There are several types of business entities available for companies in Germany to choose from. Our team of experts will thoroughly assess your business model, objectives, and resources to recommend the most suitable business structure for your needs.
- GmbH (Gesellschaft mit beschränkter Haftung)
When foreign investors and entrepreneurs decide to establish a company in Germany, the most common choice is the GmbH, which is equivalent to a limited liability company. GmbH registration is suitable for various business sectors, whether you are operating onshore or offshore. As per the Germany Companies Registry, the minimum requirements for a GmbH include:
- At least 1 director of any nationality
- At least 1 shareholder of any nationality
- Minimum paid-up capital of €25,000
- Legal registered office address
- UG (haftungsbeschränkt)
The UG, often referred to as a mini GmbH, is a suitable option for entrepreneurs seeking to invest less capital initially. Unlike the GmbH, there is no minimum paid-up share capital requirement for a UG. However, 25% of the company’s profits must be allocated to reserves until they reach a total of €25,000. Afterward, the company can convert to a standard GmbH. Setting up a UG offers reduced risk and lower initial costs compared to other structures. It shares many characteristics with GmbH but does not require an initial paid-up capital. If your business has more than 3 shareholders, you must opt for GmbH registration.
- General Commercial Partnership (Offene Handelsgesellschaft – OHG)
In this legal entity, a minimum of two individuals come together to establish a business. To establish an OHG, you must submit Articles of Association that include details of the shareholders, the business’s purpose, deposits made, and more. These articles must be notarized and submitted to the commercial registry. Additionally, the business should be registered with the Trade Office. It’s important to note that all partners in this type of business have unlimited liability, meaning they are personally accountable for the company’s debts and liabilities.
- Limited Partnership (Kommanditgesellschaft)
To establish a limited partnership, a minimum of two individuals is required, with a capital of €50,000. The partners must sign the Articles of Association, have it notarized, and register with the Trade Register. In this structure, the general partner has unlimited liability and is fully responsible for all company debts, while the limited partner is only liable up to the value of their shares in the business.
A branch office is an extension of the parent company and can conduct business activities in Germany similar to those of the parent company. The parent company is the sole shareholder and is fully liable for any debts incurred by the German branch office. Additionally, the German branch office is considered part of the foreign company and is subject to the German taxation system applicable to it.
- Representative Office
A representative office is limited to conducting market research and marketing activities for the parent company. It is not permitted to sign contracts, enter into sales agreements, or generate income in Germany.
We hope this information helps you make an informed decision regarding the most suitable business structure for your venture in Germany.