Swiss Limited Partnership (KG): Structure & Uses

The Swiss limited partnership (Kommanditgesellschaft — KG) is a partnership form under Articles 594-619 of the Code of Obligations (OR). It combines an active general partner (Komplementar) with one or more passive limited partners (Kommanditare) whose liability is capped at their capital contribution. The Swiss KG is used primarily for investment fund structures and certain family business arrangements — and almost never for ordinary commercial operations. In a market where roughly 80% of company formations involve foreign nationals choosing between a GmbH and an AG, the KG is a genuinely niche structure. If your adviser is recommending a KG for a standard operating business, that recommendation deserves scrutiny.

When the Limited Partnership Is the Wrong Choice

The KG is a genuinely niche structure. In roughly 80% of formations we handle, the founder chooses between a GmbH and an AG. The KG is the right answer only when tax transparency — not tax minimisation, but structural transparency where income flows through to partners — is the primary design criterion. If your adviser is recommending a KG for a standard operating business, challenge that recommendation.

The cost trap. A KG requires a general partner, typically a GmbH. You are forming two entities: the GmbH (CHF 1’900 + CHF 20’000 share capital) and the KG itself (CHF 600-800 register fee + partnership agreement drafting). Total setup: CHF 5’000-8’000 in professional fees plus the GmbH share capital. A standalone GmbH costs CHF 1’900. An AG costs CHF 2’500. The KG only justifies its extra complexity when tax transparency is non-negotiable.

The management restriction. Limited partners cannot participate in management. If they do, they lose their limited liability protection and are treated as general partners with unlimited personal liability. This catches founders who want “passive investment with an advisory role” — there is no middle ground in Swiss law.

Structure of the Swiss KG

General partner (Komplementar): Manages the partnership and bears unlimited personal liability. The GP is typically a Swiss GmbH or AG — which limits practical exposure to the GmbH/AG’s assets.

Limited partner (Kommanditare): Invests capital. Liability is capped at the committed contribution. Cannot participate in management without losing limited liability status.

Minimum participants: At least one GP and one LP. No maximum.

Legal personality: The KG is a legal entity — it can own property, enter contracts, and be sued. This distinguishes it from simple partnerships (einfache Gesellschaft).

Formation and Registration

The Kommanditgesellschaft must be registered in the Commercial Register (Art. 594 OR). Registration requires:

• Partnership agreement (Gesellschaftsvertrag) — in writing, signed by all partners
• Name of the partnership: must include the name of at least one partner + ”& Co.” or “KG” / “Kommanditgesellschaft”
• Registered address
• Names of general partner(s) and limited partner(s)
• Committed capital contribution of each limited partner (this is public)

Commercial Register filing fee: CHF 600—800.

There is no minimum capital requirement for the partnership itself (though the general partner’s GmbH must have CHF 20’000 share capital).

Tax Treatment

The Swiss KG is tax-transparent — it is not itself a taxable entity for income tax purposes. Instead, each partner is taxed on their share of the partnership’s profit in proportion to their participation.

General partner GmbH: Taxed on its share of partnership profit as corporate income. For details on corporate tax rates, see our guide to corporate tax in Switzerland.

Limited partner individuals: Taxed on their share of partnership profit as personal income in their canton of residence.

Capital tax: The KG is subject to cantonal capital tax on its net assets (at partnership level, separate from partners’ individual wealth tax on their participation).

VAT: The KG is itself a VAT taxpayer — if it provides taxable supplies exceeding CHF 100’000/year, it must register for VAT. See our VAT registration guide for thresholds and procedures.

Limited Partnership for Collective Investment Schemes

Swiss law introduced a specific investment vehicle based on the KG structure:

Kommanditgesellschaft fur kollektive Kapitalanlagen (KGK): A Swiss limited partnership specifically designed for private equity and real estate funds, regulated under the Collective Investment Schemes Act (CISA/KAG).

The KGK is analogous to the Anglo-American Limited Partnership used for PE/VC funds:

• General partner (typically a licensed Swiss fund management GmbH) manages the fund
• Limited partners are the investors
• The structure is tax-transparent — income and gains flow through to investors
• FINMA approval required for the GP fund manager

The KGK was reformed in 2024 to be more competitive with Luxembourg (SCSp) and Delaware (LP) structures. Swiss PE and VC funds increasingly use the KGK.

Comparison with Other Swiss Structures

The cost arithmetic matters here. A KG requires a general partner — typically a GmbH — which means you are forming two entities: the GmbH (CHF 1’900 formation cost plus CHF 20’000 share capital) and the KG itself (CHF 600-800 in Commercial Register fees plus legal drafting of the partnership agreement). The total setup cost for a KG with a GmbH as general partner typically runs CHF 5’000-8’000 in professional fees plus the GmbH share capital. By contrast, a standalone GmbH costs CHF 1’900 to form and CHF 20’000 in share capital. An AG costs CHF 2’500 to form with CHF 50’000 minimum paid-in capital. The KG only justifies its additional structural complexity when tax transparency is the primary objective — which is the case for investment funds but rarely for operating businesses.

For a full comparison of Swiss entity types and which structure best fits your needs, see our company formation guide.

When to Use a KG

Private equity / VC funds: The KGK structure provides fund-level tax transparency, which is preferred by institutional investors who do not want double taxation.

Family businesses: A KG can allow senior family members (as limited partners) to invest capital while a next-generation manager serves as general partner (through a management GmbH).

Joint ventures: For projects where one party contributes capital passively and another operates actively. See also our page on joint ventures in Switzerland.

Not recommended for: Standard Swiss operating companies — the GmbH or AG is more appropriate for most commercial businesses.

Case Study: The Family Business That Chose a KG — Then Converted

A Zurich-based family with a profitable real estate portfolio wanted to bring the next generation into the business while maintaining control. The father (general partner via a management GmbH) would run operations; his two adult children (limited partners) would invest capital and receive income.

The KG worked for three years. Then the daughter wanted to take an active management role. Under Swiss law, her participation in management would strip her limited liability status. The family converted the KG to an AG — a process that took eight weeks and cost CHF 6’000 in professional fees under the Swiss Merger Act. The AG’s board structure gave both children governance roles without liability exposure.

The lesson: the KG works precisely when roles are static. The moment limited partners want operational involvement, the structure breaks.

Real Problems With Swiss KG Structures

General partner insolvency risk. If the GmbH serving as general partner becomes insolvent, the KG may be dissolved unless remaining partners agree to continue with a replacement GP. Address this in the partnership agreement from day one.

Public disclosure of LP contributions. The committed capital contribution of each limited partner is registered in the Commercial Register and publicly searchable. Unlike an AG (where shareholders are private), every LP’s investment amount is visible on ZEFIX.

Banking complexity. Banks must conduct KYC on both the KG and the GP entity. Two sets of beneficial ownership documentation, two compliance reviews. For international structures with non-Swiss LPs, this can extend the banking timeline to 8+ weeks.

For a broader overview, see our guide to Swiss Entity Types Compared.

Frequently Asked Questions

Why would I choose a KG over a simple GmbH?

Tax transparency. A KG is not itself taxed — income flows through to partners, avoiding the double taxation (corporate tax + dividend tax) that applies to GmbH and AG distributions. This matters primarily for investment fund structures and family wealth arrangements. For standard operating businesses, the GmbH’s simpler governance and lower setup cost make it the better choice.

How much does a KG actually cost to set up?

The KG itself costs CHF 600-800 in Commercial Register fees plus legal drafting of the partnership agreement. But you also need a general partner — typically a GmbH at CHF 1’900 formation cost plus CHF 20’000 share capital. Add nominee director if needed (CHF 5’900/year), registered address (CHF 2’400/year), and accounting. Total first-year setup: CHF 5’000-8’000 in professional fees plus the GmbH share capital. Compare this to a standalone GmbH at CHF 1’900 formation cost.

Can a non-Swiss resident be a limited partner in a Swiss KG?

Yes. Limited partners can be non-Swiss residents — natural persons or corporations from any jurisdiction. The Swiss KG is commonly used for international investment structures.

Is the limited partner’s contribution publicly disclosed?

Yes. The committed capital contribution of each limited partner is registered in the Commercial Register and is publicly accessible.

Can the limited partner lose more than their contribution?

Generally no — the liability of the limited partner is capped at the amount of their committed capital contribution. If they participate in management or hold themselves out as a general partner, this protection can be lost.

What are the ongoing compliance obligations for a Swiss KG?

The KG must maintain proper accounting records in accordance with Swiss law, file annual tax returns for each partner’s share, and update the Commercial Register whenever there are changes to partners, capital contributions, or the partnership agreement. If the KG meets certain size thresholds, it is also subject to audit requirements.

Can a Swiss KG own real property?

Yes. Because the KG has legal personality, it can own real property in its own name. This differs from simple partnerships. Foreign limited partners should note that cantonal restrictions on property purchases by non-residents (the Lex Koller regime) may apply depending on the property type and location.

How is a Swiss KG dissolved?

A KG is dissolved upon the occurrence of events specified in the partnership agreement, by unanimous agreement of all partners, by court order, or if the partnership is declared bankrupt. Dissolution triggers a winding-up process during which the KG’s assets are liquidated, debts are paid, and remaining proceeds are distributed among partners according to their participation.

Does a Swiss KG need an auditor?

A KG is subject to audit requirements if it exceeds two of the following three thresholds in two consecutive financial years: total assets of CHF 20 million, revenue of CHF 40 million, or 250 full-time employees. Smaller partnerships may opt out of an audit with the consent of all partners.

What happens if the general partner becomes insolvent?

If the general partner (typically a GmbH or AG) becomes insolvent, this can trigger the dissolution of the KG unless the remaining partners agree to continue the partnership with a replacement general partner. This is a significant risk factor in KG structures and should be addressed in the partnership agreement through succession planning provisions.

Can a KG convert to a GmbH or AG?

Yes. The Swiss Merger Act (FusG) allows a KG to be converted into a capital company (GmbH or AG) through a formal transformation process. This requires a transformation plan, an auditor’s report, partner consent, and registration with the Commercial Register. The transformation preserves the legal continuity of the entity.

Is the KG suitable for a startup?

The KG is generally not the best choice for a technology startup seeking venture capital in the traditional sense. Most Swiss startups incorporate as an AG, which provides a cleaner structure for issuing equity, granting employee participation plans, and attracting institutional investors. The KG is better suited to fund structures, family offices, or joint ventures with clearly defined active and passive roles.