Starting a business in Germany usually comes with some challenges. However, there are relatively few formal requirements for a civil law partnership (Gesellschaft bürgerlichen Rechts, or GbR).

In this article, you’ll learn what a GbR is and how you can set one up, step by step. We also explain relevant costs and taxes associated with GbRs.

What’s in this article?

• What is a GbR?
  
• How do you set up a GbR?
  
• How much does it cost to set up a GbR?
  
• What taxes does a GbR have to pay?
  

What is a GbR?

A GbR is a business structure where at least two people partner up to pursue common interests, either in business or a private venture. A GbR does not require formal establishment, which makes it the most straightforward form of partnership under German law. It is particularly ideal for freelance professionals and small business owners, as well as working groups (e.g., task forces) and certain joint ventures. A GbR is also called a “BGB business,” as its legal framework is defined in paragraphs 705–740 of the German Civil Code (BGB).

Moreover, reforms to partnership law in January 2024 (Act to Modernize the Law on Partnerships, or MoPeG) introduced a new distinction to the existing notion of BGB businesses. In addition to the classic GbR, there is now the registered civil law partnership (eGbR). While a standard GbR remains informal, an eGbR can be registered in the newly created Commercial Register. This grants the eGbR legal capacity, which, among other things, makes it easier to complete contracts and participate in legal transactions. The reform aims to increase legal certainty for GbRs and integrate them more effectively into the economy.

How do you set up a GbR?

Setting up a GbR takes only a few steps, some of which are optional. However, you should carefully observe the following formalities and, if in doubt, seek advice from a tax advisor or law firm.

Preparing a memorandum of association (optional)

A written memorandum of association is not required by law when founding a GbR. However, it is still advisable to make clear agreements in advance and record them in writing. This could help avoid any potential conflict later.

You can draw up a memorandum of association without any specific format. However, the Chamber of Commerce and Industry (IHK) and the Chamber of Crafts (HWK) have templates you can use as a guide. The agreement sets out key aspects of the business, including the business’s:

• Purpose

• Allocation of responsibilities

• Decision-making processes

• Profit distribution

• Liability provisions

Choosing a GbR name

Since a GbR is not an independent business in the legal sense, it does not have a traditional business name. Instead, it must have a name that includes the names of the partners along with “GbR.” Last names are mandatory; first names are optional. This provides transparency, as GbRs are not recorded in a public register.

Ideally, the name also provides information about the business activity (e.g., “Real Estate Company Meier & Müller GbR”). In addition to any industry-relevant additions, you can also add terms that don’t have any direct connection to the partners or their activities (e.g., “Schmidt and Steiger GreenRoom GbR”). In this case, however, you should be careful to ensure that the GbR name does not contain prohibited content. Before using a name, you should check with the trade office or the local Commercial Register to see whether it has already been taken.

Business registration (only for independent business owners)

Anyone engaged in a commercial activity must register their GbR with the relevant trade office. The trade office forwards the information to the responsible tax office. Freelance professionals are exempt from this registration requirement.

Registering with the tax office

After partners register a business, the tax office automatically follows up. However, freelance professionals who set up a GbR must register directly with the tax office. All partners receive a questionnaire for tax registration. After the tax office verifies the questionnaires, it issues the GbR a tax number that partners must provide in the future when dealing with tax matters. If the GbR is planning to do business overseas, partners can also apply for a value-added tax (VAT) identification number via the same questionnaire.

Registering with the Chamber of Commerce and Industry (only for independent business owners)

As soon as you register the GbR with the trade office, the IHK will also be notified. You will then receive a registration form to fill out. In principle, businesses must be members of the IHK, but this requirement does not apply to freelance professionals.

Registering in the Commercial Register (optional)

As of January 1, 2025, GbRs have the opportunity to register with a Commercial Register at the relevant district court (see Section 707 of the BGB). Registration is not mandatory. However, it is a prerequisite for certain legal transactions, such as real estate and investments in other companies.

Registering employees with social security providers

If a GbR employs staff, it must register with the social security authorities in order to pay the relevant social security contributions. A business number is required for this and can be obtained from the Employment Agency. In addition, the GbR must pay wage tax to the tax office for employees subject to social security contributions. Employees must register for statutory accident insurance and the relevant employers’ liability insurance association.

Opening a business account (optional)

Although it is not a legal obligation, it’s a good idea to set up a separate business bank account for the GbR. This makes it easier to separate business from private finances and provides greater clarity in accounting.

Organizing accounting processes

Proper accounting is important for a GbR to ensure financial transparency and meet tax obligations on time. This includes the systematic recording of all income and expenses, proper storage of receipts, and regular preparation of profit statements. Depending on the company structure and the scope of business activities, you can handle accounting internally or outsource it to a tax consultant.

When it comes to complex tax matters—such as VAT or deductible expenses—external professional support can help you avoid mistakes and make the most of potential tax benefits. Stripe Tax helps you where you need it most—Tax collects and reports taxes for you worldwide with a single integration. It automatically determines the correct tax amount. It also gives you access to all relevant documents you might need, including those for tax refunds.

Checking out possible insurance options

When setting up a GbR, you should carefully examine which insurance policies are necessary or useful to protect you, your partners, and your business from financial risks. One of the most important forms of protection is business liability insurance, which covers damage caused to third parties due to business activities. Anyone who provides consulting services should also consider professional indemnity insurance, as it protects against claims for damages due to faulty advice or planning errors. Legal expenses insurance can also help cover unexpected legal costs in the event of disputes with customers, suppliers, or the authorities. The insurance required in each individual case depends on the industry and the specific business risks.

How much does it cost to set up a GbR?

The costs of establishing a GbR in Germany are comparatively low, as the legal creation does not require any minimum capital as business assets. This makes GbRs ideal for partners with limited financial resources. However, depending on individual requirements, different costs can arise.

If you do not have a memorandum of association—or if you draw one up on your own—there are no associated expenses. If you get help from a lawyer or notary, you can expect to pay several hundred euros, depending on the complexity of the document.

The costs for registering a business vary regionally, as each city or municipality sets the fees individually. On average, business registration costs €10–€65. These costs are waived for GbRs that do not operate a business.

The annual membership fees for the IHK also vary regionally and depend on the economic success of a business. For example, at the IHK for Rheinhessen, you could pay €49–€785 in 2025.

If partners decide to register a GbR in the Commercial Register, notary and registration fees will apply. These vary depending on the number of partners. For an initial registration with up to three partners, the fee is approximately €100. For each additional partner, the fee increases by €40.

Banks usually charge a monthly fee for setting up and maintaining a business account. Depending on the bank and the service package, this amounts to anywhere from €0–€20. Additional fees can apply per provider, including for individual transactions, cash deposits, or transfers.

For more information, see our article on the advantages and disadvantages of a GbR.

What taxes does a GbR have to pay?

Anyone who wants to set up a GbR should also learn about the associated tax obligations. They differ for freelance professionals and businesses engaged in commercial activities.

The following taxes are relevant for freelance GbRs:

• Income tax
  
• VAT
  
• Possibly payroll tax
  
• Possibly real estate transfer tax
  

The following taxes are relevant for commercial GbRs:

• Income tax

• VAT

• Trade tax

• Possibly payroll tax

• Possibly real estate transfer tax

Since the GbR is a partnership without its own legal identity, it does not have to submit a separate tax return to the tax office. A separate profit statement is sufficient. This indicates the business’s profits or losses and how they are distributed among the individual partners. Each partner has to declare their share on their private tax returns. Therefore, taxation is not carried out at the business level. Instead, individuals pay income tax on their share of profits, while legal entities are subject to corporate income tax. It does not matter whether the profits are paid out or left in the GbR.

Concerning VAT, the GbR is considered an independent, taxable entity—provided it is registered as a business under the German VAT Act (UStG). For deliveries and services in Germany, VAT is generally charged at 19% or, in certain cases, 7%. Small-scale entrepreneurs can, however, be exempted from VAT. Since the beginning of 2025, the prerequisites for this are annual revenue of less than €25,000 in the previous year and projected revenues of less than €100,000 in the current year (see Section 19 of the UStG); prior to the reform, other limits applied.