The GmbH is the most common form of all new companies incorporated in Germany and can be compared to the French Sàrl, the Spanish SL or the known Private Limited in the UK. Most foreign investors incorporate a GmbH to have a representative office in Europe which allows them start and grow their sales operations in Germany and Greater Europe.
The German GmbH is successfully established by having the documents deed of formation as well as the articles of association signed by the director in front of an offical German notary. The GmbH also can be represented by further natural persons. Those representives are required to hold the power of attorney, which has to be notarized by the German notary as well.
To complete the process of incorporation, the proposed GmbH must be registered with the local Chamber of Industry and Commerce. For registration the managing director must sign the application in front of the German notary. The notary certifies the signatures and will inform the managing directors about their duties and finally will file the application.
Upon registration in the commercial register, the GmbH becomes a legal entity and gains full legal capacity. Furthermore a new incorporated GmbH must also be registered at the local trade office. The GmbH can already start its business without this last registration, however, the limitation of liability of the shareholders will only get effective when the registration is filed.
The German GmbH requires a minimum share capital of EUR 25,000. The funded capital needs to be paid on a German corporate bank account. It is also possible to make another financial contribution, i.e. in kind of buying assets for the company. At the actual time of registration it is sufficient to hold half of the minimum capital required (EUR 12,500) in order to facilitate the formation with the notary. According to a new German legislation also a "Mini-GmbH" (UG) can be formed. In regard to this new legal form, the investor needs to raise share capital of only one Euro. However, the Mini GmbH will have to re-invest a part of its income to raise the minimum share capital of EUR 25,000. When the Mini GmbH has reached its capital of Euro 25,000 it will be converted into a traditional German GmbH. If the GmbH only has a single shareholder, this shareholder is liable for any unpaid amount of the minimum share capital and must provide security for it.
The Mini GmbH (UG) is a kind of legal sub-form of the traditional GmbH and has to be named with the suffix UG, standing for Unternehmensgesellschaft (entrepreneurial limited with limited liability). The UG was designed as an entrepreneurial company. For the entrepreneurial company with limited liability the share capital amounts to at least one Euro for the Mini GmbH in comparison to least EUR 25,000 for the incorporation of the German GmbH. Please refere to our section Germa legal forms to find more information about the new German company form - Unternehmensgesellschaft (UG).
The time period that should be considered when incorporating a new legal entity or branch office in Germany is subject to your very individual business objectives and the complexity of the specific business model. To still provide you with a guideline, approx. three to four working weeks have to be taken into consideration to form a new company in Germany.
The VAT number is provided by the German tax authority after submission of an application from the founders, including the registration certificate of the company, information on the directors and form of organization, and detailed information on the object of activity and expected turnover. A new company may register for VAT immediately after receiving the registration certificate, which usually will be received within one month period after incorporation. However, registering for VAT in Germany is not mandatory for every kind of businesses.
The German bank account is mandatory for registered businesses in Germany. In order for the company to legally function it must have a bank account in order to make transactions and deposit the capital, prior to registration. Please find more information about the corporate bank account in Germany.
Our team does not only work very closely with you but also with regional notaries and therefore it will represent a strong advocate suprting the whole process upon registration. We will monitor the progress upon registration in the commercial register and therfore are able to provide a high transparency of all activities back to our clients .
A GmbH is managed and legally represented by its managing directors (Geschäftsführer). The corporation must have at least one managing director which can be a corporation or natural person. The managing director does not have to be a shareholder or a German resident. The managing director may receive an income for his duty, but that is not required by law. The shareholders have the power to exercise direct influence on the GmbH's management by issuing binding instructions or directions to the Geschäftsführer. When no binding instructions are given, the managing director is fully responsible for all business operations of the company.
Some key notes about further shareholders:
After the incorporation process of your company or branch office your success story in Germany has just begun. Please refer to the complete Consultinghouse solutions framework to learn more about how our expertise can support you in every single phase of your starting, as well as running business.