Establishing a partnership with limited professional liability (PartG mbB)

A German partnership company with limited professional liability is a partnership in which the liberal professions can join together in order to pursue their profession together. Only those who practice a freelance profession can form a partnership with other colleagues.

What is the content of the partnership agreement with limited professional liability?

The partnership agreement of PartG mbB must contain three mandatory details in accordance with Section 3 (3) PartGG:

1. Name and seat of the partnership
2. Names and first names as well as the profession and place of residence of each partner
3. Object of the partnership.

The contract of the partnership company with limited professional liability must finally be entered in the partnership register.

In addition, the partnership contract should include individual areas of responsibility of the partners, the responsibilities and details for the distribution of profits. To avoid a shareholder dispute, precautions should be taken to exclude a partner in the event of a conflict. A lawyer specializing in company law can prepare the contract for the establishment of the partnership and take all essential measures to facilitate joint vocational training.

Who is liable for a partnership with limited professional liability?

There is a possibility that the liability of the partnership will be limited. In the event of errors in the professional practice of an individual partner, only the partnership company with its assets is liable. In the case of a simple partnership company or a company under civil law (GbR or BGB-Gesellschaft), each partner is otherwise liable for the mistakes of another partner. Individual liability of the other partners is excluded in the partnership company with limited professional liability. The limitation of liability only matures if professional liability insurance has been taken out that covers damage of € 1 million per insured event.

How is a Partnerschaftsgesellschaft mbB treated for tax purposes?

The Partnerschaftsgesellschaft mbB does not pay trade tax because it is not a trade but a free profession. A partnership company mbB is tax transparent. This means that a Partnerschaftsgesellschaft mbB does not have to pay taxes itself. The profit of a Partnerschaftsgesellschaft mbB is distributed for the financial year in accordance with the provisions in the partnership agreement. The profit share must then be taxed by the individual partner with income tax. In addition, the partner must pay a 5.5% Solidaritätszuschlag (solidarity surcharge) tax on the fixed income tax.

The partnership company with limited professional liability itself is in principle also obliged to pay sales tax. A specialty applies to doctors and dentists: Medical or dental treatment is generally exempt from VAT.