Types Of Legal Entities in Germany 


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    One of the most important aspects when forming a business in any nation is to decide on the business structure you wish to incorporate. The number of shareholders, directors, members, or cash needed to incorporate a firm will depend on the sort of business you desire to incorporate, therefore it will be helpful to know about these factors beforehand.

    Europe’s Germany is one of the greatest places to incorporate a corporation because it is one of the nations that have the lowest levels of corruption worldwide. There are various types of legal entities in Germany that can be incorporated, each with specific characteristics, such as a limited liability company, branch office, limited partnership and so on. Read the article below to find out which business form is suitable for you among the various types of companies in Germany. 

    Different types of legal entities in Germany 

    One of the most crucial phases in creating a corporation is selecting the type of corporate structure. For businesspeople who want to establish a firm in Germany, there are many different forms of companies that are available.

    Here are the different types of company in Germany:

    1. Limited Liability Company (GmBH)

    • An LLC, also known as GmBH, is one of the most popular types of legal entity in Germany for smaller and medium businesses. 
    • This type of company in Germany can be formed with just one founder, who may also be a stockholder. 
    • A minimum of a single stockholder and a single director from any country are needed to establish a GmBH. 
    • An LLC needs to have a minimum capital of €25,000, €12,500 of that amount needs to be put in the bank account of the firm at the time of incorporation. 
    • Each member shall have made an initial capital investment of a minimum of one euro. 
    • Since GmbH is a distinct legal organization, the shareholders are not accountable for the firm’s debts, damages, or lawsuits. The stocks of an LLC are not tradable on a stock market.

    2. Joint Stock Company (AG)

    • A Joint Stock Company or AG is one of the types of company in Germany that is best for larger corporations. 
    • Any person may establish a joint stock company with the required capital of no less than €50,000. 
    • A minimum of one stakeholder from any country is required for such types of legal entity in Germany. Moreover, there aren’t any limitations on the maximum number of stockholders that may be chosen. 
    • The board of directors has the authority to make decisions about how the firm will be run and managed. 
    • A JSC is a separate legal company, and its shareholders are not responsible for its obligations, liabilities, or legal actions. 
    • The corporation must designate its first auditor and add the initials “AG” to its business name. 
    • Stocks of a JSC can be traded on the stock market.

    3. Limited Partnership (KG)

    • A Limited partnership is a type of company in Germany that is mostly for SMEs. 
    • A limited partnership, often known as a KG, is one of the types of legal entity in Germany in which there are a minimum of 2 members, one of the members is a general member, who is personally liable for all of the partnership’s debts. 
    • The other member is a limited member whose responsibility is restricted to the number of stocks they own in the firm. 
    • The limited partner just contributes capital and they are not involved in running the business or taking part in the daily operations of the business. 
    • A limited partnership requires a minimum capital investment of €50,000, which is divided into shares. 
    • A partnership contract must be signed by the parties and registered with the Commercial Register and Trade Register. 
    • All members are required to submit the request to the commercial register, which must also be notarized.

    4. General Partnership (OHG)

    • A general partnership or OHG is a traditional partnership structure for SMEs. 
    • At least two members must sign a partnership contract to form these types of legal entities in Germany. 
    • A general partnership firm comprises a minimum of 2 partners, and the company’s revenues are split equally among the partners. 
    • Each partner in an OHG is held jointly and equally accountable for the obligations and liabilities of the OHG.
    • The OHG needs to be established with the local trade office and included in the commercial registry. 
    • To establish a general partnership, there isn’t any minimum capital requirement.

    5. Civil Law Partnership (GBR)

    • An organization of people or businesses joined in the accomplishment of a common contractual goal is referred to as a civil law partnership. 
    • It requires 2 members with limitless responsibility to form a civil law partnership. The partners must consent to form a civil law partnership and sign a partnership contract. 
    • Such types of legal entities in Germany must be established with the trade office if it’s a modest commercial firm. 
    • If the yearly revenue surpasses €25,000, these types of companies in Germany will be regarded as commercial businesses, which requires registration with the Commercial Register.

    6. Sole Proprietorship

    • One of the simplest types of legal entity in Germany is to incorporate a sole proprietorship. 
    • It is a type of corporate structure that is owned by a sole owner. 
    • It is managed by the owner who oversees all the activities of the firm and is totally responsible for the company’s liabilities and obligations. 
    • Due to its exemption from corporation tax, tax reporting is also straightforward. Nevertheless, individual income taxes remain applicable for such types of companies in Germany. 
    • There isn’t any capital requirement to form a sole proprietorship in Germany. 

    7. Limited Liability Entrepreneurial Company (UG)

    • Beginning November 1, 2008, a new kind of GmbH, the entrepreneurial company at limited liability has been made available. 
    • It is a more straightforward form of a GmbH and can be established with a minimum capital of one euro. 
    • A minimum of 25% of its yearly revenue must be accumulated before reaching a stock value of €25000, which would allow it to register as a GmBH.

    8. Branch Office

    • One of the types of legal entities in Germany that can be established as an international entrepreneur is to incorporate a branch office. 
    • Any international corporation having a corporate office and commercial operations outside of Germany is eligible to open a branch office in the nation. 
    • A branch office is an appropriate business structure for foreign corporations looking to build a presence in Germany to start a business. 
    • Such types of companies in Germany do not possess a unique legal existence from their parent firm. 
    • It is a component of the main office’s company legally and organizationally and is therefore governed by the same laws as its corporate headquarters. 
    • As a result, the parent business is responsible for the branch office’s liabilities.

    9. Representative Office

    • One of the types of legal entities that can be incorporated in Germany is to establish a representative office. 
    • In Germany, a representative office is only permitted to carry out market analysis and promotion on behalf of the parent firm.


    This article has briefly described the various types of companies that can be established in Germany. From starting a sole proprietorship( which can be formed by an individual owner) to forming a limited partnership ( which has to be formed with a minimum of 1 individual), you will have different options to choose from the various types of legal entities in Germany.

    If you have any further queries regarding the types of legal entities in Germany, you can consult our experts at Odint Consulting. Our experts will provide you with all the relevant information and help you choose from the numerous types of companies in Germany.