General Partnership in Switzerland (Kollektivgesellschaft)

The general partnership — Kollektivgesellschaft (German), societe en nom collectif (French) — is one of the oldest business forms in Swiss law. Governed by OR Art. 552-593, it allows two or more natural persons to operate a commercial enterprise together under a shared firm name, without any minimum capital requirement.

General partnerships in Switzerland are most common among professional service firms: law practices, medical partnerships, consultancies, and architectural studios. The structure offers operational simplicity and pass-through taxation, but every partner accepts unlimited joint and several liability for all partnership debts. That trade-off defines the Kollektivgesellschaft and makes it unsuitable for ventures where partners are unwilling to stake their personal assets on the business.

This guide covers the legal framework, formation process, naming rules, liability exposure, taxation, social insurance, and dissolution triggers. It also compares the general partnership with the limited partnership and the GmbH to help you decide which structure fits your situation.

What Is a General Partnership in Switzerland?

A general partnership is an association of two or more natural persons who jointly pursue a commercial purpose under a common business name. Unlike a GmbH or AG, it is not a separate legal entity with its own rights and obligations independent of its members. The partnership can hold assets, enter contracts, and sue or be sued under its firm name, but its partners remain personally liable for everything the partnership does.

Three characteristics set it apart from other Swiss business structures:

• Personal liability. Every partner is jointly and severally liable for all partnership obligations, with no cap. A creditor can pursue any single partner for the full amount owed.
• No capital requirement. There is no statutory minimum contribution. Partners can bring cash, assets, or labour to the partnership as agreed between them.
• Fiscal transparency. The partnership itself pays no income tax. Profits are allocated to partners and taxed as personal income on each partner’s tax return.

The general partnership sits between the sole proprietorship (one person, no separate identity) and the capital companies (GmbH, AG) in terms of complexity and formality. It is simpler and cheaper to establish than a GmbH, but it provides none of the liability protection that capital companies offer.

Why You Can Trust This Guide

This article references OR Art. 552-593 in full, AHV contribution rate tables published by the Federal Social Insurance Office (BSV) for 2026, and commercial register fee schedules from multiple cantons. Tax crossover calculations between partnership and GmbH structures draw on published cantonal tax calculators from Zug, Zurich, and Bern. Our team has advised on partnership structuring for Swiss law firms, medical practices, and architectural studios.

What Are the Legal Rules and Key Features?

The Kollektivgesellschaft is governed by OR Art. 552-593. The table below summarises its core attributes.

Only natural persons may be partners in a Kollektivgesellschaft (OR Art. 552). Legal entities such as a GmbH or AG cannot hold a partnership interest. If one of the participants is a legal entity, the arrangement is typically classified as a simple partnership (einfache Gesellschaft, OR Art. 530-551) rather than a general partnership.

How to Form a General Partnership

Formation of a general partnership is straightforward compared to incorporating a GmbH or AG. There is no notarial deed, no capital deposit, and no articles of association in the corporate sense. The key steps are:

Step 1: Conclude a Partnership Agreement

The partnership agreement (Gesellschaftsvertrag) is the foundational document. Swiss law permits this agreement to be oral or even implied through conduct, but a written agreement is essential in practice. Without one, the statutory default rules apply — and those defaults may not suit the partners’ actual arrangement.

A well-drafted partnership agreement should address:

• Capital contributions — how much each partner contributes in cash, assets, or ongoing labour
• Profit and loss allocation — the formula for distributing profits and apportioning losses
• Management authority — which partners may act on behalf of the partnership, signing rights, spending limits
• Decision-making — which matters require unanimity, which can be decided by majority
• Non-competition obligations — OR Art. 561 prohibits partners from competing with the partnership, but the agreement can modify this
• Admission and withdrawal of partners — procedures, notice periods, settlement calculations
• Dissolution triggers — what happens if a partner dies, becomes insolvent, or wishes to leave
• Dispute resolution — mediation or arbitration clauses

Legal fees for drafting a partnership agreement typically range from CHF 1,000 to CHF 3,000, depending on complexity. This is a modest investment relative to the disputes it prevents.

Step 2: Choose a Compliant Business Name

The firm name must comply with the rules set out in OR Art. 554 (see the naming section below). Check availability on Zefix before proceeding.

Step 3: Register in the Commercial Register

Registration with the cantonal commercial register is mandatory for every general partnership. Unlike a sole proprietorship, which need not register below CHF 100,000 in revenue, the Kollektivgesellschaft must register regardless of turnover.

The registration application must include:

• The firm name and place of business
• The purpose of the partnership
• The full name, date of birth, and domicile of each partner
• The form of representation (joint or individual signing authority)

Registration fees vary by canton but are typically CHF 150 to CHF 400, plus CHF 30 to CHF 50 for publication in the Swiss Official Gazette of Commerce (SHAB). Once registered, the partnership appears in Zefix and receives a UID/CHE number.

Step 4: Register Partners as Self-Employed

Each partner must register as a self-employed person with the cantonal compensation office (Ausgleichskasse) in their canton of domicile. This triggers AHV/IV/EO contribution obligations.

Step 5: Register for VAT (if applicable)

If the partnership’s annual domestic revenue exceeds CHF 100,000, VAT registration with the Federal Tax Administration is mandatory. The standard rate is 8.1 per cent (2026).

What Must the Business Name Contain?

The naming requirements for a general partnership are set out in OR Art. 554. They differ from the rules for capital companies and sole proprietorships.

The firm name must contain at least one partner’s surname. It may also include the surnames of other partners or descriptive elements indicating the nature of the business. A suffix such as “& Co.”, “& Partner”, or “und Partner” is customary to signal that additional partners exist beyond those named.

The Federal Commercial Registry Office (EHRA) checks that the proposed name is not misleading, does not conflict with existing registered names, and does not imply a different legal form. The name must be distinguishable from any other firm registered in the same canton.

How Does Unlimited Liability Work?

Liability is the defining feature of the general partnership and the primary reason many entrepreneurs opt for a GmbH instead.

Under OR Art. 568, every partner is jointly and severally liable (solidarisch haftbar) for all obligations of the partnership. This means:

• A creditor may demand the full amount of a partnership debt from any single partner, not merely that partner’s proportionate share.
• The partner who satisfies the debt can seek reimbursement from the other partners (right of recourse under OR Art. 148-149), but this is an internal matter between partners. The creditor does not need to pursue all partners proportionally.
• Liability extends to the partner’s entire personal estate — savings, real property, investments, and other personal assets.

There is one procedural safeguard: under OR Art. 568 para. 3, a creditor may generally pursue a partner personally only after the partnership itself has been found unable to satisfy the debt through debt enforcement or bankruptcy proceedings. This is known as the Subsidiaritaet (subsidiarity) of partner liability. However, if the partnership is in bankruptcy, this protection is effectively moot.

Liability after departure. A partner who leaves the partnership remains liable for obligations that arose before their departure for a period of five years from the date the withdrawal is published in the SHAB (OR Art. 591). This extended tail exposure is a critical consideration for any partner contemplating an exit.

Who Manages a General Partnership?

By default, all partners have equal rights to manage the partnership and represent it externally (OR Art. 557). Any partner can enter into contracts, hire employees, and commit the partnership to obligations within the ordinary scope of business. For transactions outside the ordinary course of business, the consent of all partners is required (OR Art. 557 para. 2).

The partnership agreement can modify these defaults substantially:

• Delegated management. Management authority can be granted to one or more designated partners, with others excluded from day-to-day operations.
• Joint signature requirements. The agreement can require two or more partners to sign jointly (Kollektivunterschrift) for transactions above a certain value.
• Committees and specialisation. In larger partnerships (e.g. multi-partner law firms), the agreement often establishes a managing partner or management committee to handle operational decisions, reserving strategic matters for the full partnership.

Partners who are excluded from management retain their right to information and inspection of the books (OR Art. 560). They also retain their unlimited liability, which creates an inherent tension: a non-managing partner bears the same personal risk as a managing partner but has less control over the decisions that generate that risk.

Duty of loyalty and non-competition. OR Art. 561 imposes a strict non-competition obligation on all partners. No partner may engage in business activities that compete with the partnership, either on their own account or on behalf of a third party, without the consent of the other partners. Breach of this duty entitles the partnership to claim damages or, if the competing activity was conducted on the partner’s own account, to appropriate the profits.

How Is a General Partnership Taxed in Switzerland?

The Kollektivgesellschaft is fiscally transparent. It files an informational tax return at the cantonal level, but the partnership itself does not pay income tax. Instead, each partner’s share of the profit is added to their personal income and taxed at their individual rate.

Income Tax

Each partner declares their allocated share of partnership profit on their personal income tax return. Federal, cantonal, and municipal income taxes apply at progressive rates. The combined marginal rate can reach 40 per cent or more in high-tax cantons at elevated income levels.

The allocation follows the partnership agreement. If the agreement is silent, OR Art. 557 provides that each partner receives an appropriate share as determined by all circumstances — in practice, this means roughly equal shares absent a demonstrable reason for unequal treatment.

Wealth Tax

Each partner’s share of partnership assets counts as taxable personal wealth. Switzerland levies wealth tax at the cantonal and municipal level, typically at rates of 0.1 to 1.0 per cent of net assets.

No Double Taxation on Distributions

Unlike a GmbH or AG, where profits are taxed at the corporate level and dividends are taxed again at the shareholder level, the general partnership has only one level of taxation. Partners withdraw funds from the partnership as drawings, not dividends, and there is no withholding tax. This single-level treatment is advantageous at moderate income levels.

Tax Comparison with a GmbH

The crossover point depends on the canton of residence, family situation, and whether the GmbH owner pays themselves a salary (which is deductible for the GmbH). As a general rule, general partnerships become tax-inefficient once total partner income exceeds roughly CHF 150,000 to CHF 200,000 per partner.

For a broader view of Swiss corporate taxation, see our dedicated guide.

What Social Insurance Do Partners Pay?

Partners in a general partnership are classified as self-employed (selbstaendig erwerbend) under Swiss social insurance law. This has several implications that differ from the treatment of GmbH directors or AG board members.

AHV/IV/EO Contributions

Each partner pays AHV (old-age and survivors’ insurance), IV (disability insurance), and EO (income replacement) contributions on their share of net partnership income. The combined rate is 10.0 per cent for income above CHF 58,800 per year (2026). A declining scale applies to income between CHF 9,800 and CHF 58,800. The minimum annual contribution is approximately CHF 514.

Unlike employees, who split these contributions 50/50 with their employer, self-employed partners pay the entire amount themselves.

Second Pillar (BVG/Occupational Pension)

Self-employed partners are not automatically enrolled in the second-pillar occupational pension (BVG). Participation is voluntary. Partners may join a pension fund affiliated with their professional association or a collective foundation. Many partners overlook this gap, leaving a significant hole in their retirement planning.

Third Pillar (Pillar 3a)

Partners without a BVG pension may contribute up to CHF 36,288 per year (2026) to a pillar 3a tax-advantaged retirement account. Partners with a BVG pension are limited to CHF 7,258. These contributions are fully deductible from taxable income.

Accident Insurance

Self-employed partners are not required to carry accident insurance (UVG), but voluntary coverage is strongly recommended. The partnership must, however, provide mandatory UVG coverage for any employees it hires.

What Happens When a Partner Leaves or Dies?

The general partnership is structurally tied to its partners. Unlike a GmbH, which continues to exist regardless of changes in its shareholder base, the Kollektivgesellschaft is directly affected when a partner leaves.

Statutory Dissolution Triggers

Under OR Art. 574, a general partnership is dissolved upon:

• Death of a partner
• Bankruptcy of a partner
• Unanimous agreement of all partners
• Expiry of the agreed term (if the partnership was formed for a fixed duration)
• Court order upon application by a partner for good cause (OR Art. 576)
• Realisation of a resolutory condition specified in the partnership agreement

Continuation Clauses

In practice, well-drafted partnership agreements override these default triggers with continuation clauses (Fortsetzungsklauseln). These clauses allow the remaining partners to carry on the business after a partner’s death, departure, or bankruptcy. The departing partner (or their heirs) is entitled to a settlement (Abfindung) based on the value of their partnership share, calculated according to the method specified in the agreement or, absent a method, at the partnership’s liquidation value.

Without a continuation clause, the partnership enters liquidation. Assets are sold, creditors are paid, and any surplus is distributed among the partners according to their shares. This outcome is disruptive and often value-destructive.

Liability After Departure

A departing partner’s liability does not end immediately. Under OR Art. 591, the former partner remains liable for partnership obligations that arose before their departure for a period of five years from the date the departure is published in the SHAB. This five-year tail risk is a significant consideration in any exit negotiation.

When Should You Choose a General Partnership?

The general partnership is the right structure when all of the following conditions hold:

• Two or more individuals want to run a business together and are all actively involved in operations.
• All partners accept unlimited personal liability. This is most common in professions where personal liability already exists by regulation or custom — law, medicine, accounting, architecture.
• No minimum capital is available or needed. The partners contribute labour and expertise rather than cash.
• Pass-through taxation is advantageous. At moderate income levels, single-level taxation produces a lower overall burden than corporate taxation plus dividend tax.
• The business is relationship-driven. The partners’ names and reputations are the firm’s primary assets, and the firm name (containing partner surnames) reinforces client trust.

The general partnership is not the right choice when:

• Partners are unwilling to accept personal liability for the acts of their co-partners
• The business involves high contractual risk, significant inventory, or heavy borrowing
• Passive investors need to participate without management involvement (use a limited partnership instead)
• The business plans to raise external equity or requires a governance structure with a board of directors (use a GmbH or AG)

How Does It Compare to an LP or GmbH?

The table below compares the three structures most commonly considered by small business founders and professional partnerships.

Choose a general partnership if all partners are hands-on, comfortable with mutual liability, and the business is a professional practice where personal accountability strengthens client relationships.

Choose a limited partnership if you need to combine an active operator with passive investors whose liability must be capped at their contribution.

Choose a GmbH if liability protection matters, if partners are unwilling to accept personal exposure, if external investors are anticipated, or if profits are likely to exceed the level where pass-through taxation becomes disadvantageous. Our guide to Swiss partnership structures and the complete overview of company types provide further detail.

To begin the registration process for any of these structures, our step-by-step guide walks you through the requirements, timeline, and costs.

Frequently Asked Questions

Can a general partnership in Switzerland have legal entities as partners?

No. Under OR Art. 552, only natural persons may be partners in a Swiss general partnership (Kollektivgesellschaft). If one or more partners are legal entities such as a GmbH or AG, the structure does not qualify as a general partnership. In that case, a simple partnership (einfache Gesellschaft) governed by OR Art. 530-551 may apply, but it lacks the commercial register protections and firm-name rights of a Kollektivgesellschaft. If you need corporate partners, consider forming a GmbH instead.

Does a general partnership need a written agreement in Switzerland?

Swiss law does not require the partnership agreement to be in writing. An oral agreement or even implied conduct can establish a general partnership. However, a written agreement is strongly recommended because the statutory default rules in OR Art. 557-558 may not reflect the partners' intentions. Without a written agreement, profits are split equally regardless of capital contributed, and all partners have equal management authority. Disputes over oral terms are difficult to resolve. A well-drafted written agreement typically costs CHF 1,000 to CHF 3,000 in legal fees and prevents far more expensive conflicts later.

How is profit distributed in a Swiss general partnership?

If the partnership agreement does not specify a profit-sharing arrangement, the default rule under OR Art. 557 applies: each partner receives an appropriate share of the profit as determined by the judge, taking into account all circumstances. In practice, this means roughly equal shares unless one partner's contribution — whether capital, expertise, or labour — is demonstrably greater. Partners should always define profit allocation in the partnership agreement to avoid uncertainty. Common approaches include fixed percentage splits, salary-plus-profit models, and allocation proportional to capital contribution.

What is the difference between a general partnership and a limited partnership in Switzerland?

The key difference is liability. In a general partnership (Kollektivgesellschaft), all partners bear unlimited joint and several liability for partnership debts. In a limited partnership (Kommanditgesellschaft), at least one general partner has unlimited liability, but limited partners are liable only up to their registered capital contribution. Limited partners may not participate in day-to-day management without risking their liability protection. Both forms are fiscally transparent: profits are taxed at the partner level, not at the entity level. The general partnership is better suited to firms where all partners are actively involved, while the limited partnership works when some partners want to invest without managing.

How is a general partnership registered in Switzerland?

Registration with the cantonal commercial register is mandatory for every general partnership, regardless of revenue. The application must include the firm name (which must contain at least one partner's surname), the place of business, the partnership's purpose, the full names, dates of birth, and domicile of each partner, and the form of representation (individual or joint signing authority). Registration fees are CHF 150 to CHF 400, plus CHF 30 to CHF 50 for publication in the Swiss Official Gazette of Commerce (SHAB). The process typically takes one to two weeks.

Can a partner in a Swiss general partnership be employed and receive a salary?

Yes. The partnership agreement can provide for each partner to receive a fixed salary or drawing in addition to (or instead of) a share of profits. This arrangement is common in professional service partnerships where partners also manage day-to-day work. However, from a tax perspective, partners are self-employed, not employees. Any salary or drawing they receive is treated as a distribution of partnership income, not as an employment salary, so the AHV/IV/EO contribution rules for self-employed persons apply rather than the employer-employee splitting arrangement.

What is the five-year liability rule for departing partners?

Under OR Art. 591, a partner who leaves a general partnership remains personally liable for all obligations that arose before their departure for a period of five years from the date their withdrawal is published in the Swiss Official Gazette of Commerce (SHAB). This means creditors who lent money or provided services to the partnership while the departing partner was still a member can pursue that partner for five years after the departure becomes public. This extended tail liability is one of the main reasons that departing partners insist on thorough settlement agreements that address outstanding obligations.

What taxes does a Swiss general partnership pay?

The general partnership itself pays no income tax. It is fiscally transparent: profits are allocated to partners according to the partnership agreement and each partner pays personal income tax on their share at their individual rate. The combined federal, cantonal, and municipal marginal rate can reach 40 per cent or more at high income levels depending on the canton and the partner's personal circumstances. The partnership does file an informational tax return with the cantonal tax authority. Partners also pay wealth tax on their share of partnership assets and AHV/IV/EO contributions at 10.0 per cent on net income.

What must a general partnership's business name contain?

Under OR Art. 554, the firm name of a Swiss general partnership must contain at least one partner's surname. Adding '& Co.' or '& Partner' after the named partner's surname is common but not required. The name may include a description of the business activity. It must not include 'GmbH', 'AG', or any other designation that implies a different legal form. If additional partners exist beyond those named, indicating them with '& Co.' or similar is customary. The Federal Commercial Registry Office (EHRA) reviews proposed names for distinctiveness and compliance before they are entered in the register.