The GmbH is the most popular corporate form in Germany. We explain the formation process step by step and outline the costs involved.
The GmbH as the Corporate Form of Choice
The Gesellschaft mit beschränkter Haftung (GmbH) is the most widely used corporate entity in Germany, with over one million registered companies. The reasons are clear: limited liability, flexible structuring options and a high degree of acceptance in business dealings.
Requirements for Establishing a GmbH
Pursuant to § 1 GmbHG, a GmbH may be established for any legally permissible purpose. The key requirements are:
- Share capital: A minimum of 25,000 euros (§ 5 Abs. 1 GmbHG). At least half, i.e. 12,500 euros, must be paid in at the time of formation.
- Shareholders: At least one shareholder is required. A single-member GmbH is expressly permissible.
- Articles of association: The articles must be notarised (§ 2 GmbHG).
- Managing director: At least one managing director must be appointed.
The Formation Process in Detail
1. Drafting the Articles of Association
The articles of association are the foundation of your GmbH. Pursuant to § 3 GmbHG, they must contain at a minimum: the company name and registered office, the business purpose, the amount of share capital, and the number and nominal values of the shares. In addition, provisions on shareholder meetings, profit distribution, succession and non-compete clauses are recommended.
2. Notarial Authentication
The articles of association must be notarised. During the notary appointment, the managing director is also appointed and the list of shareholders is prepared. Since 2018, online formation has been available pursuant to § 2 Abs. 3 GmbHG for cash formations.
3. Payment of Share Capital
Following notarisation, the share capital must be paid into the business account of the company in formation (GmbH i.G.). For formations in kind, a report on the contributions in kind is required.
4. Commercial Register Application
The application for registration with the commercial register is filed by the managing director(s) in notarially certified form. The notary submits the application electronically to the competent registry court.
5. Registration and Legal Existence
The GmbH comes into existence as a legal entity upon registration in the commercial register. From this point, the limitation of liability takes full effect.
Costs of Establishing a GmbH
Costs vary depending on complexity but typically include:
- Notary fees: Approximately 800 to 1,500 euros (depending on the share capital and scope of the articles)
- Commercial register fees: Approximately 150 euros
- Trade registration: Approximately 20 to 60 euros
- Share capital: At least 12,500 euros to be paid in at formation
- Advisory fees: Variable, depending on the scope of advice
In total, founders should budget for total costs of approximately 1,500 to 3,000 euros, in addition to the share capital.
Tax Considerations
The GmbH is subject to corporate income tax (15 per cent plus solidarity surcharge), trade tax (depending on the municipal multiplier) and value-added tax. Profit distributions to shareholders are additionally taxed at the flat-rate withholding tax or under the partial income method.
Careful tax planning from the outset of formation can yield significant benefits. This particularly applies to the choice between salary payments and profit distributions, the structuring of pension commitments and the use of fiscal unities.
Conclusion
Establishing a GmbH is a structured process that can be completed swiftly with proper preparation. A well-considered set of articles of association that prevents future disputes and incorporates tax optimisation from the outset is essential. Professional advice from a lawyer and tax adviser always pays for itself.
