Lawyer Germany
Sunday, 16. February 2020

German GmbH

GmbH in Germany

In Germany the GmbH is the common kind of company. In Germany companies it is extremely important to know with whom business should be done. A GmbH can generally be regarded as a respectable partner. However it should be clear to any potential investor that a German GmbH (Gesellschaft mit beschränkter Haftung) is a limited liability company.

The system of German GmbH is defined precisely in the GmbHG (the law for limited liability companies). A German GmbH is represented by one or more "Geschäftsführer/n", in English: CEO (also company manager or managing director).

CEO of a German GmbH

The GmbH and its CEO are subject to several rules, codified in the GmbH-law. The CEO is responsible for the operative business. He (or she) only represents the GmbH, which is, in itself, a fully autonomously legal person.

If the German GmbH becomes insolvent, the CEO is neither liable nor a deptor. His sole risk is that he has to file for insolvency in time. If he does not do so, he becomes liable for all business done as of the point of time at which bankruptcy imminent.

The CEO of the German GmbH must act in accordance with the requirements of the GmbH shareholders and of course with the German laws. If he performs to his own personal advantage, particulary in the case of deception, he becomes liable.

Shareholders of a German GmbH

The German GmbH is suitable for a small number of shareholders. The shareholdes are required to come together at least once a year. They have the power to terminate the agreement with the CEO and to amend the articles of the GmbH.

The Risk of a GmbH in Germany

Risk here refers to the risk sometimes involved in doing business with a GmbH. In principle, anyone in Germany can create a GmbH, doe business without paying the suppliers, pay themselves top salaries and file for bankruptcy. To avoid the risk of being involved in such a situation, you have to be well-informed about the GmbH before you sign a contract with it as partner.

The German AG

The German GmbH is the "little sister" of the German AG (Aktiengesellschaft), translated "stock or share company". AGs are a good choice if a company has several stockholders. AGs can also be listed on stock exchanges.

Tax Advice

In Germany there are two reasons for forming a GmbH:
- to limit liability and
- to have tax advantages.
The German GmbH form ofers several tax-saving possibilites. However, in Germany, a GmbH also has to pay business tax (Gewerbesteuer), a tax form which cannot normally be regained through tax-retuns. For this reason many shareholders of a GmbH form an additionall GmbH & Co.KG, which is a similar form of a legal person, also rewuired to pay business tax, but in this case the owner of the GmbH & Co.KG is able to deduct tax.

General Publishing Requirements

In Germany a GmbH is subject to certain publishing obligations. The annual financial statement of the German GmbH has to be published in the German Federal Gazette (Bundesanzeiger), which is open to view by all, in order to have a public overview of the current financial situation of each specific German GmbH.

Every Change of the German GmbH headquarters, each change in management und every shareholder change hast to be openly published in the commercial register(Handelsregister). So anyone who needs information can be fully informed of the current state of the company, its shareholders or its management. Both the German Federal Gazette and the comercial register can be viewed on the internet free of charge and without registration.

Formation of a German GmbH

In Germany a GmbH is formed with the help of a notary. You need a new bank account and start capital of at least EUR 12,500. The law prescribes EUR 25,000, of which at least half has to be transferred to the new account, if this is declared in the GmbH contract.

If a shareholder, or if the sole owner of the GmbH, is from abroad, the notary needs a current certified excerpt from the relevant register, no older than 4 months and stamped with an apostille.

If you wish to formate a GmbH in Germany Mr. Willers needs the following information:

- name of the new company
- full name, address, date and place of birth and marital status of every shareholder
- full name, address, date and place of birth of CEO
- address of new company
- bank account of new company

Often you need more help than just to found a GmbH. The GmbH needs an office with a letter box in Germany. You also need a bank account in Germany. It is not necessary that the CEO is living in Germany.

You need a bank account in Germany. Costs are about 10 EUR per month. There is one bank with less costs for money transfers.

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