GmbH in Germany: requirements, process, benefits & costs 2025

Many founders in Germany choose a GmbH to run their business professionally and reduce personal liability. But how does the process work? What requirements must you meet, and what costs and responsibilities are involved? This practical, easy-to-read guide covers everything you need to get started with confidence.

Summary

1. What is a GmbH?
2. Key features of a GmbH
3. Pros and cons of a GmbH
4. Requirements for setting up a GmbH
5. Step-by-step guide to forming a GmbH
6. Costs of setting up a GmbH
7. Obligations and liability
8. Accounting and taxes
9. Alternative forms and variations of the GmbH
10. FAQ: Common questions about GmbH formation
11. Is a GmbH right for you?

What is a GmbH?

The GmbH, or “company with limited liability,” is a widely used private limited company structure, favoured by start-ups, small and medium-sized businesses, and those focused on growth and a strong reputation. The main advantage: liability is limited to the company’s assets, so your personal assets are protected. A GmbH can be set up by one or more individuals or legal entities.

Key features of a GmbH

• Limited liability: in most cases, your financial risk is limited to your capital contribution, and creditors cannot claim against your private assets.
• Minimum share capital: €25,000 required (at least €12,500 must be paid in before registration).
• Independent legal status: the GmbH has the capacity to make contracts, own property, and appear in legal matters in its own right.
• Clear structure: there are defined rules for management, shareholders, and company organs.

Pros and cons of a GmbH

Advantages

• Liability shield: your financial exposure is restricted to the amount you have invested in the business.
• Strong reputation: a GmbH is trusted by banks, business partners, and clients.
• Versatility: suitable for solo founders, teams, and investors.
• Easy transfer of shares: ownership can be transferred without much bureaucracy.

Disadvantages

• Higher initial capital: at least €25,000 in share capital is required.
• More formalities: notarial certification and entry in the commercial register are mandatory.
• Ongoing obligations: you must keep proper accounts, prepare annual financial statements, and comply with disclosure rules.

For a detailed comparison of business structures, check our main article on company types in Germany with a comparison table of all business structures (link).

Requirements for setting up a GmbH

Who can set up a GmbH?

• Both individuals and companies—either on their own or together with others.
• Foreign nationals can also establish a GmbH in Germany.

Share capital and contributions

• A minimum share capital of €25,000 is required.
• At least €12,500 must be paid in before registration.
• Contributions can be made in cash or as assets (e.g. equipment, vehicles).

Articles of association and notary

• The articles of association set out the company’s purpose, who the shareholders are, how management works, and how shares are distributed.
• This document must be notarised.

Managing director and shareholders

• At least one managing director is required.
• The shareholders decide who will run the company.

Company name and business purpose

• The company name must be unique and include “GmbH”.
• The business purpose is registered in the commercial register.

How to set up a GmbH: step by step

Plan and prepare

Define your business idea, shareholder structure, funding needs, and management responsibilities.

Draft the articles of association

Set out the rights and duties of shareholders, the division of shares, and the company’s purpose. Many notaries offer digital templates and advice.

Notarise the articles

Sign the articles in front of a notary, either in person or via video call. The notary certifies the signatures and submits the documents to the commercial register.

Open a business account and deposit share capital

Open a business account, upload the formation documents, and pay in at least €12,500. The bank will provide a confirmation needed for registration.

Register with the commercial register

The notary registers your GmbH. Once approved, the company is officially established and gains its own legal status.

Register your business and with the tax office

Register your business with the local trade office and provide the necessary information to the tax office. You’ll receive a tax number and, if needed, a VAT ID.

Start trading

Once registration is complete, you can begin operations. Your business account will be active, and you can issue invoices, sign contracts, and hire staff.

Stay organised with digital tools

Use digital platforms to track your progress and manage documents. Many providers offer dashboards with status updates and reminders.

Tip: Digital GmbH formation saves time and effort. Modern services allow you to handle notary appointments, document management, and banking online.

Costs of setting up a GmbH

When you set up a GmbH in Germany, expect the following costs:

• Notary and registration fees: Around €800 to €1,200 for notarising documents and registering the company.
• Professional advice: Legal or business consulting is optional and depends on your needs.
• Share capital: At least €12,500 must be paid in up front (the legal minimum is €25,000; you can pay the rest later).
• Running costs: After formation, you’ll have ongoing expenses such as accounting, tax advice, and chamber of commerce (IHK) membership fees.

The final costs can differ based on your region and the specific needs of your business.

Obligations and liability of a GmbH

Shareholder liability

Liability is limited to the company’s assets. However, if you breach your duties (for example, by delaying insolvency filing), personal liability can arise.

Duties of the managing director

• Duty of care and lawful management
• Bookkeeping and annual accounts
• Submitting tax returns and statutory contributions

Accounting and taxes

• Corporation tax: 15% on profits
• Trade tax: varies by location
• VAT: charged on sales
• Financial statements: typically include a balance sheet and an income statement (profit and loss statement)

Alternative forms and variations of the GmbH

• UG (haftungsbeschränkt): the low-cost “mini-GmbH” with share capital from €1 — see Setting up a UG – the mini-GmbH for founders
• gGmbH: non-profit GmbH for social projects
• GmbH & Co. KG: a combination of a GmbH and a limited partnership
• Shelf GmbH: a ready-made company that’s already registered and can be acquired for immediate business operations
• SE: European company for cross-border business

FAQ

How long does it take to set up a GmbH?

Typically between two and six weeks, depending on how prepared you are and the response times of the relevant authorities.

Can a single person register a GmbH in Germany?

Yes, a single-person GmbH is possible.

What if I can’t pay in the full share capital at once?

Registration is only possible once at least €12,500 has been paid in.

What documents do I need?

ID card, articles of association, proof of share capital, and any necessary permits.

How can I take over an existing GmbH?

By transferring the shares—ideally with legal advice.

Is a GmbH right for you?

A GmbH is a strong choice if you want liability protection, growth potential, and a professional image. It’s ideal for founders with capital and clear plans. If you prefer a more flexible or lower-cost start, consider alternatives such as Setting up a UG – the mini-GmbH for founders or Sole proprietorship in Germany: what it is and how to start one.