Gesellschaft mit beschrankter Haftung is the standard German private limited liability company, used by most domestic SMEs and foreign-owned operating subsidiaries.
A GmbH is a German private limited company governed by the GmbH-Gesetz (GmbHG). It has separate legal personality and shields shareholders from company debts beyond their capital contribution. The minimum share capital is 25,000 EUR, of which at least 12,500 EUR must be paid in before registration.
Each shareholder holds a quota (Geschaftsanteil) in EUR rather than freely tradeable shares; transfers require notarisation.
Incorporation runs through a German notary, who drafts and certifies the articles of association (Gesellschaftsvertrag), then files with the commercial register (Handelsregister). The company is managed by one or more managing directors (Geschaftsfuhrer) who can be shareholders or employees and need not be German residents, though VAT and tax registrations are simpler with a local presence.
A GmbH pays corporate income tax (Korperschaftsteuer) plus solidarity surcharge and trade tax (Gewerbesteuer), with effective rates typically between 28 and 32 percent. Annual financial statements must be filed with the Bundesanzeiger.
The lighter Unternehmergesellschaft (UG) variant allows formation with as little as 1 EUR but must retain 25 percent of profits until reaching the 25,000 EUR threshold and converting to a full GmbH.
You will encounter the GmbH whenever you contract with a German SME, hire through a German subsidiary, or research a target for cross-border M&A. Founders setting up a German operating company for sales, hiring, or VAT registration almost always pick a GmbH. International groups use it as the standard German subsidiary form.
If 25,000 EUR is too much capital up front, the UG (haftungsbeschrankt) variant offers a stepping-stone path.
See what a company actually costs in year one, and how the jurisdictions compare on tax, capital and timeline.
