Most common business entity in Germany
The GmbH is the standard choice for most small- to mid-size businesses in Germany. Like a US LLC, it provides limited liability protection separated from the owners' personal assets. Mini-GmbH (Unternehmergesellschaft, UG) requires only €1 capital but must accumulate to €25k.
The full menu of Germany business structures
| Structure | Liability | Tax | Best for |
|---|---|---|---|
| GmbH | Limited | 30% corporate | Most operating businesses |
| Sole proprietor / self-employed | Unlimited personal | Personal income tax rates | Freelancers, one-person services |
| Partnership | Joint and several | Pass-through to partners | Professional services (law, accounting) |
| Branch of foreign company | Parent company liability | 30% on Germany-source profits | Foreign companies entering Germany market |
| Public limited company | Limited | Same as GmbH but stricter | Companies preparing for listing |
Which one should you pick?
- Freelance or one-person service in Germany? Self-employed structure if simple, GmbH if you want liability protection.
- Software / e-commerce / agency? GmbH — standard, scalable.
- Operating an existing foreign company in Germany? Branch (simpler) or subsidiary GmbH (more substance).
- Planning to raise venture capital? Confirm investors accept Germany entities. Many require a US Delaware C-Corp flip — see US company formation.
- Holding company for IP or other companies? GmbH with minimal substance requirements.
The GmbH in one paragraph
GmbH is Germany's primary limited liability vehicle. Minimum paid-up capital: $13,500. Headline corporate tax: 30%. 15% corporate tax + 5.5% solidarity surcharge + 14-17% trade tax = ~30%.. Banking accessibility: 9/10. Privacy: 4/10 (UBO non-public). Remote formation: in-person typical. Processing time: 14 business days.
For US comparison, see Germany vs USA. For non-resident formation specifics, see forming a Germany company as a non-resident.