The „Offene Handelsgesellschaft“ (OHG) in Germany

The Offene Handelsgesellschaft (OHG) is a prevalent form of partnership in Germany, known for its ease of establishment and management flexibility. This article provides an in-depth look at the characteristics, benefits, drawbacks, and formation process of an OHG.

Table of Contents:

  1. Characteristics of an OHG
  2. Advantages and Disadvantages
  3. Ideal Candidates for an OHG
  4. Formation Process
  5. Management and Representation
  6. Profit Distribution and Liability
  7. Conclusion
  8. Frequently Asked Questions

Characteristics of an OHG

The OHG is a legal form of a commercial partnership in Germany, operating under the German Commercial Code (HGB) and Civil Law (BGB).

It requires at least two partners (natural or legal persons) who share management duties and represent the company.

The OHG does not need a specific minimum capital for formation and is not considered a separate legal entity, though it has legal capacity. The partners in an OHG have unlimited liability with their personal and business assets. Notably, the OHG must be registered in the Handelsregister (Commercial Register) and does not require a specific capital contribution​​​​​​​​.

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    Advantages and Disadvantages of an Offene Handelsgesellschaft

    The key advantages of an OHG include low entry barriers, no need for minimum capital, and management flexibility, allowing each partner to make business decisions independently.

    However, the major drawback is the unlimited personal liability of the partners, potentially risking personal assets. Moreover, the tax treatment of an OHG can be less favorable compared to corporations, as profits are subject to the individual income tax rates of the partners, which can be higher than corporate tax rates. Nonetheless, recent changes allow OHGs to opt for corporate tax treatment under certain conditions​​​​​​.

    Ideal Candidates for an OHG structure

    The OHG structure is well-suited for small to medium-sized enterprises (SMEs), particularly those that benefit from close cooperation among partners and where personal involvement in management is crucial. It is ideal for entrepreneurs who prefer direct control over their business but are comfortable with the risks associated with unlimited liability​​.

    partners of an Offene Handelsgesellschaft in germany

    Formation Process of an Offene Handelsgesellschaft

    Forming an OHG involves drafting a partnership agreement, which can be done informally but is recommended to be in written form for clarity.

    The agreement should outline the business’s purpose, the partners’ names, and the management and representation structure. After the agreement, the OHG must be registered in the Commercial Register and also with the local trade office and tax office. This process involves notarization and electronic submission of the registration documents​​​​.

    Management and Representation in an OHG

    In an Offene Handelsgesellschaft, all partners have the right and obligation to manage the company unless the partnership agreement specifies otherwise. The extent of management authority typically covers all actions necessary for the ordinary operation of the business. Any actions beyond this scope require the consent of all partners. Similarly, every partner is generally entitled to represent the company in legal and non-legal matters unless restricted by the partnership agreement​​.

    Profit Distribution and Liability

    Profit distribution in an OHG is initially at a rate of 4% on each partner’s capital contribution, with any excess profit divided equally among partners. However, the partnership agreement can stipulate a different distribution method. As for liability, all partners are jointly and severally liable for the company’s obligations, extending to their personal assets​​​​.


    The Offene Handelsgesellschaft (OHG) offers a flexible and accessible way for entrepreneurs to enter into a business partnership in Germany. Its ease of formation, combined with the direct control it offers to partners, makes it an attractive option for many SMEs. However, the unlimited liability of partners and specific tax considerations are critical factors to be weighed when choosing this legal form.

    Frequently Asked Questions – Offene Handelsgesellschaft

    Q: Is a minimum capital required to form an OHG?

    A: No, there is no minimum capital requirement for forming an Offene Handelsgesellschaft.

    Q: Can the OHG be formed with a verbal agreement?

    A: Yes, an OHG can be formed verbally, though a written agreement is advisable for clarity.

    Q: Are OHG partners personally liable for the company’s debts?

    A: Yes, OHG partners have unlimited personal liability, including their private assets.

    Q: Can an OHG opt for corporate tax treatment?

    A: Yes, as of 2022, OHGs can opt to be taxed as corporations under certain conditions.

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