Limited partnership

The limited partnership (CV) is a special form of the General partnership (VOF). There are two sorts of partners:

• active partners
• limited or sleeping partners.

The active partner is active as an entrepreneur. The sleeping partner stays in the background and tends to finance the business. He has much less authority and bears less risk. He is not allowed to act as active partner and his name cannot be used in the name of the partnership.

A limited partnership tends to develop from a sole trader or general partnership when a sleeping partner enters the business to provide extra finance for growth.

A partnership agreement is not compulsory, but is in fact essential. The agreement states the length of the limited partnership, the contribution, authority, profit share and the arrangements for resignation of the two sorts of partners. You can either ask a civil notary to draw up the contract or do it yourself using a model contract.

Taxes
Generally the tax authorities consider active partners to be self-employed entrepreneurs. Active partners can therefore benefit from tax allowances for the self-employed, the fiscal retirement reserve, the working partner's allowance and termination allowance. Each active partner pays income tax over his or her share of the profits.

If the sleeping partner only provides capital for the business without any liability towards the business creditors, the new tax system does not consider the sleeping partner to be an entrepreneur. It considers him or her to have joint entitlement.

The entrepreneur is the taxpayer on whose account the business is run and who directly commits the business to obligations.

Liability
The active partner is jointly and severally liable for the obligations of the business. The sleeping partner has no liability to third parties. His only risk is losing the money he has invested.

If you are married on the basis of communal estate, creditors can also make claims on your partner's assets. If you are married on the basis of a marriage contract, the personal assets of your partner fall partially or completely outside the area of business liability.

If you are married on the basis of communal estate, you can still arrange a marriage contract. Ask the civil notary for details.