OHG or GmbH
December 13, 2010 | 30,00 EUR | answered by Oliver Burchardt
Dear Sir or Madam,
we are working with a business partner within the EU in the automotive trade. Our business partner purchases all vehicles with his own money. However, officially the vehicles are purchased from Germany, that is, from our company. Therefore, all transactions are processed through us and not through the actual financier. Our business partner would like to establish a GmbH with us so that he has the same balance sheet as us.
Now to my question: Is it not also possible to do this with a general partnership (OHG)? Or another form of company? Because a GmbH incurs quite a lot of costs and is much more complicated than a general partnership. With an OHG, our business partner could be the managing director abroad and we could have a managing director here in Germany, so that we would have the same balance sheet.
Is this correct? Or do we absolutely have to establish a GmbH?
Thank you in advance,
Best regards
Dear inquirer,
Thank you for your inquiry, which I am happy to answer as part of an initial consultation.
From a commercial law perspective, the legal form is irrelevant for questions regarding revenue recognition and revenue attribution. Most other accounting questions are also not dependent on the legal form. Therefore, in terms of accounting, nothing changes for you and your business partner initially. Whether it is a general partnership (OHG) or a limited liability company (GmbH), the revenues will be disclosed in the income statement of this company. All receivables from these revenues will also appear in the balance sheet of this company and cannot be easily allocated to another legal entity.
Only after the preparation of the financial statements and subsequent taxation do the differences between the two legal forms arise again. Simply put, in a general partnership (OHG), the profit share is directly allocated to all partners, while in a GmbH, a distribution resolution is necessary. This results in different tax consequences.
Furthermore, there are significant differences in terms of company law. Whether a GmbH or OHG is more complicated or suitable for a specific project cannot be assessed without a complete assessment of all objectives from both a tax and company law perspective.
You should first sit down with your business partner and understand exactly what goal he wants to achieve with the GmbH formation. It is quite possible that due to legal regulations in his home country, the establishment of a GmbH in Germany may be advantageous for him.
I recommend seeking detailed advice from a local colleague afterwards on the tax perspective solution that is suitable for all parties involved.
Best regards,
Oliver Burchardt
Tax advisor
