Germany requires €25,000 minimum capital for GmbH (limited liability company). UG (haftungsbeschränkt) alternative requires only €1 minimum capital but carries stigma. 73% of German startups choose UG initially, upgrade to GmbH after reaching profitability.
German Business Entity Types
GmbH: Standard limited company. €25,000 capital required.
UG (Unternehmergesellschaft): "Mini-GmbH". €1-24,999 capital. Must add "(haftungsbeschränkt)" to name.
Einzelunternehmen: Sole proprietorship, unlimited liability.
GbR: Partnership, unlimited liability.
GmbH vs UG Decision
GmbH advantages: Higher credibility with banks and customers. No profit retention requirement.
Name doesn't include "(haftungsbeschränkt)" stigma. Easier to sell shares.
UG advantages: Lower startup capital - €1 minimum vs €25,000. Same limited liability protection.
Can upgrade to GmbH later. Suitable for bootstrapped startups.
UG Profit Retention Rule
UG must retain 25% of annual profits until capital reaches €25,000.
Example: €20,000 profit means you must retain €5,000, can distribute €15,000.
After capital reaches €25,000, you can convert to full GmbH.
Typically takes 2-4 years for profitable UG to accumulate €25,000 capital through profit retention.
UG Name Stigma: Must include "UG (haftungsbeschränkt)" or "Unternehmergesellschaft (haftungsbeschränkt)" in official name. Signals to partners you have minimal capital. Banks require personal guarantees for UG loans. Suppliers often demand prepayment from UG. Large customers prefer GmbH suppliers. Consider if €25,000 capital is worth the credibility gain.
Name Approval Process
Check Handelsregister at handelsregister.de for existing names.
Name must: Include "GmbH" or "UG (haftungsbeschränkt)", not be identical or deceptively similar to existing company, not mislead about business activity.
Restricted words need approval: Bank (BaFin approval), Versicherung (insurance, needs license), Steuerberater (tax advisor, needs certification).
Notarization Requirement
All GmbH formation documents require notary certification. Can't incorporate without notary.
Process: Book notary appointment (1-3 week wait typical), all shareholders must attend or provide power of attorney, notary drafts articles of association, shareholders sign before notary, notary files with Handelsregister.
Notary fee: €800-1,500 depending on capital amount and complexity.
Capital Deposit Requirements
Before registration: Must deposit at least 50% of capital - €12,500 for GmbH, €0.50 for €1 UG.
Open blocked business account, deposit capital, obtain confirmation letter.
After registration: Deposit remaining 50% within reasonable time - typically 3-6 months.
Full capital must be deposited before dividend distribution.
Handelsregister Filing
Notary files electronically with local Handelsregister.
Required documents: Articles of association (notarized), shareholder list, managing director appointment, capital deposit confirmation.
Fee: €150. Processing: 2-4 weeks typical.
Company legally exists once registered in Handelsregister. You'll receive company number (HRB number).
GmbH in Gründung (i.G.): Company operates as "in formation" status between notarization and Handelsregister registration. Can sign contracts and operate business. But managing directors have personal liability for debts incurred before registration. Minimize business activity during 2-4 week i.G. period.
Business Registration (Gewerbeanmeldung)
Register with local trade office (Gewerbeamt) within 2 weeks of starting business.
Cost: €15-65 depending on city.
Triggers automatic notifications to: Tax office (Finanzamt), trade supervisory authority (IHK/HWK), statistical office.
Receive tax number within 2-4 weeks. VAT number applied separately.
German Trademark Registration (DPMA)
File with German Patent and Trademark Office.
Cost: €300 for up to 3 classes, €100 per additional class.
Processing: 4-6 months typical. Opposition period: 3 months after publication.
Protection: 10 years renewable.
Search database at register.dpma.de before filing.
Germany-only protection - separate EUIPO filing needed for EU-wide protection.
DPMA vs EUIPO Strategy
German trademark (DPMA): €300, protects Germany only.
EU trademark (EUIPO): €1,500, protects all 27 EU countries including Germany.
Recommendation: File EUIPO unless you're Germany-only business.
EUIPO costs 5x more but covers 27 countries vs 1. Better value for any business with European ambitions.
Trademark Search Before GmbH Name: Check DPMA and EUIPO databases before finalizing GmbH name. Handelsregister approves names without checking trademark conflicts. Existing trademark owner can force name change even after €30,000 spent on GmbH formation. Search trademarks FIRST, then notarize GmbH with cleared name.
Timeline for GmbH Formation
Week 1: Business plan, name search, find notary.
Week 2-4: Wait for notary appointment.
Week 5: Notarization, open business account.
Week 6-7: Deposit capital, obtain confirmation.
Week 8-9: Notary files with Handelsregister.
Week 10-11: Handelsregister registration.
Week 12: Business registration.
Total: 12 weeks typical - 3 months from start to operational GmbH.
Annual Compliance
Annual financial statements: Required, must be certified by tax advisor.
Trade association membership (IHK): Mandatory, €150-500/year depending on revenue.
Corporate tax return: Due 7 months after fiscal year end - extendable to 14 months with tax advisor.
No annual Handelsregister filing fee after formation.
Name Change Process
Requires notarized amendment to articles of association.
Notary fee: €500-800. Handelsregister amendment: €100. Processing: 3-4 weeks.
Must update: Tax office, trade association, bank accounts, all contracts.
Total time: 6-8 weeks. Total cost: €700-1,200 plus administrative burden.
Costs Summary
Notary: €800-1,500. Handelsregister: €150. Trade office registration: €15-65.
Bank account: €0-50. IHK membership: €150-500/year. Tax advisor (first year): €1,500-3,000.
Legal advice: €1,000-3,000. Minimum capital: €25,000 GmbH or €1 UG.
Total GmbH: €28,500-33,000. Total UG: €3,500-8,000.
Foreign Ownership
Non-EU residents can own 100% of German GmbH.
But managing director must: Have German address (can be business address), hold residence permit if non-EU, be physically present in Germany regularly.
Options for foreign entrepreneurs: Appoint German resident managing director, obtain German visa/residence permit, or use nominee director service - €3,000-6,000/year.
Trademark Lens verifies business name availability before €28,500+ German GmbH formation and legal costs.