🇩🇪 Company Formation in Germany: GmbH, UG and Setup Guide

Germany is a large, decentralised market, so the first decision is not simply how to register a company. Founders should decide where the business will actually operate, which legal form fits its funding and risk, and whether a German subsidiary or a branch is the right vehicle. This guide explains the usual GmbH route and the lower-capital UG option for international founders.

GmbH or UG: which structure fits?

A GmbH is the familiar German limited liability company. Its statutory share capital is €25,000. At registration, the cash contributions must meet the statutory minimum, normally at least €12,500 in total, with at least one quarter of each cash share paid. The balance remains a capital obligation; it is not a fee. Founders should choose capital based on solvency and the credibility required by counterparties, not only the minimum due at formation.

An UG (haftungsbeschränkt) can be formed below €25,000, even with €1 in capital, but it must be fully paid in cash before registration. It cannot receive contributions in kind at formation and must retain a portion of annual profits in a statutory reserve until it reaches the GmbH capital threshold. A low nominal amount does not fund operations or make the company cheaper to run. For larger financing rounds, a regular GmbH may be clearer.

How company formation in Germany works

1. Plan ownership and management. A GmbH can have one shareholder; shareholders and managing directors need not be German residents. Plan who can represent the company and how decisions will be taken.
2. Choose the company name, purpose and registered office. The GmbH needs a German registered office and a business address. Check the proposed name with the local Chamber of Industry and Commerce and notary before committing to branding.
3. Prepare the articles. The articles define the shareholders, shares, capital and business purpose. A statutory model protocol is available for some simple cash formations, but tailored ownership or governance usually needs bespoke drafting.
4. Sign before a notary. Incorporation documents are generally notarised. Certain GmbH formations can use the online notarial procedure when the participants have eligible electronic identification and the transaction qualifies.
5. Pay the share capital and register. Open a company account when possible, transfer the required contributions, then the managing director applies for entry in the Commercial Register through the notary. The GmbH becomes a legal person when entered.
6. Complete local and tax registrations. Depending on activity, register with the local trade office (Gewerbeamt), submit the tax questionnaire through ELSTER, and handle VAT, payroll and chamber obligations that apply.

What non-resident founders should prepare

Expect identity and beneficial-ownership checks, evidence of a foreign parent company where relevant, and certified translations or apostilles depending on the documents and issuing country. Banks conduct separate onboarding and may request a business plan, contracts, source-of-funds information and details of the German activity. Incorporation does not guarantee a bank account, residence permission or tax outcomes for the founders.

Remote signing is not universally available to every founder: the German online notarisation route uses an approved video process and qualifying eID. If a shareholder cannot attend, ask the notary about powers of attorney, authentication and translation requirements before sending originals.

Costs, tax and ongoing duties

Budget for notarial and commercial-register charges, translations, a German address, accounting, tax advice and any licensed activity. Germany has federal corporate tax and a municipal trade tax whose rate varies by location; compare the actual municipality rather than relying on a single national headline rate. A company generally submits the tax-registration questionnaire promptly after establishment and keeps annual accounts and statutory records.

Choose Germany when its customers, staff, supply chain or operating substance justify the local entity. If the purpose is only to hold contracts while management remains elsewhere, compare the branch and cross-border tax consequences before incorporating.

If timing is a key constraint, compare a new formation with acquiring an existing entity; our ready-made GmbH company service outlines the transfer option.

Official resources

• Germany Trade & Invest: Company Set Up in Germany
• Federal Portal: Register a GmbH
• German Limited Liability Companies Act (English translation)
• Germany Trade & Invest: Corporate Taxation
• Germany Trade & Invest: Branch Offices

Need to compare a German subsidiary with an Estonian company or branch? Contact Eesti Consulting with your planned activity, owners and target market.