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German Limited Liability Company (LLC) Formation

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A German Limited Liability Company (LLC) is officially called “Gesellschaft mit beschränkter Haftung”, and its abbreviation is “GmbH”. This is the most popular of all German corporations. It combines flexibility with few restrictions and is easy to form.

The German Limited Liability Company Law went in effect on November 1, 2008 which governs every LLC formation, registration, activities, and dissolution.

Foreigners can own 100% of the shares in a German LLC.

Germany is located in Central Western Europe. Its political system is a federal parliamentary republic, thus, its official name is the “Federal Republic of Germany”.


A German Limited Liability Company (LLC) enjoys these benefits:

100% Foreign Ownership: Foreigners can own 100% of the shares in a German LLC.

Limited Liability: Shareholders liabilities are limited to the company’s assets.

A Low Capital Mini LLC: Small companies can start out as a Mini LLC with 50% of the normal minimum authorized capital.

Simple Registration: Only two documents are required which can be filed by a notary.

One Shareholder/Manager: Only one shareholder and one manager are required which can be the same person.

Map of Germany

Company Name
Every LLC must select a company name which is not similar to any other legal entity’s name in Germany. Every LLC name must end with the abbreviation “GmbH”.

Mini LLC
Formation of a small (mini) LLC is an available option. They are called a “Mini GmbH” (Unternehmergesellschaft UG, haftungsbeschränkt). A Mini LLC is not a separate LLC, but rather, a LLC with a capital less than 25,000 Euro with full cash subscription. Therefore, it is possible to form a Mini LLC with only a capital share of only 1 Euro.

To make up for the initial absence of its full capital, a Mini LLC must accumulate the minimum share capital of 25,000 Euro by retaining 25% of its annual profit until fulfilled. Then the Mini LLC becomes a standard LLC with at least 25,000 Euro share capital.

Formation of a LLC is uncomplicated. The founding shareholders execute a Deed of Formation along with Articles of Association and sign them before a notary.

These LLC documents must be filed with the Commercial Register (Handelsregister). All of the managing directors (Geschäftsführer) must sign the Commercial Register application form before a notary. After being registered, the LLC becomes a legal entity. Then the LLC must register at the local trade office (Gewerbe- oder Ordnungsamt).

Registration costs for filing with the Commercial Registry for a LLC is currently 400 Euro. In addition, there are fees for the notary and for the district court for entry and publication in the Federal Gazette (Bundesanzeiger).

Limited Liability
Limited liability of the shareholders is only effective when the required documents describing such limitations are filed with the Commercial Register. Prior to filing, if business is conducted by the LLC, the shareholders are all personally liable for any losses incurred by the company.

The liability of the shareholders in a LLC is limited to the company’s share capital. Which means the company’s assets alone shall serve to fulfill the company’s obligations to its creditors. The LLC is a legal entity holding separate rights and obligations in acquiring ownership and other rights in real property and can individually sue and be sued in court of law related to its rights and duties.

A minimum of one shareholder is required.

Aside from basic rights and duties explained in the Limited Liability Company Act (GmbHG), the Articles of Association (Satzung) can create additional rights and duties for the shareholders as private shareholders and the class of shares issued. Such rights and duties will carry through inheritance and other forms of share transfers to third parties.

These rights and duties may be divided into administrative and property rights. Administrative rights include the right (i) to participate in the shareholders meetings; (ii) to request the calling of the shareholders’ meeting; (iii) to right to vote; and (iv) obtaining information regarding all corporation actions from the managing directors including inspection of books and records.

Property rights include sharing in the annual profits, transfer of shares, and share entitlements when the company dissolves.

More important duties include the duty to make contributions, fiduciary duties, and preservation of share capital.

The Articles of Association may expand, restrict, or exclude all of the shareholders’ rights and duties if not in conflict with mandatory laws.

If the company experiences financial difficulties, the shareholders are obligated to either: (i) increase their contributions to the company; (ii) dissolve the company; or (iii) require the management to begin insolvency procedures.

German Building

A LLC is managed and represented by its managing directors. At least one manager must be appointed (who can be a shareholder) and does not have to be a German resident. The shareholders exercise control of the managers by issuing binding directions to them.

The Limited Liability Company Act (GmbHG) of Germany places control of a LLC completely in the hands of its shareholders, who regularly adopt resolutions at the shareholder meeting (Gesellschafterversammlung). In addition, second in command are the managing director(s) (Geschäftsführer). A Supervisory Board (Aufsichtsrat) can also be formed as an option which directly oversees the managing directors.

Required Minimum Share Capital
A German LLC minimum share capital is 25,000 Euro which can be in cash or like kind contributions. At least 50% of the minimum capital (12,500 Euro) must be verified as an actual contribution in a bank account.

The corporation tax rate is 15%.

In addition, there is a “Solidarity Surcharge” of 5.5% of the total corporation tax paid.

There is also a “Trade Tax” on trade earnings plus some municipalities charge a tax too.

It is estimated that a typical LLC involved in a trade pays around 30% in total taxes.

Annual General Meetings
Annual general meetings are not required. As long the shareholders adopt resolutions by majority vote in text form without having to attend a physical meeting which is allowed by the Articles of Association, no meetings are required.

Shareholders have the ultimate power and control of the LLC. The shareholders’ meeting makes all of the policy decisions for the company.

The Articles of Association determine how often and where physical meetings occur. The articles can pose alternatives to physical meetings as long as there is a written record of a majority acceptance of resolutions and other actions.

Public Records
The Commercial Register (Handelsregister) information is public and can be viewed by anyone. The Commercial Register contains the following information:

•The company name;

•The name of the owner(s);

•The names of the managing directors;

•The corporation’s capital stock amount;

•Liability limitations of the owners and/or shareholders;

•All issued Power of Attorney;

•If any insolvency proceedings were initiated; and

•The dissolution and termination of a company.

District courts manage the Commercial Register which is open to the public for free. In addition, the Commercial Register is also available to view online through the common register portal of the German federal states (Gemeinsames Registerportal der Länder). A portion of the company’s information is also availed online through the commercial register of the Federal Gazette (Bundesanzeiger).

Time Required for Registration
The typical time period required for the formation of a LLC is two to three weeks.

Shelf Companies
Shelf companies are available in Germany to purchase for faster registration.


A German Limited Liability Company (LLC) enjoys these benefits: 100% ownership by foreigners, limited liability, low capital mini LLC as an option, simple registration, and only one shareholder required who can also be the sole manager.

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