The Austrian GmbH & Co. KG
Posted: 14 May 2007
The GmbH & Co. KG is the most common 'hybrid' type of company in Austria. It consists of a limited partnership (KG) owning the company assets and a private company limited by shares (GmbH) participating as the KG's (usually only) general partner. Typically, the shareholders of the GmbH and the limited partners of the KG are identical, in most cases also holding shares in the same proportion. Contrary to most other forms of business organisation, the GmbH & Co. KG is not a legislative product but has arisen out of practical needs. The main purpose of setting up a GmbH & Co. KG is to combine fiscal advantages of partnerships (i.e., netting the company's profits and losses against the shareholders' other income) with limited liability. Although this hybrid was recognised very early by the courts, the discussion about its legitimacy is still alive. As soon as the tax advantages disappear in comparison to other legal forms, the attractiveness of the GmbH & Co. decreases. A legislator should hesitate to establish a hybrid only to facilitate fiscal benefits; he must prove and secure advantages by civil and corporate law.
Keywords: GmbH & Co. KG, hybrid company, Austria
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