Gesellschaft bürgerlichen Rechts (GbR) Civil law partnership
The most popular entrepreneurial company form in Germany This company form is the simplest among the enterprises.
If you wish to establish a GbR, because you would like to have an enterprise in the construction industry, we recommend you to get information about the obligations and rights of the GbR. Most GbR enterprises fail because the founding members do not comply with the requirements and obligations.
For the establishment of a GbR, minimum two private or legal entities are needed. The legal form of the GbR is “in force” from the moment when the two founding members organize themselves into a company form. No share capital is needed. After that the GbR is established, the co-partners are responsible with their complete wealth and not only for themselves but for all members of the company.
Let’s the steps what you should have to do is you wish to establish a GbR:
- Articles of Association (if it does not exist, each member receives an equal proportion from the profit at the end of the year. It is important that a lawyer must write the contract.)
- Registered office the GbR
- Chamber of crafts trade (Handwerkskammer) permission if you wish to execute a profession that is subject to permission (external painting, isolation, carpentry, scaffolding, water, gas and heating plumber, masonry)
- ID card or passport
If you have these, you can go to the Gewerbeamt and you may establish the GbR. Many people ask us if they need a home address in Germany. The answer is no, it is not necessary.
Many people already start to work at this point. This is a big mistake because a many consigners abuse the situation. Thus, you cannot issue an invoice and you are missing many papers. The rules of the German VOB stipulates for the consigner that if an entrepreneur does not have a VAT number, company liability insurance, health and accident insurance, membership at the chamber of crafts trade and so on, the consigner is not obliged to pay for the commissioned party, that is you. At this moment, many people go home that he/she was misled, cheated, whereas it only your fault that you have not been paid because your company has not complied with the German statutory provisions. Ignorance costs a lot of money.
When you have received the GbR document, you have the following obligations:
- Requesting the VAT number from the tax authority (it is very important to correctly fill in the form, otherwise you must pay your tax in advance)
- Requesting the Freistellungsbescheinigung nach § 48b, we can call it a zero value tax certificate from the tax authority. The Germans call it “bausteur” (with this you certify that you as a natural person do not have any debts towards the tax authority in Germany, if you cannot obtain this, the consigner is liable to deduct 15% of each invoice issued by the GbR and to pay this amount to the tax authority, and the authority call upon you to prepare your personal income tax return for the given period. This usually occurs when somebody has already had an enterprise in Germany, or was employed at a German company and did not submit his/her personal income tax return, or did not submit anything to the tax authority as entrepreneur)
- Company liability insurance (this is obligatory for each enterprises in Germany)
- Health and accident insurance (if you have a health insurance in Hungary, and you can prove that it is paid, and then this is also appropriate)
- Certificate of membership at the chamber of crafts trade
It is recommended to start work only when you have these documents, you may start earlier but there is little chance that you will have to be paid. A serious company usually requires these documents already before the assignment.
After this, you have to find an accountant who prepares the reports every month for the tax authority.
Attention! It is very important that you shall start the work only if you have agreed in written form. The agreement shall contain on what basis the invoice must be issued. It is called “Leistungsverzeichnis (in short LV) Liste”, this list shows how much you get for which work, and you shall also buy a construction log.
You do not have to pay a social contribution but you have the possibility to do it on a voluntary basis.
When you have established a GbR, from that point, you are obliged to have an accounting prepared each month.
Many times, after a few weeks or months, one-two members, or sometimes everyone go home and leave everything behind. However, due to this, their obligation to the tax authority has not ceased to exist. If you do not check out the GbR on time, then you may expect a very serious penalty in the future from the German tax authority.
Moreover, here, we must clear another very important fact. When for example, a person leaves the GbR without officially checking out from it and modifying the articles of association, the following status exists. You are still the member of the GbR, therefore you are still liable in the GbR with your complete wealth, you are still due to money from the GbR every month and from the GbR’s assets at the end of the year (here, the articles of association applies in respect of the percentages) and you shall declare it also in your personal income tax (this will be also your problem if you have not received the amount, you must prove it).