Setting up a GmbH or “Mini GmbH”
The German limited liability company (Gesellschaft mit beschränkter Haftung, GmbH) is the most widely used legal form for corporations. It combines high flexibility with relatively few obligations. Corporations like the GmbH based in Germany or with an executive board in Germany are liable to corporate taxation on globally generated income. Setting up a GmbH is easy and uncomplicated and can be accomplished in just a few steps.
Five-step formation process
In order to establish a GmbH in Germany, at least one shareholder (private individual or legal entity) is required. The nationality and residence of the shareholder(s) and the managing director(s) of a GmbH are irrelevant. However, the GmbH must have a German business address and a local representative.
The involvement of a German notary is required for the incorporation of a GmbH.
Certain documents are required for the incorporation of a GmbH. Typically, the notary will ask for documentation verifying the existence of any parent company as well as the power of representation for persons acting on behalf of it. In general, an excerpt from the foreign commercial register as well as articles of association of the foreign parent company are required.
Drafting of Articles of Association
Notarization of Articles in Association
Payment of share capital
Commercial Register registration
Trade Office registration
Authentication and translation
Please note that specific requirements regarding authentication and translation apply, depending on the legal form and origin of the foreign company. It is advisable to consult a German notary at an early stage for individual advice.
Online formation
From August 2022 onward, online formation of a GmbH by way of cash contribution will be possible - enabling a remote and faster incorporation procedure.
The online notarization takes place in a video conference between the notary and the parties involved. The German Federal Chamber of Notaries provides a video communication system with a two-step identification procedure that requires an electronic proof of identity (eID).
The following German eIDs meet the current requirements for secure identification within the online formation procedure:
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- German national ID cards with eID function (for German nationals)
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- German eID cards (for EU/EEA citizens)
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- German electronic residence permits with eID function (for nationals of third countries)
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- Electronic identification schemes issued by another EU/EEA member state in accordance with the eIDAS regulation and a corresponding high assurance level
Electronic signature
The signatures required for the incorporation are obtained by means of a qualified electronic signature.
Articles of association
Share capital of a GmbH
Registration of the new company
Further requirements
A business license or permit is not necessary for registering the business in the majority of cases. In some sectors, a permit or authorization might be required.
Limited Liability Entrepreneurial Company
”Mini-GmbH“
The Mini GmbH (Unternehmergesellschaft UG, haftungsbeschränkt) is a start-up version of the GmbH with a share capital of less than EUR 25,000. It is often referred to as “Mini-GmbH”.
The Mini-GmbH is a private limited liability company with a minimum capital of less than EUR 25,000. In order to compensate the initial absence of capital, the company has to retain a quarter of its annual profit until it has accumulated the minimum shareholder capital of an ordinary GmbH (i.e. EUR 25,000). The accumulated capital can then be converted into share capital and the Mini-GmbH altered into a standard GmbH.
Mini-GmbH formation
The Mini-GmbH is generally subject to the same legal duties and rights as the standard GmbH (excepting the above-mentioned specific provisions). The formation procedure is also the same as that for a standard GmbH. However, the share capital has to be contributed fully and contributions in kind are not possible when establishing a Mini-GmbH.
Model articles
For uncomplicated standardized formation of a Mini-GmbH, model articles are provided. These articles must still be notarized, but for a reduced fee.