German Limited Partnerschip (GmbH & Co. KG)

Tax Consulting in Germany

The GmbH & Co. KG is a special legal form which is partially comparable with the USA's Limited Liability Company (LLC).


This form of company unites the tax advantages and company law advantages of a corporation and a personal company.

Precisely speaking, it is in fact two companies: a GmbH as a limited liability corporation, and a limited partnership (Kommanditgesellschaft - KG) which unlike an OHG has only one fully liable person (the general partner) while the other shareholders (limited partners) have only partial share, with their capital investment, in outside obligations of the KG.

The GmbH functions as the general partner of the KG, which leads to a factually limited outside liability of the entire company unit.

Founding a GmbH & Co. KG

Since this is a case of two companies, as already mentioned, you must first found a GmbH and then in a second step, found a KG in which the GmbH is a participating shareholder. However, both foundings can be carried out in a joint notary consultation to save costs.


Management is regularly taken over by the GmbH as the general partner of the KG, which for its part is represented by its own manager. The natural person appointed as the GmbH manager generally also manages the business of the KG.


Here must be differentiated between the two types of shareholder in the KG: the general partner and the limited partner.

The limited partner participates in the KG but is only partially liable. This means that the level of his liability is limited to his share investment.

The general partner functions as a fully liable participant and therefore is liable for outside obligations of the KG, in an unlimited manner with his entire assets. Because a GmbH & Co. KG fills this position with a GmbH, its liability is however limited to its own business assets, and the whole GmbH & Co. KG is finally only liable for the amount of the GmbH's nominal capital plus the share investments of the limited partners.


The income of a GmbH is subject to corporate tax, the solidarity surcharge, and local business tax. However, because the GmbH generally has only a relatively low return for taking on the liability (and possibly the management) of the KG), there are normally no tax payments due, or only a low amount.

Taxation on the income of the KG, which maintains the actual business operation, corresponds to the taxation on the income of an OHG, whereby the loss offset for the limited partners is essentially limited to the level of their capital accounts.

Tax on turnover (VAT) is done in Germany essentially independently of the company's form and is explained in more detail on the next page.

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