Company Formation in Germany: The Complete English Guide

The German legal forms at a glance

Germany offers six broad routes to a business presence, and choosing between them is the decision most founders come here to make. The table below sets out the headline numbers; the sections beneath it explain each form and link to a dedicated guide. If you want a side-by-side breakdown of every structure, see our full overview of the types of companies in Germany.

GmbH (the SME default)

The GmbH (Gesellschaft mit beschränkter Haftung) is the most widely used corporate form in Germany and the default choice for small and medium-sized businesses. Its minimum share capital is €25,000 under §5(1) GmbHG, of which at least €12,500 must be contributed before the company is entered in the Handelsregister under §7(2) GmbHG. It is a limited-liability entity: shareholders' exposure is, in principle, confined to their capital contribution. Formation requires notarisation of the articles of association and entry in the commercial register, and the notary submits the registration electronically. This is the form most foreign founders should look at first. For the full procedure, capital rules and timeline, see our guide to opening a GmbH in Germany.

UG (haftungsbeschränkt), the €1 mini-GmbH

The UG (haftungsbeschränkt), often called the "mini-GmbH" or "1-euro GmbH", is a sub-form of the GmbH governed by §5a GmbHG. Its share capital may be below €25,000, from as little as €1, which makes it attractive for a lean start with little cash. The trade-off is in the detail: the capital must be fully paid in cash, contributions in kind are excluded, and the UG must allocate one quarter (25%) of its annual profit (reduced by any prior-year loss carried forward) to a statutory reserve until it can convert into a full GmbH. The €1 floor is real, but the reserve obligation and the cash-only rule are the strings most guides omit. See forming a UG for the conversion path and the §5a mechanics in full.

AG (stock corporation), €50,000, capital markets

The AG (Aktiengesellschaft) is Germany's stock corporation, designed for larger ventures and capital-market access. Its minimum share capital is €50,000 under §7 AktG. The articles must be notarised, and at least one quarter of the lowest issue amount per share (plus any premium) must be paid at incorporation. The AG carries heavier governance (a management board and a supervisory board) than a GmbH, so it is rarely the right starting point unless you are planning to raise equity at scale or list. Do not copy the GmbH's €25,000 figure onto an AG: the threshold is €50,000. Our German stock corporation guide covers the share structure and board requirements.

Partnerships & GmbH & Co. KG

Germany's partnership forms (the GbR, oHG and KG) require a minimum of two partners and do not have a fixed minimum capital. The widely used hybrid is the GmbH & Co. KG, which combines a limited partnership (KG) with a GmbH acting as the general partner. Because the general partner is itself a limited-liability company, this structure caps the liability that would otherwise fall on a natural-person general partner, while retaining the tax and governance flexibility of a partnership. It is a common choice for family businesses and asset-holding structures.

Branch office (autonomous vs dependent)

A foreign company that wants a German presence without forming a subsidiary can register a branch. The German distinction is important: an autonomous branch (selbständige Zweigniederlassung) must be entered in the Handelsregister and requires a notary, whereas a dependent branch (unselbständige Zweigniederlassung) needs only a local trade-office registration. In both cases the foreign parent remains fully liable, so a branch is not a liability shield. Our branch office in Germany guide explains the three-way split, registration and tax in full.

Sole proprietorship / freelancer

The simplest route is the sole proprietorship (Einzelunternehmen), which has no minimum capital. A trader registers via the local trade office (Gewerbeanmeldung); a recognised freelancer (Freiberufler) registers directly with the tax office (Finanzamt). The owner is personally liable for business debts, so this form suits solo founders with low liability exposure rather than ventures that need outside capital or protection.

How company formation works, step by step

At a high level, forming a German corporation follows a predictable pipeline. The exact documents and timing vary by form, but the sequence is consistent:

1. Choose the name and business object. The company name and its stated purpose (Unternehmensgegenstand) are settled and checked, usually with input from the local chamber of commerce (IHK).
2. Notarise the articles of association. For a GmbH, UG or AG, the articles must be notarised. The notary records the deed and prepares the registration.
3. Open a bank account and pay in the capital. The required portion of the share capital is paid into the company's bank account (for a GmbH, at least €12,500 of the €25,000).
4. Register in the Handelsregister. The notary submits the registration electronically to the commercial register; entry is constitutive (the company legally exists on entry).
5. File the Gewerbeanmeldung. The business is notified to the local trade office before operations begin.
6. Register with the Finanzamt and for VAT. The company obtains a tax number and, for EU and cross-border trade, a VAT ID (USt-IdNr.).
7. File with the Transparenzregister. The beneficial owners are reported to Germany's transparency register.

For the detailed GmbH version of this pipeline, with the documents at each step, see GmbH formation in Germany.

The €12,500 vs €25,000 truth

This is the single most common point of confusion, and it is worth stating plainly. The GmbH's minimum share capital is €25,000 under §5(1) GmbHG. That is the total subscribed capital. However, only €12,500 (half) must actually be paid in before the company is registered in the Handelsregister under §7(2) GmbHG. The remaining €12,500 is still owed by the shareholders and can be called up later; it does not disappear.

Two cautions follow. First, the €12,500 figure belongs to the GmbH, not the UG: a UG can start from €1, but that €1 must be fully paid in cash, with no contributions in kind (§5a GmbHG). Do not transfer the GmbH's half-payment rule onto a UG. Second, the capital is not a fee: it is your company's money, available to run the business after formation. We unpack both points further in our UG guide.

Do I need a notary, and must I travel to Germany?

A notary is mandatory for corporations (GmbH, UG and AG) and for autonomous branches: the articles of association must be notarised, and the notary handles the electronic filing to the Handelsregister. There is no way around the notary for these forms; it is a structural feature of German company law, not a service add-on.

You do not, however, necessarily have to fly to Germany. Online (video) notarisation of a GmbH has been possible since 2022, which lets many founders complete the notarial act remotely rather than appearing in person. Availability depends on the notary and the specifics of your case, but for a straightforward GmbH or UG formation it can remove the travel requirement entirely. We coordinate this for clients who are outside Germany.

How long does formation take?

Realistic timing matters more than a best-case headline. After notarisation, the Handelsregister typically processes the entry in around two to six weeks. End to end, a full formation commonly runs four to six weeks, and sometimes anywhere from two to eight weeks, depending on:

• Notary scheduling and appointment availability.
• How quickly the corporate bank account is opened and the capital paid in.
• Handling of foreign documents, including certified translations and apostilles for non-resident founders.
• Authority workload at the relevant Amtsgericht.

For a step-by-step view of how long company registration takes, including what typically delays cross-border cases, see our dedicated timeline page.

What does it cost?

Costs are separate from the share capital. The €25,000 (or €50,000 for an AG) is your company's money, not a payment to anyone; the fees below are the real cost of getting incorporated. As indicative ranges:

• Notary fees: from around €350 where a model protocol (Musterprotokoll) is used, rising to roughly €750 or more with bespoke standard articles. Notarial fees are set by the GNotKG and scale with the share capital.
• Handelsregister court fee: since 1 June 2025, the current registration fee is around €225 for a GmbH or UG and around €450 for an AG.
• Trade office (Gewerbeanmeldung): typically €15 to €65, depending on the municipality.
• Advisory / formation support: engaging a tax advisor and formation specialist commonly costs a low four-figure euro amount, depending on scope.

For a full breakdown of the real formation costs for a GmbH or UG, including what is and is not included in fixed-price packages, see our costs guide.

Which legal form should you choose?

There is no universally "best" form; the right one depends on your liability appetite, capital and plans. As a rule of thumb:

• GmbH is the SME default: limited liability, credible standing, and the form most counterparties expect.
• UG (haftungsbeschränkt) suits a lean start with little cash, as long as you accept the §5a strings (cash-only capital, the 25% reserve, and a non-automatic conversion to GmbH).
• AG is for ventures heading toward capital-market access or a listing, where the heavier governance is justified.
• GmbH & Co. KG fits founders who want partnership flexibility with limited liability, common for family and asset-holding setups. See our note on German holding structures if you are building a multi-entity group.
• Branch office suits a foreign company that wants a German footprint without a subsidiary, accepting full parent liability.
• Sole proprietorship is for solo founders with low liability exposure and no need for outside capital.

If you are still weighing options, our overview of all entity types in Germany compares them feature by feature.