Company Formation & Entity Setup in Germany
Entity types, liability, capital, governance, registration timeline and costs for setting up in Germany — matched to what each structure is actually for, against your business objective.
GermanyCurrency
Euro (EUR)
Most common entity
GmbH (limited liability company)
GmbH minimum capital
€25,000 (≥ €12,500 paid in)
Formation timeline
~2–4 weeks to Handelsregister entry
Notarization
Mandatory — in person or by video-notary
Formation cost (GmbH)
~€700–€1,200 in fees, plus share capital
How company formation works in Germany
Germany offers ten legal forms relevant to a foreign company entering the market — from a fully liable branch to a capital-market-ready AG. The right choice depends less on which structure is "best" in the abstract than on what the business is actually trying to do: test a market, run a committed local subsidiary, bring in investors, or protect a family-owned group's holding structure.
The sections below map each entity type to the business objective it fits, then cover the mechanics: liability and capital at a glance, the registration process and timeline, governance requirements, the subsidiary-vs-branch decision, tax and trade registration, and typical formation costs.
Discuss your Germany market-entry structureTen legal forms, matched to your business objective
Each entry below covers liability, minimum capital and governance — and, most importantly, what the structure is actually suited for in relation to a client's business objective.
GmbHGesellschaft mit beschränkter Haftung
The default vehicle for an operating subsidiary of a foreign company — limited liability, moderate capital requirement, and broad recognition with banks, landlords and business partners. The standard choice for most market-entry engagements.
UG (haftungsbeschränkt)"Mini-GmbH"
Suited to bootstrapped or pilot operations that want limited liability without committing €25,000 upfront. Converts to a full GmbH once the statutory reserve reaches the GmbH capital threshold.
AGAktiengesellschaft
Fits businesses planning to raise capital from multiple investors, issue shares broadly, or eventually list. The mandatory two-tier board makes it costlier to govern than a GmbH — rarely the right choice for a standard operating subsidiary.
GmbH & Co. KGHybrid partnership with a GmbH general partner
Common in the German Mittelstand for family-owned groups and holding structures that want partnership-level tax and control flexibility combined with limited liability.
KGKommanditgesellschaft
Fits structures that need to bring in passive financial investors (as limited partners) while the founders retain full operating control as general partner.
OHGOffene Handelsgesellschaft
A commercial partnership for parties who know and trust each other well. Full personal liability exposure makes it uncommon as a vehicle for foreign market entry.
GbRGesellschaft bürgerlichen Rechts
Suited to small joint ventures, professional practices, or testing a business idea with a partner before committing to a more formal structure. Rarely appropriate for a substantial international operation.
Einzelunternehmen / e.K.Sole proprietorship / registered merchant
For a single founder operating alone. Has no separate legal personality from the individual, so it is generally not relevant to a foreign company’s German market entry.
ZweigniederlassungBranch
Useful for testing the German market before committing to a subsidiary, or for keeping a single legal entity across borders. Creates a permanent establishment — profits are taxed in Germany.
RepräsentanzRepresentative office
For market research and liaison activity only — cannot sign contracts, invoice, or trade locally. Must be structured carefully to avoid inadvertently creating a taxable permanent establishment.
Quick reference across all ten forms
| Entity | Liability | Minimum capital |
|---|---|---|
| GmbH | Limited to company assets | €25,000 (≥ €12,500 paid in) |
| UG (haftungsbeschränkt) | Limited, same as GmbH | From €1, plus a mandatory 25% annual profit reserve until €25,000 is reached |
| AG | Limited to company assets | €50,000 |
| GmbH & Co. KG | Limited — the GmbH general partner bears the formal unlimited liability, not an individual | €25,000 for the GmbH general partner, plus the KG’s own agreed capital |
| KG | Komplementär (general partner): unlimited. Kommanditist (limited partner): limited to contribution | None fixed by law |
| OHG | Unlimited, joint and several, for all partners | None fixed by law |
| GbR | Unlimited and personal, for all partners | None |
| Einzelunternehmen / e.K. | Unlimited and personal | None |
| Zweigniederlassung | None separate — the foreign parent company bears full liability | None — no separate capital requirement |
| Repräsentanz | N/A — not a registered legal entity | None |
From notary to Handelsregister entry
For a capital company (GmbH, UG, AG), formation runs through a notary and the commercial register. Partnerships and sole proprietorships are simpler — a GbR needs no notarization at all, and an OHG or KG is registered directly with the Handelsregister without the capital-deposit step.
Notarize the articles
Gesellschaftsvertrag authenticated by a German notary — in person or via video-notary for standard-template formations, since the August 2022 digitalization reform (DiRUG).
Deposit capital
The minimum share capital (or the required portion of it) is paid into a German bank account opened for the company.
Handelsregister filing
The notary files the formation documents with the commercial register on the founders’ behalf.
Register entry
The company legally comes into existence once entered — typically 2–4 weeks after notarization.
Tax registration (Finanzamt) and trade registration (Gewerbeamt) run in parallel with the commercial register process — see Tax & Trade Registration below. Total time to a fully operational entity, including a tax number, typically spans 4–10 weeks.
Plan your formation timelineManagement and oversight, by entity
Capital companies require a formally appointed management body; partnerships generally leave management to whichever partners the partnership agreement designates. A supervisory board is only mandatory for a GmbH once it crosses 500 employees (German co-determination law) — for an AG, it is mandatory from formation.
| Entity | Management | Oversight body |
|---|---|---|
| GmbH | Geschäftsführer (1 or more) | Supervisory board (Aufsichtsrat) mandatory only above 500 employees |
| UG (haftungsbeschränkt) | Geschäftsführer (1 or more) | Same as GmbH |
| AG | Vorstand (management board) | Aufsichtsrat (supervisory board) — mandatory, minimum 3 members |
| GmbH & Co. KG | Geschäftsführer of the GmbH general partner | As per the GmbH general partner |
| KG / OHG / GbR | General partner(s), per the partnership agreement | None required by law |
| Zweigniederlassung | Locally registered representative | Governed by the foreign parent company |
Matching the vehicle to the commitment
Before choosing a specific legal form, most foreign companies first decide how committed a presence they want in Germany. These three options sit on a spectrum from full commercial capacity with liability protection, to a liaison-only presence with no separate legal standing.
Subsidiary (GmbH / UG)
- Separate legal personality — parent’s liability limited to its investment
- Taxed as a German resident company
- Full commercial capacity: contracts, invoicing, hiring
Best for a committed, long-term operating presence.
Branch (Zweigniederlassung)
- No separate legal personality — parent bears full liability
- Creates a permanent establishment; profits taxed in Germany
- Full commercial capacity
Best for testing the market before committing to a subsidiary, or keeping a single legal entity across borders.
Representative office (Repräsentanz)
- Not a registered legal entity
- Generally no permanent establishment if activity stays preparatory or auxiliary
- Cannot trade, invoice, or sign contracts
Best for market research and liaison only, ahead of a formal market-entry decision.
Finanzamt, Gewerbeamt, and chamber membership
Alongside — or immediately after — commercial register entry, every entity needs a tax number (Steuernummer) and, where applicable, a VAT ID (USt-IdNr.) from the Finanzamt. Trade registration (Gewerbeanmeldung) with the local Gewerbeamt is required for any commercial activity, and automatically triggers notification to the Finanzamt and, depending on the business, mandatory membership in the local Chamber of Industry and Commerce (IHK) or Chamber of Crafts (HWK), funded by an annual contribution scaled to company size.
Set up your tax and trade registrationsWhat a standard GmbH formation costs
Costs below are indicative for a standard GmbH formation and vary by notary, share capital, and whether a custom shareholder agreement is needed. They are separate from the share capital itself, which remains company assets rather than a fee.
| Item | Typical range |
|---|---|
| Notary fees | €350 – €850, depending on structure and share capital (lower with the standard Musterprotokoll template) |
| Handelsregister court fee | €225 (since 1 June 2025) |
| Trade office registration (Gewerbeanmeldung) | €15 – €65, municipal, varies by city |
| Typical total, standard template | €700 – €1,200 in formation fees, plus the share capital itself |
| With custom shareholder agreement & advisory | €1,500 – €3,000, plus the share capital itself |
Frequently asked questions
Talk to a Germany formation expert
For companies choosing between a subsidiary, branch, or representative office in Germany, or structuring a group around a GmbH, KG, or holding entity.