German Limited Liability Company (GmbH)
Limited liability company · Germany
Quick answer
A German GmbH (Gesellschaft mit beschränkter Haftung) is the standard limited liability company, requiring a notary and EUR 25,000 minimum share capital, with the lighter UG as a EUR 1 alternative. The combined corporate tax burden is around 30%, and notary involvement, GoBD-compliant accounting, and a multi-week formation are common realities. This is informational only, not legal or tax advice.
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- Liability
- Limited (shareholders)
- Tax model
- ~30% combined corporate
- Non-resident suitability
- Moderate
- Typically best for
- EU-market and B2B founders
Common founder use cases
- Founders selling into the largest single market in the EU
- B2B companies serving German Mittelstand customers
- Scaling companies that want a credible, investor-recognised EU entity
Who it is usually good for
- Founders who need direct access to the largest EU domestic market
- Teams that value mature legal and banking infrastructure
Who it is not ideal for
- Founders chasing a low headline corporate tax rate
- Founders who want to skip mandatory notary involvement
What this structure is
The standard German limited company; notary-formed with EUR 25,000 capital (or a EUR 1 UG), strong for the largest EU market but administratively demanding.
Ownership
A GmbH is owned by shareholders and can be single-owner. Non-residents can hold and direct it, though the notarized formation step requires coordination.
Liability overview
Shareholders generally have limited liability up to their contribution. The company is a separate legal person entered in the Handelsregister.
Tax treatment overview
Federal corporate tax is 15% plus a solidarity surcharge, and municipal trade tax brings the combined effective rate to roughly 30%, varying by municipality. Standard VAT is 19% with a reduced 7% rate for designated categories.
Formation / registration overview
A GmbH requires a notary and EUR 25,000 minimum share capital, registered in the commercial register (Handelsregister). The UG (Unternehmergesellschaft) is a lighter variant with EUR 1 minimum capital. Elapsed time is commonly two to four weeks.
Capital
Minimum share capital is EUR 25,000 for a GmbH (a portion payable on formation); the UG can start from EUR 1 and must build reserves toward GmbH-level capital.
Administration & annual compliance
Annual financial statements must be filed with the Bundesanzeiger, and GoBD rules govern the integrity and retention of accounting records.
Compliance
VAT returns are filed monthly, quarterly, or annually depending on prior-year liability, alongside corporate tax filings.
Banking & payment considerations
Mainstream German banks and challengers such as N26 Business, Holvi, and Qonto serve GmbH and UG entities, though KYC for non-resident-owned entities has tightened. Wise Business is a common supplementary account.
Non-resident founder considerations
Non-residents can own and direct a GmbH or UG, but the in-person or notarized formation step and tightened bank KYC make local coordination important. Verify tax positions with a qualified advisor.
Hiring & payroll considerations
Employment is governed mainly by the BGB and the Works Constitution Act, and employer-side social charges typically add roughly 20% on top of gross salary.
Dissolution
Dissolution involves a liquidation procedure, settling liabilities, deregistration from the commercial register, and final tax filings.
Lifecycle
German Limited Liability Company (GmbH) — typical lifecycle
Formation / registration
A GmbH requires a notary and EUR 25,000 minimum share capital, registered in the commercial register (Handelsregister). The UG (Unternehmergesellschaft) is a lighter variant with EUR 1 minimum capital. Elapsed time is commonly two to four weeks.Capital & ownership
Minimum share capital is EUR 25,000 for a GmbH (a portion payable on formation); the UG can start from EUR 1 and must build reserves toward GmbH-level capital.Operation & annual compliance
Annual financial statements must be filed with the Bundesanzeiger, and GoBD rules govern the integrity and retention of accounting records.Dissolution
Dissolution involves a liquidation procedure, settling liabilities, deregistration from the commercial register, and final tax filings.
Founder fit (Germany)
Computed from the published jurisdiction scorers for Germany — weighted composites, not entity-specific promises.
Common mistakes
- Confusing the EUR 25,000 share capital with the formation fee
- Underestimating notary and register timelines when setting a launch date
- Assuming the ~30% combined rate is just the 15% federal figure
FAQ
- What is the difference between a GmbH and a UG?
- Both are limited-liability companies. The GmbH requires EUR 25,000 minimum share capital; the UG can be formed with as little as EUR 1 but must build reserves over time toward GmbH-level capital.
- Is the German corporate tax rate really 15%?
- The federal rate is 15% plus a solidarity surcharge, but municipal trade tax brings the combined effective corporate burden to roughly 30%, varying by municipality. This is informational only.
Related
Country profile
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Calculators
Insights
Sources
- Handelsregister — German commercial register (Handelsregister) (accessed )Covers: Germany's commercial register of companies, including GmbH and UG entities and their filings.Why it matters: Official reference for German limited-liability-company (GmbH/UG) registration and register entries.
- Bundesministerium der Finanzen — Federal Ministry of Finance — Germany (accessed )
- European Commission — European Commission — policy and country information (accessed ; reviewed )Covers: EU policy framework including the VAT One-Stop-Shop and single-market rules.Does not cover: Member-state-specific reduced rates, national thresholds, or non-EU jurisdictions.Why it matters: Used for EU/EEA market-access and VAT-OSS framing referenced across rankings and guides.Review cadence: On policy change; re-checked each data review.
- OECD — OECD — economic and tax statistics (accessed ; reviewed )Covers: Comparable corporate tax, statutory rate, and economic indicators across member and partner economies.Does not cover: Effective tax rates, deductions and incentives, local surtaxes, and personal residency rules.Why it matters: Used as a cross-country baseline to sanity-check rates against primary tax-authority figures.Review cadence: Annual, plus on major statutory changes.
- PricewaterhouseCoopers — PwC Worldwide Tax Summaries (accessed ; reviewed )Covers: Corporate income tax, VAT, and dividend withholding rates across most covered jurisdictions.Does not cover: Your specific effective rate, bespoke incentives, rulings, or transactions requiring professional advice.Why it matters: Used to triangulate rates against primary tax-authority sources, not as the sole authority.Review cadence: Updated by the publisher per tax year; re-checked each data review.
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