable turnover, the KGaA is always subject to turnover tax.

• Trade tax (GewSt)
• Value added tax (VAT)
• Income tax (ESt)
• Corporate income tax (KSt)

Taxation of the KGaA – separation principle

As a corporation and legal entity, the partnership limited by shares is generally subject to corporate income tax. Insofar as the KGaA exercises its management and/or its registered office in Germany, it is deemed to be subject to unlimited corporate income tax and must pay tax on its entire global income accordingly. In the case of foreign management and/or foreign registered office with domestic income – for example from a domestic permanent establishment – the KGaA is deemed to have limited tax liability.

The profit of a KGaA is determined by means of a comparison of business assets. For the taxable income, on the other hand, a special provision applies with regard to deductible expenses, which is anchored in the German Corporate Income Tax Act (Körperschaftsteuergesetz, KStG) – the corporate income tax of the KGaA therefore only applies where income is attributable to the share capital, i.e.: the profit shares of the limited liability shareholders. The profit shares of the general partners as well as their management remuneration are deducted in advance and can be deducted as operating expenses. They do not come into play in the calculation of the KGaA’s income, but must be taxed by the general partners themselves.

Excerpt from the law – Section 9 (1) no. 1 KStG:

in the case of partnerships limited by shares and comparable corporations, that part of the profit which is distributed to personally liable partners on their contributions not made to the share capital or as remuneration (bonus) for management;

The KGaA must pay trade tax as an entrepreneur, regardless of its hybrid structure. Thus, the determined profit from business operations – increased and decreased by the amounts specified in the Trade Tax Act (GewSt) – is understood as the trade income of the KGaA. The amounts previously calculated for corporate income tax purposes for profit shares and management remuneration of the general partners are now added back to the calculated profit from business operations, thereby ensuring that no amounts escape taxation through trade tax.

Taxation of the limited liability shareholders of the KGaA – separation principle

As natural persons, limited shareholders do not have to pay corporate income tax. Therefore, their profit shares and any management remuneration are settled via the partnership limited by shares itself. Like their counterparts in the conventional limited partnership, they are subject to income tax in the event of a dividend distribution. If they hold limited partnership shares as private assets, they generate income from capital assets in accordance with the German Income Tax Act (EStG).

Taxation of the general partners of the KGaA – separation principle

General partners are taxed like co-entrepreneurs for the purposes of tax law. In this context, they are not to be regarded as co-entrepreneurs, but merely treated as co-entrepreneurs – a small but significant difference… especially in terms of “taxes”! As natural persons, general partners are subject to income tax as normal and must pay tax on their income from business operations.

In contrast to the limited liability shareholders, general partners are required to pay corporate income tax: Their profit shares and any management remuneration are deducted from the KGaA’s income to be determined and charged directly to the general partners. The corresponding amounts must be taxed as part of the income tax return.

Partnership limited by shares (KGaA) – For whom is it worthwhile?

The possibility of easy capital procurement is certainly one of the reasons for founders of new businesses to opt for the formation of a KGaA. In addition, the partnership limited by shares has a high resistance to takeovers, which is why the individual partners can contribute personally and maintain their entrepreneurial commitment despite high capital contributions. The sometimes high liability risk of the general partner can be absorbed by the clever positioning of a GmbH or AG as a personally liable partner.

So who is the partnership limited by shares suitable for? This legal form is worthwhile for start-ups that cannot avoid external financing, but do not want to make any concessions with regard to their decision-making authority as well as the management of their company. The special legal form of the KGaA provides family businesses with a company in which control does not have to be transferred to outside hands as soon as share capital is issued as shares.

Alternatives to the KGaA: Legal forms in Germany

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

Company types in detail:

• Sole proprietorship
• Registered businessman / registered businesswoman (e. K.)
• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)
• Entrepreneurial company (UG)
• GmbH: Limited liability company
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Real estate stock corporation (REIT-AG)
• Societas Europaea (SE)
• Foundation / Family Foundation

How do I learn to act? Methods

In the past, this was virtually the only way to do it:

Trial and Error.

Trial and error means you actively participate in trading and thus learn, mostly through mistakes you make, i.e. losses. Today, you can “just copy” traders. Let’s look at the function of “social trading” and the 2 ways or methods with which you can improve your trading knowledge (besides Youtube videos, books, etc.), directly in the app.

First, the “classic method” of trial and error.

No investment advice or purchase recommendation!

All information provided here does not constitute investment advice or a recommendation to buy. All statements are my general published opinion. I have obtained the information from my experience as a private investor. This experience report cannot and is not intended to replace personal investment advice from professionals.

Trial and error: learning from mistakes

The classic way – The classic way is, “learning by doing”! You hear about methods, strategies, you read about them, you try them yourself. In the process, you usually lose a lot of money. But that’s okay, because (!) you use for trading of course only money that you have left. One of the most important rules!

Only invest money that you have “left over

This is the only way to stay calm, even if prices slip into the red.

But you can also “copy profiles”, observe traders and draw your own conclusions for your trading strategies. Passively your assets will increase, if chosen correctly.

Now before we “celebrate trading”, here’s a look at a day full of red numbers! Losses, risk, “play money”, be aware of all these factors if you want to trade. In the morning, it can look like this.

Trading app in the browser (price losses):

If you can handle it, let’s move on!

Trader copy: Modern anlagen

The modern method – Modern means in this aspect, copy the investment portfolio of a successful trader. This is exactly the advantage of eToro. Through this “copy feature” in social trading, you can easily copy investment portfolios of other traders.

After copying, the app triggers all actions exactly as the trader does. Accordingly, all financial products are bought and sold simultaneously. As a result, your assets grow and are reinvested, automatically. The big advantage is that your portfolio acts on the basis of the actions of an experienced trader. This reduces risk.

Social Trading: Copy investment portfolio and traders

Social trading is therefore, among other things, another step towards minimizing risk. Why? You do not manage your portfolio yourself and have to check the daily news, financial data, other stock values.

You do not give away your money. You just copy the portfolio and all the trader’s actions. In the eToro app you can take a close look at all movements and transactions. This way, in addition to your own learning, you can build up further practical knowledge. Simply by checking daily which movements are triggered by the experienced traders.

Before I get to the individual functions, here are my quick experiences.

My experience: The first 3 months

I was bored at Christmas and this is exactly where I tried eToro for the first time.

What I really liked was the extremely fast registration. Other trading apps often take days, banks even weeks. Here, the entire registration process was over after 10 minutes and everything was verified after 30 minutes. Accordingly, I was able to start on Christmas Eve and copied my first profiles.

Gain 24/7 trading experience instead of hiring banks

In my experience, it is a nice feeling when you can rely on an experienced person for the first time. PS: Yes, there are classic banks that take over the trade for you, but here you have no real-time insights, you get “only” monthly evaluations. In the app, you are live 24/7 if you want.

For the first time I didn’t have to check the news every morning, someone else does that. I just check the portfolio, compare the different traders with each other and optimize every 14 days. That is, I change a few traders, sometimes only assets allocated to individual traders.

This is what the app looks like (menu and watchlist):

Asset accumulation in history: comparisons

Another big advantage, which I find particularly good in this context, of course, is that you can look at the trader’s asset accumulation in the entire history.

So I can not only look at how the current investment portfolio of the respective trader looks like, I can also look at how the individual months have gone in retrospect. When did the trader achieve returns, when did he or she make losses?

Comparability – The simple and quick overview allows me to compare different traders with each other. So I can easily decide which trader or investment profile I want to copy.

Find a trader: Guidance and overview for beginners

Finding traders – Your very first step is to compare different trailers. As I just described, the overview in eToro is really strong. In the overview you can see the most popular trailers.

Filter – Through the filter function, you can go even deeper. For example, you can search for traders who have a relatively low investment risk, thus a lower return but stable and safer. You can also select traders who have a higher risk, e.g. because they invest in cryptocurrencies or because they trade with leverage. Accordingly, the profits are higher, but so are the losses – be careful!

You can also select individual countries, so that you only follow traders from your home country, for example, who may then also invest in financial products that you know.

This is how the overview of trader profiles looks like:

Trade Profile: Investment portfolio, see profits and losses

Within the overview you will then find the individual traders, with their investment portfolio and the history of their trading, that is, profits and losses in retrospect for the individual months and years. If you now open several tabs on your browser, you can easily compare the different traders and make your choice! Tip: Shortcut ” Ctrl + Tab “, or for Mac ” CMD + Tab ” to switch tabs.

Diversify investments – As always in trading financial products, the more diverse your portfolio, the less risky your investment. Accordingly, you should also divide your assets among different traders.

One trader may invest more in the American market, another more in the Asian market and yet another somewhat more speculative also with cryptocurrencies. Through the mix are the default risk of a single product.

Another advantage – Due to the fact that your single product is a trader, your investment portfolio is already broad anyway. Most traders on eToro hold between 10 and 50 financial products. Usually, of course, stocks.

This is how trading works: trader copy

Once you have copied a Trader Portfolio, the individual financial products are automatically bought / sold in the same ratio.

If you now wait a few hours or a few days, you will see that the first values are also sold again. Traders usually do not hold individual financial products for years, but they use ups and downs of the prices to generate additional profits.

So after a few days you will also see the first evaluation of the profits and losses that your trader has told. Since you automatically copy his or her investment portfolio, you have the same profits or losses that the trader has. This way your assets will increase step by step.

Reinvest – Your additional assets that were earned through profits are then reinvested as well. So you trade at some point with 105% of your capital, 110%, 120% and so on. Thus, your assets increase and you can, as described at the beginning, passively actively participate in trading.

Increase profit through asset accumulation

Profit increase through asset accumulation, simply calculated:

• Profit from 100% = 5% | 1,000 Euro = 50 Euro
• Profit from 105% = 5% | 1,050 Euro = 52.50 Euro
• Profit from 110.2% = 5% | 1,102.50 Euro = 55.13 Euro

Capital investment in copying: Overview

The maximum amount you can currently invest in a single trader is 2,000,000 US dollars, equivalent to 1,680,000 euros. You can copy a maximum of 100 profiles per eToro app account. Trades in general are opened from 1 US dollar. Therefore, the minimum amount per trader copy is 200 US dollars, i.e. 168 euros.

In summary:

• Minimum deposit / profile: $200 / €168
• Maximum amount / profile: 2.000.000 $ / 1.680.000 €
• Maximum copies: 100 profiles

Copy functions

If you want to withdraw money from your portfolio, e.g. because you want to invest it, you have several options. You can stop the portfolio of the trader immediately, so that all financial products are closed and you can, depending on stock exchange opening hours, usually within 6 to 12 hours to access your capital. On weekends, of course, it takes longer, due to the exchange opening hours.

If an individual trader still has losses in the portfolio, you also have the option to stop copying only partially.

In the app, you have these options:

• Add Funds
• Remove Funds
• Pause Copy
• Set Copy Stop Loss
• Stop Copying
• Write New Post
• View Chart

Here briefly explained all the functions in copying the trading profiles:

Add Funds / Add money

Here you add additional capital to an existing, copied profile.

Remove Funds / Withdraw Money

With this function you can deduct open amounts (not invested). Usually this is 0.5 – 10% of the invested capital.

Pause Copy / Pause copying

When you stop, all items are immediately closed (sold). If you don’t want that, choose Pause. Now no new trades will be executed. So you could hold the portfolio and sell it yourself, step by step. For example, because you first want to sell only individual items.

Set Copy Stop Loss

Here you determine how much loss you accept. The standard stop loss (SL) is 60%. That means:

• Invested: $10,000
• Depot loss: -$4,000 -> sell

If the individual deposit or copied profile falls below 6,000 US dollars, it is automatically sold. This “protects” you from even higher losses.

Stop Copying / Stop Copying

With “Stop Copying” everything is sold immediately. As described above, the sale takes time depending on which stock exchange which paper is traded on (time zones). Read more about stock exchange opening hours & time zones here.

Write New Post / New Post

Every trader has a profile and a news feed. Like on Facebook, Instagram & Co. With this function you can write new posts, which are then displayed in the trader’s news feed.

View Chart

Here you can see the entire historical course of your investment with profits / losses in a curve.

EToro: Get to know the app

Stocks, ETF, Cryptocurrency (Bitcoin), … Costs, rating + experience – where do we start? Best here! eToro app – trade stocks, ETF, cryptocurrency, in my blog you have already learned a lot about trading.

Lots of questions of course: what app do you trade with, what do I recommend? So today I want to share with you my favorite trading app, eToro. 29.88% asset growth in 12 months, with low risk through “Copy People” and “Copy Portfolios” or up to 127.35% through active trading and trading strategies.

Learn here step by step about the app, fees and much more. Of course, with all the criteria of valuation, costs and all trading options, from stocks to ETF, index fund, currency, cryptocurrency and commodities.

In addition, the ultimate eToro advantage: You can copy successful traders! Keyword “Social Trading”. In the end, you know the app inside out for your first trades. You want to start right away? Start in the browser or get the app:

• EToro

GmbH & Co KG – formation, financing, liability & Co

The limited partnership – in short: Kommandite or KG – is one of the so-called complete companies and, as a partnership, is subject to the German Commercial Code (HGB). The formation process for this legal form of company is quite uncomplicated, as it can be formed informally and requires a minimum of only two founding members. It can be formed by both natural persons and legal entities. A maximum number of permissible shareholders is not specified by law.

If all general partners of a KG consist of limited liability companies (GmbH), they form a so-called Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft – called GmbH & Co KG for short. Such a GmbH is sometimes also referred to as a general partner GmbH, but beware: the general partner GmbH is a corporation and part of the GmbH & Co KG, while the GmbH & Co KG by virtue of its legal form is always a partnership!

Other typical partnerships:

• Limited partnership (KG)
• General partnership (OHG)
• Limited Liability Company and Compagnie General Partnership(GmbH & Co OHG)

Foundation & Company Name

Two persons are required for the formation of a GmbH & Co KG: The GmbH as full partner – i.e. general partner – and a natural person as partial partner – called limited partner. If you are starting from scratch, you must first establish a limited liability company in preparation. To do this, you need the following in a nutshell: a natural person or legal entity as the founder of the company; a tax identification number (tax ID); the confirmation of registration from the trade office; the shareholders’ agreement aka articles of association together with notarial certification; 25,000 euros in share capital; and finally the entry in the commercial register.

You can find out how the process of setting up a GmbH works in detail here:

• Establishment of a limited liability company (GmbH)

You have successfuly founded your GmbH? The limited partner is ready to go? Then the next step is to set up a limited liability company (Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft). Since the GmbH & Co KG is a separate company, you again need a tax ID and must register the company with the trade office. The establishment of articles of association is also mandatory and of course your company needs a suitable company name including the company suffix “GmbH & Co KG”.

Management & power of representation

As a general partner, the GmbH basically has power of representation in the external relationship. However, since a GmbH is a legal entity, the management authority is entrusted to a natural person. This may be a shareholder of the general partner GmbH or the position may be assigned externally to a so-called third-party managing director. In this case, there is often talk of a third party board of directors or external board of directors.

Alternatively, limited partners may also act as managing directors, provided they are expressly appointed to this body. Since limited partners are generally excluded from management, their management authority in this case is, however, limited to the right of objection in the case of extraordinary transactions.

Profit distribution & loss sharing

With regard to the distribution of profits and the sharing of losses, either the statutory principles come into play or corresponding specifications have been anchored in the articles of association. Profits are generally distributed at 4 percent of the capital share plus additional profit “in reasonable proportion”. Losses are also shared appropriately.

It is possible to completely exclude the general partner GmbH from the distribution of profits by means of a declaration in the shareholders’ agreement, whereby higher profits can be distributed to the investors. Insofar as the GmbH has inherent management authority, it can be paid an appropriate remuneration to compensate for its role as managing director, whereby a managing director’s remuneration cannot be deducted in total as a business expense for tax purposes. However, the remuneration is paid irrespective of the profits generated and thereby has the effect, if applicable, that the entire company can save taxes.

General partner, partial partner & tax liability

Usually, the general partners of a limited partnership are liable without limitation and jointly and severally – i.e. with their business assets plus private assets. If, on the other hand, the general partner of a KG appears in the form of a limited liability company (GmbH), he is liable as a legal entity only to the extent of the GmbH’s capital contribution. Limited partners are liable – as in the case of a conventional KG – only to the extent of the mandatory sum that they paid in as a limited partner’s contribution when the GmbH & Co KG was founded.

Like all other legal forms of companies, the Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft is generally liable to pay taxes. First and foremost, they are subject to trade tax and – in the case of taxable turnover – turnover tax. A GmbH & Co KG is generally exempt from income tax and corporation tax… However, profit income is still subject to taxation: corporation tax is applied to the profit share of the general partner GmbH, whereas limited partners must pay income tax on their profit.

• Trade tax (GewSt)
• Value added tax (VAT)
• Income tax (ESt)
• Corporate income tax (KSt)

Tip. All taxes for companies in one list:

• Taxes in Germany

GmbH & Co KG – For whom is it worthwhile?

A significant advantage of a GmbH & Co KG is undoubtedly the limitation of liability to the business assets of the general partner GmbH. This means that founders do not directly risk the existence of their company if an investment turns out to be disadvantageous, and they can quickly increase their equity capital through the flexible and simple admission of new limited partners. They can confidently outsource the organisational effort and the management to an outside body or make deviating succession arrangements in order to maintain the GmbH & Co KG.

So who is the GmbH & Co KG suitable for? This legal form is worthwhile for start-ups who would like to set up their business as a partnership without having to forego the special liability restrictions of a GmbH. A GmbH & Co KG is also conceivable as an asset-managing company and for family businesses.

Alternatives to the GmbH & Co KG: Legal forms in Germany

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

Company types in detail:

• Sole proprietorship
• Registered businessman / registered businesswoman (e. K.)
• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)
• Entrepreneurial company (UG)
• GmbH: Limited liability company
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Real estate stock corporation (REIT-AG)
• Societas Europaea (SE)
• Foundation / Family Foundation