The limited partnership – Kommanditgesellschaft (German), societe en commandite (French) – is a partnership form that divides its members into two distinct classes: general partners who manage the business and bear unlimited liability, and limited partners whose risk is capped at their agreed capital contribution. Governed by OR Art. 594-619, the limited partnership in Switzerland occupies a niche between the general partnership and capital companies such as the GmbH.
Fewer than 2,000 limited partnerships are registered in Switzerland, making it the least common of the non-capital business forms. Its rarity does not reflect a flaw in the structure but rather the dominance of the GmbH, which offers limited liability to all participants without restricting anyone from management. That said, the Kommanditgesellschaft remains the right vehicle when a business needs to combine active management by one person with passive capital investment by others, all within a pass-through tax framework.
This guide explains the legal basis, formation process, partner roles, naming rules, tax treatment, and practical use cases of the Swiss limited partnership.
What Is a Limited Partnership in Switzerland?
A limited partnership is a contractual relationship between two or more persons who jointly operate a commercial enterprise under a common business name. It is defined in OR Art. 594 and distinguished from the general partnership by the presence of at least one partner whose liability is limited.
The structure requires a minimum of two partners:
- At least one general partner (Komplementaer) who manages the business and bears unlimited personal liability for all partnership obligations.
- At least one limited partner (Kommanditaer) who contributes capital but does not participate in management. Their liability is restricted to the amount of their agreed capital contribution.
The limited partnership is not a separate legal entity in the same way a GmbH or AG is. It can act under its firm name, hold assets, and enter contracts, but the general partner’s personal wealth ultimately backs every obligation the partnership incurs. This hybrid character positions the limited partnership between the full personal exposure of a sole proprietorship and the structural protection of a capital company.
Registration in the commercial register is mandatory. The partnership comes into legal existence upon registration, and the limited partner’s liability cap only becomes effective towards third parties once the capital contribution amount is entered in the register.
Why You Can Trust This Guide
This article is based on OR Art. 594-619, the Federal Merger Act (FusG) for conversion procedures, and the Commercial Register Ordinance (HRegV) for registration requirements. Tax treatment references ESTV guidelines on pass-through taxation and AHV contribution rates published by the Federal Social Insurance Office (BSV) for 2026. Formation cost data reflects cantonal register fee schedules and notary rates from Zurich, Bern, and Basel.
What Are the Two Types of Partners?
The defining feature of the Kommanditgesellschaft is the strict separation between two partner classes. Understanding their respective rights and obligations is essential before forming this structure.
General Partner (Komplementaer)
The general partner is the active manager of the business. Under OR Art. 598, the general partner has the same rights and obligations as a partner in a general partnership.
Key characteristics:
- Unlimited personal liability. The general partner is liable with their entire personal wealth for all debts and obligations of the partnership. This liability is joint and several if there are multiple general partners.
- Management authority. The general partner conducts all business operations, enters into contracts, hires staff, and represents the partnership before third parties.
- Must be a natural person. Swiss law does not allow legal entities (such as a GmbH or AG) to serve as general partners. This is a notable difference from jurisdictions like Germany, where the GmbH & Co. KG structure is common.
- Name in the firm name. The business name must contain the surname of at least one general partner (see naming rules below).
Limited Partner (Kommanditaer)
The limited partner is the passive investor. Their role is defined by what they may not do as much as by what they contribute.
Key characteristics:
- Liability capped at capital contribution. The limited partner’s maximum exposure equals the Kommanditsumme (capital contribution amount) recorded in the commercial register. Once this amount is fully paid in, the limited partner owes nothing further to creditors.
- No management participation. Under OR Art. 608, the limited partner may not take part in the day-to-day management of the business. If they do, they risk being treated as a general partner and losing their liability cap.
- Retained protective rights. Despite the management restriction, limited partners retain important rights: they may inspect the books, review annual accounts, and receive a share of profits as stipulated in the partnership agreement.
- Can be a natural person or legal entity. Unlike general partners, limited partners may be individuals, companies, or other legal entities.
The Management Boundary
The line between permissible oversight and prohibited management is drawn by case law rather than a precise statutory definition. Swiss courts generally hold that a limited partner crosses the line when they:
- Direct employees or make operational decisions
- Negotiate contracts or represent the partnership to third parties
- Sign documents on behalf of the partnership without express authority
Actions that remain permissible include reviewing financial statements, participating in decisions explicitly reserved to limited partners by the partnership agreement, and advising the general partner informally. The partnership agreement should define these boundaries as clearly as possible to protect the limited partner’s status.
How to Form a Limited Partnership
Formation of a limited partnership follows a structured process, though it is simpler and cheaper than incorporating a GmbH or AG.
Step 1: Draft the Partnership Agreement
The partnership agreement (Gesellschaftsvertrag) governs the relationship between general and limited partners. Swiss law does not prescribe a specific form, but a written agreement is strongly recommended. It should address:
- Names, roles, and addresses of all partners
- The general partner’s management authority and its limits
- Each limited partner’s capital contribution amount and payment terms
- Profit and loss allocation between general and limited partners
- Procedures for admitting new partners or handling withdrawals
- Non-competition obligations
- Dissolution and settlement terms
- Continuation clauses in case of a partner’s death or departure
Without a written agreement, the default rules in OR Art. 594-619 apply. These defaults may not reflect the partners’ actual intentions, particularly regarding profit sharing and decision-making.
Step 2: Prepare the Required Documents
The following documents are typically required for registration:
- Signed partnership agreement
- Signature specimens of all partners with signing authority (notarised in most cantons)
- Declaration of the limited partner’s capital contribution amount
- Application form for the cantonal commercial register
Step 3: Register with the Commercial Register
Submit the application to the Handelsregisteramt (commercial register office) in the canton where the partnership has its registered office. The registration must include:
- The partnership’s business name and registered address
- The names of all general partners and their signing authority
- The names of all limited partners and the amount of each limited partner’s capital contribution (Kommanditsumme)
- The partnership’s purpose
Registration typically takes one to two weeks. The entry is published in the Swiss Official Gazette of Commerce (SHAB).
Step 4: Register for Social Insurance and VAT
General partners must register as self-employed with the cantonal compensation office (Ausgleichskasse) for AHV/IV/EO contributions. If the partnership’s annual domestic revenue exceeds CHF 100,000, VAT registration with the Federal Tax Administration is mandatory.
Formation Costs
| Cost Item | Typical Amount |
|---|---|
| Notarisation of signatures | CHF 100-300 |
| Commercial register entry | CHF 200-400 |
| SHAB publication fee | CHF 30-50 |
| Legal advice for partnership agreement | CHF 500-2,000 |
| Total | CHF 500-2,500 |
These costs are significantly lower than the CHF 3,000-5,000 required to form a GmbH.
What Are the Business Name Rules?
The naming rules for limited partnerships are set out in OR Art. 947 and follow principles similar to those for general partnerships.
Mandatory requirement: The business name must contain the surname of at least one general partner, combined with an indication that a partnership exists. Typical suffixes include “& Co.” or “& Cie.” (e.g. “Mueller & Co.” or “Schneider & Cie.”).
Limited partners’ names: A limited partner’s name must not appear in the firm name. If a limited partner’s name is included, they are treated as a general partner towards third parties who are unaware of their actual status, even if they have not participated in management. This rule protects creditors who might assume that all named partners bear unlimited liability.
Additional elements: The name may include a description of the business activity (e.g. “Mueller & Co., Immobilien”). Fantasy elements are permissible provided they are not misleading.
No misleading suffixes: The name must not include “GmbH”, “AG”, or any other designation that implies a different legal form.
| Compliant | Non-Compliant | Reason |
|---|---|---|
| Mueller & Co. | Weber Investments GmbH | Implies a different legal form |
| Schneider & Cie., Immobilien | Mueller & Weber | Limited partner Weber’s name in firm name |
| Rosenberg & Co., Private Equity | Swiss Capital Partners | Missing general partner surname |
Check name availability on Zefix before filing the registration application.
How Does the Limited Partner’s Capital Work?
The limited partner’s capital contribution (Kommanditsumme) is the cornerstone of the liability structure. It determines the maximum amount that the limited partner can lose.
How It Works
The capital contribution amount is agreed in the partnership agreement and recorded in the commercial register. This registered amount is publicly visible to anyone searching the register. It serves two functions:
- Liability ceiling. The limited partner’s liability towards third-party creditors cannot exceed the registered Kommanditsumme.
- Creditor protection. If the limited partner has not yet fully paid in their contribution, creditors can demand payment of the outstanding balance directly from the limited partner, up to the registered amount.
Fully Paid vs Partially Paid Contributions
Under OR Art. 608, the limited partner’s position depends on whether their contribution has been fully paid in:
- Fully paid in: The limited partner has no further financial obligations towards partnership creditors. Their risk is limited to losing the amount already invested.
- Partially paid in: The limited partner can be called upon by creditors (or by the general partner) to pay the outstanding balance up to the registered amount. This outstanding portion functions like a callable commitment.
Reduction and Withdrawal
If a limited partner withdraws part of their capital contribution so that the actual invested amount falls below the registered Kommanditsumme, their liability towards existing creditors revives up to the originally registered amount. The partnership must update the commercial register to reflect any changes to the contribution amount.
No Statutory Minimum
Swiss law does not prescribe a minimum amount for the limited partner’s capital contribution. The amount is freely negotiable between the partners. In practice, contributions range from modest sums in family arrangements to millions of Swiss francs in real estate and private equity structures.
How Is a Limited Partnership Taxed?
The limited partnership is fiscally transparent under Swiss tax law. This means the partnership itself is not a taxable entity. Instead, profits and losses flow through to the individual partners and are taxed at the personal level.
Partner-Level Taxation
Each partner’s share of the partnership profit – as determined by the partnership agreement – is added to their other personal income and taxed at progressive federal and cantonal/municipal income tax rates. The allocation typically reflects the partnership agreement’s profit-sharing provisions, which may differ from the capital contribution ratios.
The partnership files an informational tax return (Hilfsrechnung) with the cantonal tax authority, disclosing total income, expenses, assets, and the allocation of profit to each partner. However, the partnership itself pays no income tax.
Wealth Tax
Each partner must declare their share of partnership net assets as personal wealth on their individual tax return. Swiss cantons levy wealth tax at rates typically ranging from 0.1 to 1.0 per cent of net assets.
No Withholding Tax
Profit distributions from the partnership to partners are not subject to Swiss withholding tax (Verrechnungssteuer). This is a notable advantage over dividend distributions from a GmbH or AG, which are subject to 35 per cent withholding tax (refundable for Swiss-resident individual shareholders, but creating a cash-flow delay).
Social Insurance
General partners are classified as self-employed and pay AHV/IV/EO contributions at 10.0 per cent of net income (for income above CHF 58,800 in 2026). They are not automatically enrolled in the second-pillar occupational pension (BVG) but may join voluntarily.
Limited partners who are purely passive investors are typically not classified as self-employed. Their share of partnership income may be treated as investment income rather than earned income, depending on the degree of their involvement. The cantonal compensation office makes this determination on a case-by-case basis.
Tax Comparison: LP vs GmbH
| Factor | Limited Partnership | GmbH |
|---|---|---|
| Entity-level tax | None | Corporate profit tax (12-22% effective) |
| Partner/shareholder tax | Personal income tax on profit share | Personal income tax on dividends |
| Withholding tax | None on distributions | 35% on dividends (refundable) |
| Tax levels | Single (partner level only) | Double (corporate + dividend) |
| Advantage at low profit | LP often cheaper below ~CHF 150,000 | – |
| Advantage at high profit | – | GmbH often cheaper above ~CHF 200,000 |
The crossover point depends on the canton, the partners’ marginal tax rates, and how much profit is retained versus distributed. A tax adviser familiar with the relevant cantonal rates should model both structures before a decision is made.
When Does a Limited Partnership Make Sense?
The limited partnership is not a general-purpose vehicle. It fills a specific structural need: combining active management by one party with passive capital investment by others, under a transparent tax framework. The following scenarios illustrate where it works well.
Investor and Operator Structures
A managing partner with industry expertise runs the business while one or more investors contribute capital without involvement in operations. The general partner controls decisions and bears the entrepreneurial risk; the limited partners participate in profits proportional to their investment. This structure is common in small to mid-sized ventures where the parties know each other well and prefer contractual flexibility over the governance formality of a GmbH.
Real Estate Ventures
A property developer or manager acts as general partner, while investors provide equity as limited partners. The pass-through tax treatment avoids double taxation on rental income and capital gains, and each partner reports their share directly on their personal tax return. Real estate limited partnerships are particularly attractive in cantons with favourable personal income tax rates.
Private Equity and Fund Structures
Although larger Swiss private equity funds typically use Luxembourg or Cayman structures, smaller domestic arrangements sometimes use the Kommanditgesellschaft. The fund manager serves as general partner, and investors enter as limited partners with defined capital commitments. The structure offers contractual flexibility for capital calls, distribution waterfalls, and carried interest arrangements.
Family Businesses
In family business succession planning, the senior generation may transition from general to limited partner status, retaining a financial stake while the next generation assumes management responsibility. The limited partnership formalises this handover without requiring a full corporate conversion.
Professional Firms in Transition
Law firms, consultancies, or architectural practices organised as general partnerships sometimes convert retiring partners to limited partner status. The retiring partner continues to receive a share of profits on their invested capital while surrendering management authority and unlimited liability exposure.
How Does an LP Compare to a GP or GmbH?
The table below compares the three structures most often considered when forming a small or mid-sized business with multiple participants.
| Criterion | Limited Partnership (KmG) | General Partnership (KlG) | GmbH |
|---|---|---|---|
| Legal basis | OR Art. 594-619 | OR Art. 552-593 | OR Art. 772-827 |
| Minimum founders | 2 (1 GP + 1 LP) | 2 natural persons | 1 |
| Minimum capital | None (LP contribution recorded) | None | CHF 20,000 |
| General partner liability | Unlimited personal | Unlimited joint and several | N/A |
| Limited partner liability | Capped at contribution | N/A (all unlimited) | Limited to share capital |
| Management | General partner only | All partners (default) | Managing director(s) |
| LP/passive investor role | Yes (limited partner) | No | Yes (non-managing shareholder) |
| Separate legal entity | No | No | Yes |
| Taxation | Pass-through (personal) | Pass-through (personal) | Corporate + dividend tax |
| Withholding tax on distributions | None | None | 35% (refundable) |
| Commercial register | Mandatory | Mandatory | Mandatory |
| Formation cost | CHF 500-2,500 | CHF 300-800 | CHF 3,000-5,000 |
| Business name rule | GP surname required | Partner surname(s) required | Free choice + “GmbH” |
| Best for | Investor + operator combos | Professional firms, equal partners | Most businesses needing limited liability |
Choose a limited partnership when you need a clear split between active management and passive investment, want pass-through taxation, and the general partner accepts unlimited personal liability.
Choose a general partnership when all partners are equally active in the business, share similar risk tolerance, and prefer the simplicity of equal management rights.
Choose a GmbH when all participants want limited liability, the business carries meaningful risk, or you need the credibility and structural flexibility of a capital company. See our partnerships overview for further guidance, or compare the GmbH and AG if a capital company is the better fit.
Can You Convert a Limited Partnership?
As a business grows, the limited partnership’s structural constraints may become limiting. The unlimited liability of the general partner, the management restriction on limited partners, and the inability to use a legal entity as general partner all push some businesses towards conversion.
Conversion to a GmbH or AG
The Federal Merger Act (Fusionsgesetz, FusG) provides a formal change-of-form procedure. All partners must consent to the conversion. The partnership’s assets and liabilities transfer to the new company by universal succession, preserving existing contracts and business relationships.
Key steps:
- Resolve the conversion with the unanimous consent of all partners (or the majority specified in the partnership agreement).
- Draft articles of association for the new GmbH or AG.
- Prepare an audited balance sheet of the partnership at the conversion date.
- Execute the notarial deed establishing the new company.
- Register the new entity and delete the limited partnership from the commercial register.
The conversion can qualify as a tax-neutral restructuring under federal and cantonal tax law, provided the new entity continues the business at book values and the partners hold their shares for at least five years. Professional guidance from a fiduciary or tax adviser is recommended to avoid triggering capital gains tax.
Liability After Conversion
The general partner’s unlimited liability does not vanish overnight. Under OR Art. 590 (applicable by reference), former general partners remain personally liable for obligations incurred before the conversion for a period of five years after the change is registered in the commercial register. This transitional liability protects creditors who extended credit in reliance on the general partner’s personal guarantee.
Other Conversion Paths
A limited partnership can also be dissolved and its assets contributed to a newly formed entity, though this approach is less elegant than the FusG change-of-form procedure and may trigger tax consequences. In practice, the formal conversion is almost always preferable.
For a broader view of all company types in Switzerland and guidance on choosing the right structure, consult our pillar guide or speak with our expert.
Frequently Asked Questions
Can a legal entity be a general partner in a Swiss limited partnership?
No. Under OR Art. 594, only natural persons may serve as general partners (Komplementaere) in a Swiss limited partnership. Legal entities such as a GmbH or AG cannot assume the general partner role. This differs from jurisdictions like Germany or Luxembourg, where a GmbH & Co. KG structure allows a limited liability company to act as general partner. In Switzerland, the general partner must be an individual who accepts unlimited personal liability for partnership debts.
What happens if a limited partner participates in management?
If a limited partner (Kommanditaer) takes part in the day-to-day management of the partnership beyond the rights expressly granted by the partnership agreement, they risk losing their limited liability protection under OR Art. 608. Swiss courts may treat such a partner as a general partner for liability purposes, meaning they become personally and unlimitedly liable for all partnership debts. Limited partners may still inspect the books, review annual accounts, and vote on matters reserved to them by the partnership agreement without jeopardising their status.
How is a limited partner's capital contribution recorded?
The capital contribution (Kommanditsumme) of each limited partner is recorded in the commercial register and is publicly visible. This amount represents the ceiling of the limited partner's liability towards third-party creditors. If the limited partner has fully paid in their contribution, they owe nothing further. If the contribution has only been partially paid, creditors can demand payment of the outstanding balance directly from the limited partner, up to the registered amount.
Is a limited partnership in Switzerland subject to corporate tax?
No. The limited partnership is fiscally transparent under Swiss tax law. The partnership itself files an informational tax return but does not pay income tax. Instead, each partner's share of the profit is allocated according to the partnership agreement and taxed as personal income on that partner's individual tax return. This applies to both general and limited partners. There is no withholding tax on profit distributions, and partners must declare their share of partnership assets for wealth tax purposes.
What is the minimum capital contribution for a limited partner in Switzerland?
Swiss law prescribes no minimum amount for the limited partner's capital contribution (Kommanditsumme). The amount is freely agreed between the general and limited partners and specified in the partnership agreement. It is then recorded in the commercial register and is publicly visible. The registered amount represents the limited partner's maximum liability to third-party creditors. If the limited partner has fully paid in their contribution, they owe nothing further. In practice, contributions range from a few thousand francs in small family arrangements to millions of francs in real estate and private equity structures.
Can a limited partner's name appear in the firm name of the partnership?
No. Under OR Art. 947, a limited partner's name must not appear in the partnership's firm name. If a limited partner's name is included in the name, they are treated as a general partner towards third parties who are unaware of their actual status — meaning they lose their limited liability protection and become unlimitedly liable for all partnership debts. The firm name must contain the surname of at least one general partner, typically followed by '& Co.' or '& Cie.' to signal that additional partners exist.
How does a limited partner exit a Swiss limited partnership?
A limited partner's exit is governed by the partnership agreement. Common mechanisms include the right to give notice after a fixed initial term, redemption of the capital contribution at book or agreed value, and continuation clauses that allow the partnership to carry on after a partner's departure. If the partnership agreement is silent on exit procedures, the default rules under OR Art. 594-619 apply, which may require all partners' consent. After exit, the former limited partner's name and contribution amount are removed from the commercial register, and the change is published in the SHAB.
What are the formation costs for a limited partnership in Switzerland?
A limited partnership is significantly cheaper to form than a GmbH or AG. The main costs are notarisation of partner signatures (CHF 100 to CHF 300 in most cantons), the commercial register entry fee (CHF 200 to CHF 400), publication in the Swiss Official Gazette of Commerce (CHF 30 to CHF 50), and legal fees for drafting the partnership agreement (CHF 500 to CHF 2,000 depending on complexity). Total formation costs typically fall between CHF 500 and CHF 2,500. There is no mandatory capital deposit and no minimum capital requirement, making this one of the lowest-cost formal structures available in Switzerland.
Can a foreign company be a limited partner in a Swiss limited partnership?
Yes. Unlike general partners, who must be natural persons under Swiss law, limited partners may be any legal person, including a foreign company, a GmbH, an AG, or an individual. This flexibility makes the limited partnership useful for international investment structures where a foreign holding company acts as a passive limited partner providing capital while a Swiss-resident individual serves as the active general partner managing the business. The foreign limited partner's contribution and liability ceiling are registered publicly in the Swiss commercial register.