ESTABLISHING A KG (LIMITED PARTNERSHIP)
A limited partnership (KG) is similar to a general partnership (OHG). The Commercial Code (HGB) regulates details of the KG.
A limited partnership (Kommanditgesellschaft, KG) consists of at least one personally liable partner and one non-personally liable partner. These have to run a trade together. A commercial trade, according to the legal regulations, is a commercial enterprise which, depending on the type, requires a commercial business operation. These transactions include trading transactions regulated by the HGB. A social contract is necessary between the partners. This must regulate who is the general partner (general partner) and who is not the general partner (limited partner). In addition, the KG must be entered in the commercial register. A KG is right- and party-capable and can therefore bear its own rights and obligations.
The Komplementär (general partner) is the personally liable partner of the KG. He is fully liable with his private assets. He is authorized to represent the company externally. The limited partner is not liable with his private assets. There is an exception if the limited partner has not made his contribution. If the contribution is repaid by the KG, the limited partner is personally liable again. For the limited partner’s liability to be effectively excluded, this must be entered in the commercial register.
An advantage with a limited partnership is that the limited partner is not liable with his personal assets. If the contribution has been made and has not yet been repaid, there are no liability risks for the limited partner’s private assets. Only the general partner is a personally liable partner. In the case of partnerships whose partners are to be regarded as so-called co-entrepreneurs in tax law, there is the advantage that the co-entrepreneurs’ income or losses are tax-deductible from other partners’ income.
The limited partner is legally excluded from representing the KG. This means that only the personally liable general partner has comprehensive representation rights of the KG. However, the limited partner can be granted procuration. As a result, there is an authorization to represent the business of the KG.
The design options of a KG are versatile. A lawyer specializing in corporate law can draft the partnership agreement for the KG. There are the individual rights and obligations governing the payment of the capital contribution.
The KG is a partnership. It is tax transparent. This means that it does not have to pay corporation tax like a GmbH, but the shareholders of the KG themselves must pay income tax. The annual result of the KG is then to be divided between the individual shares. Each partner then has to pay income tax on the profit of his share. In addition, the partner must pay a 5.5% Solidaritätszuschlag (solidarity surcharge) tax on the fixed income tax.
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