Legal Structures in Germany

Choosing the right legal structure for your business in Germany has personal, financial, tax and legal consequences. The two basic structures are shown below:

  • Sole proprietorships and partnerships with personal liability
  • Corporations with limited liability

 

Sole proprietorships and partnerships are mainly divided into the following types of businesses:

  • Gesellschaft des bürgerlichen Rechts (GbR – company constituted under civil law)
  • Kommanditgesellschaft (KG – limited partnership)
  • Offene Handelsgesellschaft (OHG – general partnership)
  • Gesellschaft mit beschränkter Haftung & Co. KG (GmbH & Co. KG – limited commercial partnership with a general partner and a limited partner)

 

Types of corporations with limited liability include mainly the following:

  • Gesellschaft mit beschränkter Haftung (GmbH – limited liability company)
  • Unternehmergesellschaft (UG – entrepreneurial company), also referred to as “Mini-GmbH” (mini LLC)
  • Aktiengesellschaft (AG – joint stock corporation)
  • Societas Europaea (SE – European company)

 

The most advisable structure for establishing a subsidiary in Germany is a limited-liability corporation, particularly in the form of a Gesellschaft mit beschränkter Haftung (GmbH).

 

A German GmbH is the equivalent to an American limited liability company (LLC) or a private company limited by shares (Ltd.) in the UK.