How to set up a GmbH company in Germany

Are you considering starting your own business in Germany as a GmbH? This decision is not one to take lightly, as your choice of company legal form has far-reaching implications on the complexity of getting started, the taxes you'll pay, and the liability you'll need to assume.

In this article, we delve into the requirements for forming a GmbH, outline the individual steps to creating one, and provide you with an overview of the costs you should expect.

A GmbH, short for Gesellschaft mit beschränkter Haftung, is one of the most commonly used business forms in Germany. When you establish a GmbH, you create a legal entity with its own legal personality. This means that liability in the event of debts or legal issues is limited to the company's assets and does not affect your personal assets.

The GmbH is represented by one or more managing directors and requires a share capital of at least €25,000. It is particularly suitable for medium-sized businesses and is especially popular among entrepreneurs due to its structure and limited liability.

The GmbH is the suitable legal form of a corporation for founders who do not yet meet the extensive requirements for establishing a public limited company (Aktiengesellschaft, or AG).

With the GmbH minimum capital backing you, your company enjoys a certain esteem among customers and investors. At the same time, you benefit from limited personal liability.

A good alternative for founders who lack the GmbH capital and who do not wish to take on external financing is to establish a entrepreneurial company (Unternehmergesellschaft, or UG).

Learn about setting up a UG in this separate article.

Setting up a GmbH comes with conditions and requirements. 

• Name and legal form suffix: you must choose a unique and non-misleading company name, which needs to include the suffix "GmbH" to indicate the legal form.

• Share capital (Stammkapital): the most important condition for establishing a GmbH is the deposit of a minimum contribution as GmbH share capital amounting to €25,000. This can also be done as a contribution in kind.

• Articles of Association (Gesellschaftsvertrag): your founding document should not only include basic information such as business purpose and share capital but also regulations on topics like the appointment of managing directors, profit and loss distribution, shareholder meetings, and similar organizational matters.

• Transparency and disclosure obligations: the GmbH must fulfil various administrative and financial disclosure obligations, such as the publication of the annual financial statement.

• Company Identification Number (Unternehmensidentifikationsnummer): you must apply for a company identification number at the Federal Statistical Office (Statistischen Bundesamt).

• Permits and licenses: depending on the business field, additional official permits or licenses may be required, such as a business license or specific industry certificates.

The process of establishing a GmbH in Germany can take anywhere from a few days to several weeks. Let's break it down into 7 steps:

1. Create GmbH Articles of Association
2. Approve GmbH Articles of Association and shareholder list
3. Open a business account and deposit share capital
4. Enter your GmbH in the commercial register
5. Register your business with the trade office
6. Register your business with the tax office
7. Registering the GmbH with other offices and authorities

In the articles of association of the GmbH, your founding document, you establish all the important legal framework conditions of the company:

• Who are the shareholders?
• Who acts as manager(s)?
• How much is the share capital?
• What is the commercial purpose of the GmbH?
• How is the profit distribution of the GmbH regulated?
• Who is involved in major business decisions?

Since many regulations are agreed individually, it makes sense, especially with a large number of GmbH shareholders, to draft your own individual contract or have it created by a lawyer. This way, you also have the assurance that the shareholder agreement will withstand the scrutiny of the notary during certification.

The partnership agreement must be reviewed, read aloud, and notarized by a notary. In the past, all partners had to be present at this appointment to sign the agreement. Here, the notary also creates the list of GmbH shareholders. However, thanks to the Digitalization Directive for Online Incorporation, you can also easily do this from home on your laptop.

According to § 40 of the GmbH Act (GmbHG), this list must contain the following information for all partners:

• Full name (first and last name)
• Date and place of birth
• Current residence
• Nominal share capital amounts
• Serial numbers of the acquired shares

If the shareholder structure changes during the company's business activities, these changes must be reported to the commercial register. For this purpose, the managing director submits the current list to the district court.

Once the partnership agreement is signed and notarized, a kind of pre-company is established. This pre-company is referred to as a GmbH in formation (GmbH i. G.). It retains this status until it is entered into the commercial register after depositing sufficient share capital.

It's advisable to open a business account for any company, whatever its legal form, in order to clearly separate personal and business expenses. For a GmbH, this is a legal requirement.

The share capital is deposited into this account by the shareholders. At least half of the required share capital (so, at least €12,500) must be deposited at this stage. This capital can also be contributed in the form of non-cash assets.

Once the share capital is in your GmbH business account, you'll receive a corresponding certificate from your bank, which you need for the notary to register your company in the commercial register.

At Qonto, you can open a business account for founders in no time and directly deposit your required share capital.

In principle, all merchants are required to register their business in the commercial register (Handelsregister). The GmbH is entered in the commercial register Section B (HRB).

Since you need to deposit share capital to establish the GmbH, the notary requires a bank statement of your business account as well as the deposit slip for the minimum capital of €12,500. The application for entry in the commercial register is done with the help of the notary, who then forwards it to the district court.

After review by the district court, the new GmbH's entry in the commercial register is published in the electronic Federal Gazette (Bundesanzeiger). With the commercial register entry, the GmbH loses its status as a pre-company: the GmbH i. G. becomes a fully-fledged GmbH with all rights and obligations according to GmbH law.

Before commencing business operations, the GmbH must also be registered with the trade office (Gewerbeamt), either in the local branch or online. Registration costs range between €15 and €60, depending on the city. You will need a valid identification document and the completed business registration application form (Gewerbeanmeldung).

In addition, the trade office requires the following information:

• Name and legal form of the company
• Number of legal representatives
• Address and contact details of the company
• Description of business activities
• Location and number of the commercial register entry

Depending on the industry and activity, additional documents such as a certificate of good conduct or a health certificate may be required.

No more than one month after registering the business with the trade office, your GmbH must also be registered with the tax office (Finanzamt). For this, you need to fill out the questionnaire for tax registration (Fragebogen zur steuerlichen Erfassung). This determines the amount of taxes you'll need to pay.

Additionally, the tax office requires further documents:

• Excerpt from the Handelsregister
• Articles of Association (Gesellschaftsvertrag)
• Date of establishment
• Start date of operations
• Opening balance sheet
• Estimates of revenue and profit for the current and subsequent year
• Business registration (Gewerbeanmeldung)
• Existing rental agreements

After reviewing the information, your GmbH receives a tax number (Steuernummer), which must be included on all invoices you send to clients.

Depending on the scale at which the GmbH is starting and the industry it operates in, further registrations may be necessary. Those employing staff must inform the Federal Employment Agency (Bundesagentur für Arbeit) as well as relevant health insurance fund (Krankenkassen), which collects the social security contributions for the employees and forward them to the insurance carriers.

Additionally, you'll need to register with the Chamber of Industry and Commerce (IHK) or the Chamber of Crafts (HWK) and with any relevant professional association.

Establish your GmbH or UG in just a few days – with our fully digital incorporation process and personal support in English for legal and tax questions. This way, you can get the right business account for your incorporation and deposit your share capital directly online.

GmbH formation costs depend on the fees for the services you use. The notary and court costs in Germany, for instance, are regulated by the Court and Notary Fees Act (GNotKG).

The fees for registering and entering the GmbH in the commercial register are also uniformly regulated throughout Germany. These are billed by the respective district court.

There are no upper limits on the additional costs when establishing a company as a GmbH, but for a simple company set-up, you can expect approximately €1,000 in founding costs in addition to the GmbH share capital of at least €25,000.

Below is an example cost calculation for forming a GmbH.

If you do not have the necessary share capital to found a GmbH, you can, alternatively, found a UG, for which the minimum required share capital is just one euro. The UG is also called a one-person GmbH, Mini-GmbH, or 1-Euro-GmbH.

Essentially, the same regulations apply as for the GmbH. One of the main differences is that 25% of the annual profit must be retained as a reserve. Once this reserve reaches at least €25,000, the UG must be converted into a GmbH. This €25,000 then serves as the GmbH's share capital.

While offering many advantages in terms of flexibility and limited liability, the GmbH is also subject to various tax obligations. If you decide to establish a GmbH or are already managing one, it's important to have a clear overview of the taxes involved. This is the only way to minimize potential financial risks and exploit tax benefits effectively.

Here is an overview of the possible GmbH taxes:

• Corporate tax (Körperschaftssteuer): This is 15% on profits. There are no allowances.

• Trade tax (Gewerbesteuer): This tax is based on the assessment rate, which varies depending on the municipality. On average, it is about 400 to 500% of the federal base rate of 3.5% (2025 figures). There is an allowance of €24,500 for all businesses.

• Value-added tax (VAT, Umsatzsteuer): The standard rate is 19% and a reduced rate of 7% applies to certain products and services. Small businesses can take advantage of the small business (Kleinunternehmer) regulation - which exempts them from VAT - if their turnover in the previous calendar year was below €25,000 and is not expected to exceed €100,000 in the current calendar year.

• Capital gains tax (Kapitalertragsteuer): If you have capital gains, you pay 25% on interest, dividends, and capital gains. The application of exemption orders or saver’s allowance is possible.

• Income tax (Lohnsteuer): If you employ staff, you must also pay income tax. In Germany, income tax ranges from 14% to 45% of the salary.

• Property tax (Grundsteuer): If you own a property, property tax is due on it. The annual property tax amount is determined by multiplying the property tax assessment amount by the assessment rate.

Manage accounting and taxes directly in Qonto – thanks to our convenient integration with DATEV.

Each legal form has its own pros and cons, and the GmbH is no exception. Below you will find a table listing the main advantages and disadvantages of a GmbH to assist you in making a decision.

The decision for or against a GmbH should be well-considered and depends on various factors such as your risk tolerance, the required capital, and your business sector. Consulting with experts is advisable in many cases.

This information has been compiled and reviewed to the best of our knowledge and belief. Nevertheless, we would like to point out that we cannot assume liability for the accuracy, timeliness, and completeness. In case of doubt, this information does not replace legal advice. If you have legal or tax-related questions, please contact your lawyer or tax advisor.