⚡TL; DR
- Legal form: For tech startups in Germany, the GmbH is usually the default; the UG (haftungsbeschränkt) is a lean “mini‑GmbH”; an AG is possible but more complex and rare at the very start.
- Timing: Incorporate once you move from idea to operations (contracts, customers, employees) to limit personal liability. Between notarization and registration you act as a “GmbH in formation (GmbH i. G.)” with potential personal liability for pre‑registration acts.
- Capital: GmbH EUR 25’000 (at least EUR 12’500 paid in before registration); UG from EUR 1 with a 25% profit reserve until EUR 25’000; AG EUR 50’000.
- Location: Incorporate where you actually run the business. Germany has no canton‑style double taxation; however, trade tax (Gewerbesteuer) varies by municipality.
- Banking: There is no Swiss‑style “blocked” capital account. The key is that the paid‑in capital is freely at the disposal of the managing directors; bank KYC can still take time.
- After registration: File your business registration, submit the tax registration (ELSTER), obtain a VAT ID if needed, report beneficial owners to the Transparency Register, and note IHK membership.
Where should I incorporate?
Germany is a strong base: large market, robust infrastructure, and deep talent pools. Our advice is to incorporate where your team and actual management sit (align the registered office and place of effective management). There’s no state‑by‑state tax competition, but municipal trade‑tax multipliers differ. Check the local rate – but prioritize talent access, customer proximity, and ecosystem (e.g., Berlin, Munich, Hamburg, Cologne).
When should I incorporate?
“As early as you have to, but as late as you can.” In practice: incorporate once you start operations and liability risk arises (signing contracts, hiring, taking payments). From the notarial deed until entry in the commercial register, you are a GmbH in formation; persons acting for the company before registration can be personally liable for those acts.
Which legal form fits?
GmbH:
- Capital: Minimum EUR 25’000; for registration, typically at least EUR 12’500 must be paid in.
- Publicity: A shareholder list is filed with the commercial register and is publicly accessible; updates are mandatory after changes.
- Management: At least one managing director (no German residency required, though practical reachability/visa/banking should be considered).
- Fit: The standard for startups-investor‑friendly with flexible governance.
UG (haftungsbeschränkt):
- Capital: From EUR 1; each year 25% of net profit must be allocated to a legal reserve until the capital reaches EUR 25’000, after which you can convert to a GmbH.
- Fit: Good if cash is tight; slightly weaker market signal to some investors than a GmbH.
AG:
- Capital: Minimum EUR 50’000.
- Fit: Appropriate for later stages with broader investor bases; higher formality and two‑tier governance (management board/supervisory board).
Conversion of a GmbH into an AG for an IPO?
- A GmbH can be converted into an AG via a change of legal form (Formwechsel) under the German Transformation Act (UmwG). This preserves the company’s legal identity – no dissolution or asset transfer; existing contracts, permits and legal relationships continue.
- Why convert?
Shares of a GmbH are not designed for stock‑exchange trading; for an IPO in Germany the issuer must generally be an AG, SE or KGaA. Hence, pre‑IPO issuers convert to AG (or occasionally SE/KGaA).
- Key legal requirements (high level):
• Shareholder resolution: Typically a ¾ majority of votes in the GmbH (stricter thresholds in the articles may apply).
Anwalt24
• AG fundamentals: Minimum EUR 50,000 share capital; AG governance management board & supervisory board); updated articles suitable for a listed company.
• IPO rule‑set (once public): Prospectus under the EU Prospectus Regulation and exchange admission rules (e.g., Frankfurt Stock Exchange).
- Takeaway: If an IPO is on the horizon, plan the change of legal form early in the readiness workstream and align articles, board structure, capital measures (e.g., authorized/conditional capital) and reporting with listing requirements.
Best practices
Timing: Incorporate before entering into significant contracts or hiring – use “GmbH i. G.” clearly during the interim.
Form: If venture funding is in view, GmbH is the typical starting point (UG can convert later).
Location: Align registered office with the place of management; check the local trade‑tax multiplier.
Constitutional documents: Use market‑standard articles and a shareholders’ agreement (vesting/ESOP‑VSOP mechanics, consent matters, drag/tag, IP assignment).
VAT & tax: Consider the small‑business regime thresholds (current rules from 2025) vs. opting into VAT to recover input VAT—many startups opt in.
What do I need to keep in mind?
- Capital & bank: No statutory blocked account – what matters is that the contribution is definitely paid and freely available to management at the time of filing. Banks will run KYC/AML checks, which can add time; some banks have their own onboarding requirements.
- Address: You need a domestic business address for the company (independent of the managing directors’ residence).
- Business registration (Gewerbeanmeldung): File with the local trade office before commencing activities (certain activities are licence‑bound).
- Tax onboarding: Within one month of starting operations, submit the tax registration form electronically (ELSTER) and, if you trade cross‑border within the EU, request a VAT ID.
- Transparency Register: All German companies must report their beneficial owners (full register).
- IHK membership: Most commercial undertakings become members of the Chamber of Industry and Commerce (IHK) by law.
How do I get this done?
Incorporate your company with us using the following step-by-step process:
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- Book a free call with us.
- Accept our incorporation flat fee package (or, even better, choose our flat fee package including a Shareholders’ Agreement (SHA) and the incorporation).
- Fill out our incorporation questionnaire.
- We draft articles & resolutions and arrange notarization (on‑site or online for cash incorporations).
- Pay in the share capital to the GmbH‑in‑formation account; keep it freely available (bank statement as evidence if needed).
- The notary files the commercial register application; once registered, the GmbH comes into legal existence.
- We handle business registration, tax registration (via ELSTER), VAT ID, Transparency Register filing, and IHK onboarding.
Notarization requirements at a glance
- What must be notarised?
The Articles of Association for a GmbH/UG must be notarised. If you use the model protocol (≤ 3 shareholders, one managing director), it substitutes the articles and also serves as the initial shareholder list. Representatives may sign only under a notarial power of attorney (including via video under the Notarization Act).
- Who must attend / identification
All founders (or duly authorised representatives) attend the appointment – in person or online. For online incorporations, identification is performed through the German eID within the Federal Chamber of Notaries’ portal (video conference). The notary can decline online notarization if identity/security cannot be ensured.
- Language & understanding
– Deeds are in German by default. If any party does not sufficiently understand German, the notary must ensure translation (often via a sworn interpreter) and record this in the deed. The notary may draw up deeds in another language only if sufficiently proficient (English should never be a problem).
- How the notarization proceeds
The notary reads the deed aloud, explains it, parties approve and sign; the notary then certifies. (For online procedures, these steps are done via secure video per the statute.)
- Managing director declarations
With the commercial‑register application, the managing director(s) must declare that no statutory disqualifications exist (cf. § 6 GmbHG) and that the capital is paid in and freely at the company’s disposal. The court may demand bank evidence if in doubt.
- Filing with the commercial register
The application is filed electronically in publicly certified form; public certification by video is permitted. Notaries handle the electronic submission as part of the process.
- Scope of online notarization
Since 1 Aug 2022, GmbH/UG incorporations and register applications can be completed online; since 1 Aug 2023, the online scope was expanded (incl. certain contributions in kind).