The GmbH (Gesellschaft mit beschränkter Haftung) is one of the most popular legal forms for businesses in Germany, right after the sole proprietorship. It combines a professional reputation with limited liability and offers flexibility for nearly any business model.
But many founders ask themselves: How do I establish a GmbH, what costs are involved, and what tax implications should I be aware of?
This article provides a step-by-step guide to setting up a GmbH in Germany – including advantages, costs, legal requirements, and practical tax tips.
Why Choose a GmbH?
The GmbH is one of the most recognized and trusted corporate structures in Germany. Key advantages include:
- Limited liability: Shareholders are generally only liable up to their capital contributions – private assets are protected.
- Professional image: A GmbH is taken more seriously by banks, investors, and business partners.
- Flexibility: Easy admission of new shareholders, adaptable shareholding structures.
- Scalability: Ideal for businesses aiming for growth – from start-ups to established SMEs.
The GmbH is the best choice if you want to minimize risk, build trust, and plan for long-term growth.
Steps to Setting Up a GmbH in Germany
Establishing a GmbH follows a clearly structured process.
1. Articles of Association (Gesellschaftsvertrag)
The GmbH must have articles of association, notarized by a German notary. The contract must include:
- Company name (Firma)
- Registered office (Sitz)
- Business purpose (Unternehmensgegenstand)
- Share capital (Stammkapital)
- Shareholder contributions (Stammeinlagen)
2. Share Capital
The required minimum share capital is €25,000, of which at least €12,500 must be paid in before registration.
- Minimum per contribution: €100
- Contributions can be in cash or in kind (e.g. real estate, equipment, patents)
- Offsetting debts against contributions is not allowed
Without sufficient share capital, registration is not possible.
3. Commercial Register Entry
The GmbH only comes into existence once it is registered with the commercial register. Before that, it operates as a pre-GmbH (Vor-GmbH), where shareholders are still personally liable.
Required documents:
- Notarized articles of association
- Proof of share capital contribution
- Shareholder list
4. Tax Registration
After registration, the GmbH must be registered with the tax authorities:
- Corporate tax number assigned
- Subject to corporate income tax and trade tax
- Obligation to submit VAT returns
At this stage, tax advice is highly recommended to avoid costly mistakes.
Costs of Setting Up a GmbH
Many founders ask: How much does it cost to set up a GmbH? The main expenses include:
- Notary & commercial register: approx. €600–1,000
- Advisory costs (tax advisor, lawyer): variable
- Share capital: minimum €25,000 (at least €12,500 immediately payable)
- Additional costs: Chamber of Commerce membership, business license, possible appraisal for contributions in kind
Expect a minimum starting capital requirement of €13,500–14,000 for a standard GmbH setup.
Alternative: UG (haftungsbeschränkt)
The UG (Unternehmergesellschaft, haftungsbeschränkt) is a simplified form of the GmbH.
- Minimum share capital: from €1
- Legal requirement: 25% of annual profits must be retained as reserves
- Once €25,000 is accumulated, the company can convert into a GmbH
Suitable for founders with low capital – but long-term, the GmbH is usually the stronger choice.
Taxation of a GmbH
A GmbH is an independent legal entity and taxed separately from its shareholders:
- Corporate income tax: 15% + 5.5% solidarity surcharge
- Trade tax (Gewerbesteuer): varies by municipality (average 14–17%)
- VAT: 19% (reduced 7% for certain services)
- Contributions in kind: may trigger taxable capital gains if assets contain hidden reserves
Proper tax structuring is key – especially if you plan to contribute assets or restructure an existing business.
Online GmbH Formation
Since 2022, it has been possible to set up a GmbH online via a notary video conference.
Benefits of online formation:
- Faster and more flexible
- Lower administrative hurdles
- Particularly helpful for international founders or entrepreneurs abroad
Conclusion – Setting Up a GmbH with a Tax Advisor
The GmbH is the ideal legal form for entrepreneurs who want to limit liability, gain credibility, and build a scalable business.
Yes, the process involves capital, formalities, and legal requirements – but the advantages clearly outweigh the effort.
As a tax advisor, I support founders from the first idea to official registration – ensuring that tax risks are avoided and opportunities fully used.
✅ Your Next Step
👉 Are you planning to set up a GmbH in Germany?
I can assist you with:
- Drafting and reviewing your articles of association
- Tax structuring (capital, reserves, profit distribution)
- Registration with tax authorities and compliance setup
- Avoiding mistakes with contributions in kind and cross-border issues
Book your personal consultation today and start your GmbH with confidence.
