What types of companies are there in Germany? A comparison for investors
Investors who want to set up a company in Germany have various options. Legal forms for selection. The choice of the right company form influences Liability, capital requirements, tax burden and administrative costs. Here is a comprehensive comparison of the most important types of companies in Germany.
1. overview of the types of company
| Company form | Minimum capital | Liability | Taxation | Commercial register | Administration |
| Individual companies | No minimum capital | Personal liability | Income tax | No | Simple |
| Company under civil law (GbR) | No minimum capital | Personal liability | Income tax | No | Simple |
| General partnership (OHG) | No minimum capital | Personal liability | Income tax &trade tax |
Yes | Medium |
| Limited partnership (KG) | None Minimum capital |
Complementary: Unlimited Limited partner: Limited liability |
Income tax &trade tax |
Yes | Medium |
| GmbH ( limited liability company ) | 25.000€ | Limited to the company's assets | Corporation tax (15%) & trade tax | Yes | High |
| UG (Company - Mini GmbH) |
1€ | Limited to the company's assets | Corporation tax (15%) & trade tax |
Yes | Medium |
| AG ( stock corporation) | 50.000€ | Limited to the company's assets | Corporation tax (15%) & trade tax | Yes | Very high |
2. detailed comparison of the company forms
a) Sole proprietorship - ideal for small businesses and the self-employed
Easy to set up, no entry in the commercial register necessary
Low administrative costs
Unlimited personal liability
Income tax can be expensive for high profits
➡ Suitable for: Self-employed, small retailers and service providers
b) GbR (partnership under civil law) - The simple multi-person partnership
No minimum capital required
Simple foundation with contract
All shareholders have unlimited personal liability
Not suitable for larger stores
➡ Suitable for: Small companies with several shareholders
c) OHG (general partnership) - For merchants with full liability
Suitable for larger companies than the GbR
Every shareholder has a full say
Full personal liability
Obligation to keep accounts & entry in the commercial register
➡ Suitable for: Medium-sized companies, commercial enterprises
d) KG (limited partnership) - mixture of full and limited liability
Limited partners (investors) are only liable for their capital contribution
Suitable for family businesses and investors
General partner (main shareholder) has unlimited liability
Obligation to keep accounts and file tax returns
➡ Suitable for: Companies with external investors
e) GmbH (limited liability company) - The most popular legal form for investors
Limited liability (only with company assets)
Suitable for large & small companies
More favorable tax treatment than sole proprietorships with high profits
Minimum capital € 25,000 (of which € 12,500 must be paid in upon formation)
High administrative costs (annual financial statements, commercial register, notary)
➡ Suitable for: Medium-sized and larger companies, start-ups with capital requirements
f) UG (entrepreneurial company - "Mini-GmbH") - The favorable GmbH alternative
Foundation possible from € 1
Same limitation of liability as the GmbH
Suitable for small start-ups with little capital
Obligation to set aside reserves (25 % of the profit must be saved for capital growth)
Less trustworthy than a limited liability company
➡ Suitable for: Startups and entrepreneurs with little capital
g) AG (public limited company) - For large companies and investors
Capital can easily be raised via shares
Liability is limited to the company's assets
Suitable for IPOs and large investments
Very high administrative costs (Management Board, Supervisory Board, Annual General Meeting)
Strict legal regulations & high tax burden
➡ Suitable for: Large companies with expansion plans
3. tax consideration of the company forms
| Type of company | Tax type | Tax rate |
| Sole proprietorship/ GbR/OHG/KG | Income tax | 14-45% ( depending on the amount won) |
| GmbH/UG/AG | Corporate income tax | 15%+5.5% Solidarity surcharge |
| All commercial enterprises | Trade tax | 7-17 depending on the city |
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