The Modernization of the Law on Partnerships through the MoPeG


The Act on the Modernization of Partnership Law ("MoPeG") became effective on January 1, 2024. It comprehensively amended the provisions on civil law partnerships (GbR) and modernized the law governing other partnerships, including opening up the legal forms regulated therein with respect to the liberal professions. With the Secondary Credit Market Promotion ("Kreditzweitmarktförderungsgesetz") of December 29, 2023, the legislator has reacted to the tax implications of the MoPeG.

The following is an overview of the legal situation after the MoPeG.

The following is an overview of the legal situation under MoPeG

1. The Legal Capacity of the GbR

As a significant new innovation brought about by the MoPeG, the legal capacity of the GbR is now legally standardized and defined in § 705 (2) 1. Alt. of the German Civil Code (BGB). According to this, the partnership itself can acquire rights and enter into liabilities if it is to participate in legal transactions according to the joint will of the partners (legally capable partnership). There must therefore be a clear common will. This definition also applies in other areas of law.

Legal consequences of the legal capacity of the GbR

The formation of own assets (§ 713 BGB)

The contributions of the partners as well as the rights acquired for or by the partnership and the liabilities established against them become assets of the partnership. There are no longer any joint assets. The previous regulations in §§ 718 to 720 BGB have been deleted. The same applies to OHG, KG and PartG.

Transfer of company shares (§ 711 BGB)

Shares in a GbR can be transferred with the consent of the other partners. Except for individual proprietary claims, shareholder rights are not transferable (§ 711a BGB).

Entry in the company register (§ 707 et seq. BGB); registered office (§ 706 BGB)

Legal capacity can be outwardly recognizable through an entry in a newly created company register. The entry is not mandatory and not constitutive, which means that there will also be legally capable GbRs without an entry. Like entries in the commercial register, however, registered GbRs enjoy protection in good faith, e.g. with regard to the existence of the partnership and representation of the partnership by its partners (§ 707a (3) BGB). The corresponding name suffix is "eGbR".

To the extent that the GbR as such wishes to dispose of rights entered in public registers (e.g. real estate, patents or company shares) or wishes to acquire such rights, however, (pre-)entry in the company register is mandatory. For example, only the GbR entered in the company register can be entered as such in the land register as the owner of a plot of land (cf. § 47 (2) of the German Land Registry Code (GBO)). A change in the shareholder structure is thus entered in the register of companies with effect for all properties.

Please note:

German civil law partnerships (GbR) that have already been entered in the land register prior to January 1, 2024 in accordance with applicable law do not have to be registered in the company register. However, an entry in the company register will be required if entries in the land register have to be changed in the future, e.g. because real property is to be sold or further real property is to be acquired.

GbRs entered in the company register are also subject to the notification obligations under money laundering law (reports on the beneficial owner to the transparency register). 

Registration also entitles a company to participate in transformations in accordance with the Transformation Act.

Registered partnerships governed by civil law (GbR) may have a domestic or - subject to recognition in the country of residence - a foreign registered office that differs from the domestic registered office (as specified by the partners in the partnership agreement). This new rule also applies to other partnerships by virtue of the reference. It is of particular importance for the GmbH & Co. KG, since the administrative seat of the general partner was previously regarded as the seat of the KG and could not be situated abroad.

Succession

The legally capable GbR as an external company is likely to be capable of succession. Assets from the deceased's estate can probably be inherited in a GbR structure.

2. Management authority (§ 715 BGB), representation of the company (§ 720 BGB)

No changes have been made regarding the management and representation of the GbR.

However, a new provision on the emergency management was created to ensure that the company is also capable of acting if not all partners can act jointly (§ 715a BGB).

3. Contributions, voting power, share in profits and losses (§ 709 BGB)

The participation ratios are based on the contributions, whereby the contribution of a shareholder can also consist of the performance of services. 

The voting power and the share in profit and loss are primarily based on the agreed participation ratios. If no shareholding ratios have been mutually agreed, the ratio of the agreed amount of the contributions shall form the basis of distribution. If no amounts of the contributions have been agreed either, each shareholder shall have the same voting power and an equal share in the profit and loss irrespective of the value of his contribution.

4. Liability (§§ 721 to 721b BGB)

The liability of the shareholders is newly regulated in § 721 to § 721b BGB.

Pursuant to § 721 sentence 1 BGB, the shareholders are personally liable to the creditors directly as joint and several debtors for the liabilities of the company. Any agreement to the contrary is invalid vis-à-vis third parties pursuant to § 721 sentence 2 BGB. 

In addition to the objections and defences which are based in his or her own person, the shareholder may also assert such objections and defences which may be raised by the company (§ 721b (1) BGB) or refuse to perform if the company is entitled to contest or set off (§ 721b (2) BGB).

The shareholder joining the company is liable in the same way as the other shareholders for the liabilities of the company established prior to his joining the company. Any agreement to the contrary is invalid vis-à-vis third parties (§ 721a BGB). Shareholders who have left the company are liable to the company for the deficit in proportion to their share in the profit and loss, insofar as the value of the company's assets is insufficient to cover the company's liabilities (§ 728b BGB).

5. Withdrawal (§ 723 BGB), dissolution (§ 729 BGB)

§ 723 (1) BGB specifies reasons inherent in the person of the individual shareholder which only lead to the withdrawal of this shareholder, but not to the dissolution of the company. These include, for example, death, termination, insolvency, exclusion. A so-called continuation clause in the shareholder agreement is therefore no longer required. On the other hand, the shareholder agreement must now regulate if the company is to be dissolved in these cases.

In accordance with § 712 BGB, the share of the withdrawing shareholder in the company accrues to the remaining shareholders in proportion to their shares in case of doubt. However, a deviating agreement between the shareholders is permissible.

§ 712a BGB now expressly provides that, upon the withdrawal of the penultimate shareholder, the company assets pass to the remaining shareholder by way of universal succession. Therefore, there is no longer any need for provisions in the shareholders' agreement in this respect. In this case, the company ceases to exist without liquidation.

The liquidation of the company is set out in § 729 BGB and only contains reasons that are inherent in the company itself. 

Shareholder resolutions require the consent of all shareholders entitled to vote (§ 714 BGB). The shareholders' agreement may also provide for a majority decision. In this case, a majority of at least three quarters of the votes is required for resolutions on liquidation and continuation (§§ 732, 734 BGB).

6. Deficiencies in resolutions

There is no standardized right of defective resolutions for the GbR. This must be expressly agreed.

7. GbR without legal capacity

As the legal capacity of the GbR is not mandatory, there is also the "non-legal company", which serves the shareholders to structure their legal relationship with each other (§ 705 (2) BGB). It is not represented externally and has no assets (§ 740 BGB). It follows from the explanatory memorandum to the law that no assets of the partners which are bound together are taken into consideration. There remains the possibility of pursuing the corporate purpose with fractional rights. Alternatively, a shareholder can hold and manage the assets in trust for the other shareholders at the same time. The §§ 740 et seq. BGB contain special provisions on the termination of the partnership, the separation and the withdrawal of a partner. They largely correspond to the previous legal situation. Whether the partial legal capacity recognized by case law will apply to a GbR without legal capacity in the future, however, appears very questionable.

Shareholders' meeting (§ 109 HGB), resolution defects (§ 110 et seq. HGB)

As opposed to the GbR, §§ 110 et seq. of the German Commercial Code (HGB) introduce regulations on the assertion of defective resolutions. They are based on the resolution defect law for stock corporations; i.e. a resolution can primarily be challenged within three months and is only void in exceptional cases.

Furthermore, regulations on the convening and holding of partners' meetings have been included. Partner resolutions continue to require the consent of all partners. Here, too, the articles of association may provide for a majority decision. In this case, a majority of at least three quarters of the votes is also required for dissolution and continuation resolutions (§§ 140, 142 HGB).

Information rights (§ 166 HGB), liability of the limited partner (§ 171 HGB)

The information rights of the limited partner are extended in the case of the KG and cannot be excluded by deviating regulations in the partnership agreement.

Limited partners are not personally liable to a purely asset-managing limited partnership for such transactions that occur before the limited partnership is entered in the commercial register or before their accession to the limited partnership is entered in the commercial register.

Unified partnership (§ 170 HGB)

With § 170 (2) HGB, the so-called unified partnership is now also recognized by law. Under this provision, the shareholder rights to which the KG is entitled in the shareholders' meeting are no longer exercised by the management of the general partner but, subject to an agreement to the contrary, by the limited partners of the GmbH & Co. KG, subject to an agreement to the contrary.

For freelancers who continue to practice their profession or will do so in the future in the legal form of a GbR, it should be noted that due to the legal capacity of the GbR, as a rule in the case of partnerships of e.g. lawyers, tax advisors and auditors, the partnership becomes the contractual partner of the client. In addition to the partnership itself, all partners are personally, directly and unlimitedly liable as joint and several debtors for the partnership's liabilities.

Please note:

In its ruling of 10 May 2012 - IX ZR 125/10, NJW 2012, 2435, the German Federal Court of Justice (BGH) decided that all partners of an inter-professional partnership can be liable irrespective of their professional qualifications, i.e. in a partnership consisting of lawyers and a tax advisor, the tax advisor can also be personally liable for a breach of consulting duties by the lawyers of the partnership.

One new aspect is that members of the liberal professions may now also have the general partnership (OHG), the limited partnership (KG) and the limited liability company (GmbH & Co. KG) available as a legal form. The prerequisite, however, is that the respective professional law permits registration (§ 107 (1) sentence 2 HGB). In BRAO, StBerG and WPO, however, this has been explicitly the case for many years (§ 59b (2) BRAO, § 49 (2) StBerG, § 27 WPO).

Please note:

In the case of a Freiberufler GmbH & Co. KG, a much more far-reaching limitation of liability applies than in the case of a partnership company with limited professional liability. The limitation of liability does not only apply in cases of incorrect professional practice and liabilities, but is fully effective.

With the Secondary Credit Market Promotion Act, numerous provisions of the German Tax Code (AO) have been adapted to the MoPeG. The BMF has already made extensive changes to the AEAO in its letter dated December 29, 2023. The key new regulations that are applicable as of 2024 are briefly described below and reference is made to the amendments to the AEAO contained in the BMF letter.

Association of persons pursuant to §14a AO

The new § 14a AO contains a legal definition of the term "associations of persons". This includes associations of persons without legal personality to pursue a legally permissible purpose. A distinction is then made between associations of persons with legal personality and associations of persons without legal personality:

Associations of persons with legal personality are, for example, associations without legal personality (§ 54 BGB), partnerships with legal personality, including companies (§ 705 BGB), commercial partnerships, partnership companies, partnership shipping companies and European economic interest groups as well as communities of apartment owners (§ 9a WEG; § 14a Para. 2 AO). Associations of persons without legal personality include, for example, fractional communities (§ 741 BGB), communities of property (§ 1415 BGB) and communities of heirs (§ 2032 BGB; § 14a Para. 3 AO). The provisions applicable to associations of persons without legal capacity apply mutatis mutandis to companies without legal personality (§ 740 BGB) except for § 267 para. 1 sentence 1 AO. However, pursuant to the AEAO to § 14a, the list of associations of persons with (no) legal personality in § 14a para. 2 and 3 AO is not conclusive.

Referring to § 719 para. 1 BGB (a GbR with legal personality comes into existence as soon as it participates in legal transactions with the consent of all partners, but at the latest upon entry in the company register), the BMF specifies the start of participation in legal transactions of a GbR with legal personality. This can already take place through preparatory legal transactions, which include, for example, opening an account or renting premises.

Please note:    

It is unlikely that this will have any effect on the commencement of the substantive trade tax liability, so that only the trade income generated by the ongoing operation of the GbR will continue to be subject to trade tax; operational transactions from the first preparatory act to the opening of the business do not affect the trade income.

Where it cannot be clearly determined whether an association of persons has legal personality or not - e.g., in the absence of articles of association - the legal personality or lack of legal personality should be determined based on a catalog of circumstantial evidence (AEAO to § 14a, no. 8).

Continuation of the joint ownership principle (“Gesamthandsprinzip”)

In accordance with § 39 para. 2 no. 2 sentence 2 AO, partnerships with legal personality are deemed to be joint owners and their assets are deemed to be joint assets for income tax purposes. The AOAE adds that the respective tax laws as well as the general statutory and contractual regulations are decisive for the pro rata attribution of assets that are jointly owned by several parties.

Disclosure of administrative acts

§ 122 AO remained unchanged. In view of the MoPeG, the AEAO has been amended to the effect that the regulations for commercial partnerships apply accordingly to the notification of tax assessments to legal personalities such as GbRs. Instead of the commercial register, the company register is used, whereby the name given in this register is decisive.

Assessments are to be addressed to all members in the case of associations of persons that do not have legal personality and are not themselves taxable.

Assessment of late payment surcharges

If several persons are involved in the relevant income or the corresponding attribution, a late payment surcharge shall be assessed

  • in the case of associations of persons with legal personality, primarily against the association of persons and
  • in the case of associations of persons without legal personality, primarily against the persons who are required to make the corresponding declaration

(§ 152 para. 4 sentence 3 AO). For this purpose, the AEAO adopts the application regulation for § 39 para. 1 EGAO, according to which the legally determined date on which the respective declaration deadline has expired is decisive for the application of the new regulation. The new regulation therefore applies for the first time for the 2022 assessment period in the assessment cases discussed.

Obligation to file assessment return

For this purpose, the AEAO adopts the application regulation for § 39 para. 1 EGAO, according to which the legally determined date on which the respective declaration deadline has expired is decisive for the application of the new regulation. The new regulation therefore applies for the first time for the 2022 assessment period in the assessment cases discussed.

Disclosure towards associations of persons with legal personality/non-legal personality

In the case of associations of persons with legal personality, the separate and uniform assessment must generally be notified to the association of persons representing the parties involved in the assessment. The legislator clarifies that no authorized representative is required. It is important to note that the relevant new version of § 183 AO must be applied in all pending cases. However, administrative acts in 2024 and 2025 can still be notified to the previously appointed authorized recipient (AEAO on § 183, no. 7).

On the other hand, associations of persons without legal personality must continue to appoint a joint authorized recipient in accordance with § 183a para. 1 AO. Notification to a person authorized to represent the company without legal personality is no longer possible (AEAO to Section 183a, No. 4).

Right to appeal against the separate and uniform assessment

Regarding associations of persons with legal personality, only the association of persons is entitled to object to the assessment notice; the shareholders' right of objection remains unaffected (§ 352 para. 1 no. 1 or 3 AO). If administrative acts are still notified to the previously appointed authorized recipient in 2024 and 2025, the right of appeal is determined in accordance with the previous law (AEAO to § 352, no. 5).

In the case of associations of persons that do not have legal personality, the jointly appointed authorized recipient shall continue to act as before. The shareholders' right of objection also remains unaffected here.

Liability

In terms of liability, no. 1.3 of the AEAO on § 191 refers to the civil law liability regulations of the general partners of an association of persons with legal personality pursuant to §§ 721 et seq. BGB.

Insolvency of the association of persons with legal personality

The insolvency proceedings of a legal personality GbR or a commercial partnership only include the company's assets in accordance with AEAO to § 251, no. 4.4.1.1.

Implications for real estate transfer tax law

Art. 29 of the Secondary Credit Market Promotion Act expands the GrEStG (Real Estate Transfer Tax) to include § 24. Under this provision, partnerships with legal personality are deemed to be joint and several companies for the purposes of real estate transfer tax and their assets are deemed to be joint and several assets. The legislator has thus eliminated legal uncertainties with regard to the preferential treatment under real estate transfer tax law in §§ 5, 6 and 7 of the GrEStG, which are linked to the abolished concept of “Gesamthand”, at least until the end of 2026.

Please note:

Art. 30 in conjunction with Art. 36 Para. 5 of the Secondary Credit Market Promotion Act already provides for this provision of § 24 GrESt to be repealed on January 1, 2027. By then, the real estate transfer tax is to be reformed in a legally neutral manner.


The changes introduced by the MoPeG firmly establish the legal personality of the GbR in law and modernize the law of partnerships. The legal changes are generally also relevant for existing companies.

Partnership agreements should be reviewed for possible need for adjustment. In particular, it should be checked whether an entry in the company register is necessary or desired for GbRs with legal personality. Advice should also be considered as to whether voting on a per capita or shareholding basis is desired.

The tax adjustments resulting from the Secondary Credit Market Promotion Act are unlikely to require any further action.

The tax regulations that are linked to the joint ownership principle of the partnership continue to apply unchanged, in particular § 6 para. 5 sentence 3 EStG, which enables the tax-neutral transfer of assets between the taxpayer's business assets and the joint assets of a co-entrepreneurship as well as between the special business assets and the joint assets of a co-entrepreneurship, and up to and including 2026 also §§ 5, 6 and 7 GrEStG.