What Is a Kg Company in Germany
In civil law, the registration of the change of legal form is constitutive. It takes place on entry without retroactive effect. Under tax law, retroactive effect from the conversion date up to eight months before the entry of the amendment to § 14 UmwStG may also be decided. In practice, conversion is often chosen at the turn of the year. This saves an intermediate balance. If the change of legal form is on 31 December of the previous year, registration in the commercial register must take place no later than 31.8. of the current year. However, it is also necessary to consider whether 1.1. should be set as the conversion date.
This has the advantage that tax charges, for example due to a takeover profit for shareholders, only arise in the current year, i.e. one year later. In addition, no profit statement for the previous year is required for GmbH & Co. NGK The conversion does not have retroactive effect on VAT. Until the change of legal form is registered in the commercial register, the transferring company must file its own preliminary VAT returns. The same applies to the annual VAT return. The accounts of the GmbH will continue until the conversion is entered in the commercial register. The lawsuit by GmbH & Co. KG is transparent, as the identity of the company does not change and the assets are not transferred. If you have any questions about acquiring a business, our lawyers in our offices in Hamburg, Berlin, Munich, Frankfurt and Cologne will be happy to help you.
Attention: The company has the legal capacity even before registration in the commercial register, only the limited partners are responsible until that moment for their private assets. GmbH & Co KG stands for Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft. The GmbH & Co. KG, which is identical to persons and participations, is the most common variant in practice. In this form, the same persons with identical shareholdings are both limited partners of GmbH & Co. KG and shareholders of the personally liable partner GmbH. This has the advantage that the shareholders of both companies control the decision-making process and is therefore particularly recommended for purely entrepreneurial companies. However, such a constellation requires careful individual drafting of the articles of association, as copies of the personally liable partner GmbH und GmbH & Co. KG must be coordinated. A partial form exists if an individual shareholder is exclusively involved in the personally liable partner GmbH and the GmbH & Co.
KG. This approved variant of the GmbH & Co. is called a «sole proprietorship». Also for this form of organization, an individual conception of the articles of association is advisable, especially from the point of view of inheritance law, if a continuation of the company after the death of the shareholder is desired. This form of corporation combines the tax and corporate advantages of a corporation and a personal corporation. This type of German capital is suitable for entrepreneurs who want to limit their liability while benefiting from the flexibility of a company without legal personality. KG GmbH & Co. are generally used for medium-sized companies and family businesses. The income of a GmbH is subject to corporation tax, solidarity surcharge and business tax. However, since the GmbH usually has only a relatively low return for assuming liability and, if necessary, managing the KG, there are usually no or few tax payments due.
The taxation of KG income, which maintains effective business operations, corresponds to the taxation of the income of an OHG, the compensation of losses for limited partners being essentially limited to the level of their capital accounts. Value added tax (VAT) in Germany is largely independent of the form of the company and is explained in more detail on the next page. One of the advantages of GmbH & Co KG is, among other things, that the GmbH assumes the role of general partner in the KG. As already mentioned above, the GmbH is liable as a company with all the assets of the company, but not with the private assets of the shareholders. The liability risks for those involved in the company can thus be greatly limited. In Germany, there are various forms of partnerships, in which the limited partnership (KG) with a limited liability company as the second shareholder is a limited liability company (GmbH). In this case, the limited liability company is fully liable for the debts and obligations of GmbH & Co. KG.
The limited partnership with a limited liability company in Germany may have one or more limited partners who are liable for the debts and liabilities of the company only to the extent of their capital contributions. For example, a limited liability company & KG Company (GmbH & Co. KG) is a limited partnership, the only general partner usually being a limited liability company. It can thus combine the advantages of a partnership with those of the limited liability of a capital company. A detailed description of disputes after the acquisition of a stake in a company and entry into the company (after the merger and acquisition dispute) under German law can be found here: Litigation after the acquisition of the company (to be continued soon) The purchase of a GmbH & Co. KG in Germany usually involves the acquisition of two companies. The purchaser regularly acquires both the operating limited partnership and the managing general partner GmbH. If it is a so-called unified company (the GmbH shares are in the assets of KG), the general partner GmbH is «automatically» taken over by the buyer with the takeover of KG`s shareholding. In all other cases, the personally liable partner GmbH must be transferred separately.
As its name suggests, this variant of the GmbH & Co. does not have the identity of shareholder vis-à-vis the general partner GmbH and the GmbH & Co. KG. This type of design is mainly in the form of a corporation. In a joint-stock company, business partners are usually both limited partners of GmbH & Co. as well as shareholders and (often) managing directors of personally liable GmbH partners. In addition, pure investors are only accepted as limited partners of GmbH & Co. Since the corporate rights of limited partners are very limited, this can prevent lenders from having too much influence over the company`s business operations.
Conversely, a business becomes attractive to investors who, due to time constraints, want to leave day-to-day business to entrepreneurs. Like an OHG, a limited partnership (KG) is a partnership-based business structure in which two or more entrepreneurs or companies join forces to operate a business under a joint venture. However, the KG differs considerably in that there is always at least one fully liable partner (general partner) and at least one limited partner who makes the investment but is not involved in the management of the company.