Germany company formation in 2026: the GmbH, the trade tax and the bank account that holds everything up
Germany company formation: a GmbH needs EUR 25,000 capital with half paid up, pays about 30–33% combined — and the bank account is the real bottleneck.
Features writerSeptember 20268 min readGermany does not compete on tax and has stopped pretending to. What it offers is the largest economy in Europe, a legal system that counterparties trust without asking questions, and a company form — the GmbH — that has been the continental standard for over a century. The price is roughly a third of your profit and a formation process that runs on notaries.
Here is the short version. A GmbH requires EUR 25,000 of share capital with at least EUR 12,500 paid up. The UG, the so-called mini-GmbH, starts from EUR 1. Formation takes about two to six weeks; a model-protocol formation by natural persons can register within days, but the bank account and the Handelsregister review are the usual bottlenecks. Combined tax is roughly 30 to 33%: 15% federal corporation tax plus a 5.5% solidarity surcharge, giving 15.825%, plus municipal trade tax that runs an effective 14 to 17% depending on the local multiplier. Corporation tax is legislated to fall in annual steps from 15% to 10% between 2028 and 2032.
How to set up a GmbH
- Check the name with the local chamber of commerce, the IHK, and draft the articles of association.
- Notarise the articles and appoint the managing director before a German notar — in person, by online video notarisation, or via a notarised and apostilled power of attorney.
- Open a German business bank account and pay in the capital: at least EUR 12,500 of the EUR 25,000.
- The notar files electronically with the Handelsregister. The court enters the company and assigns an HRB number, at which point the GmbH legally exists.
- Register with the trade office (Gewerbeanmeldung) and the tax office (Finanzamt) for a tax number and VAT ID.
State charges are moderate: Handelsregister entry is EUR 225, raised from EUR 150 on 1 June 2025; notary fees follow the statutory GNotKG scale at roughly EUR 800 to 1,000 for a standard EUR 25,000 GmbH; trade-office registration is EUR 15 to 65.
The trade tax is where the rate actually lives
The federal layer is fixed and predictable: 15% corporation tax plus the 5.5% solidarity surcharge, giving 15.825%.
Trade tax — Gewerbesteuer — is not. It applies a 3.5% base rate multiplied by a municipal multiplier, the Hebesatz, which each municipality sets for itself. The result is an effective 14 to 17%, and the spread between a high-multiplier city and a low-multiplier municipality is large enough to be worth a conversation before choosing the company's seat.
That is the honest optimisation available in Germany. It is a matter of geography within the country, not of clever structuring.
One forward-looking point: corporation tax is legislated to step down from 15% to 10% between 2028 and 2032. Confirm the current-year rate rather than relying on either the present or the future figure.
Video notarisation, and why it may not work for you
Online video notarisation has been available since 2022 and genuinely removes the need to travel. But non-EU founders are frequently excluded from the online route on identity-verification grounds, which sends them back to a notarised, apostilled power of attorney.
This is worth checking early, because it changes the timetable by weeks and the cost by a meaningful amount. Do not assume the online route is available to you because it exists.
The bank account is the bottleneck
Opening a German business account typically takes two to four weeks and some banks are cautious with non-resident founders. Since the capital must be paid in before Handelsregister entry, this sits directly on the critical path — the company cannot come into existence until the bank has done its work.
Anyone quoting a few days for German company formation is describing the notarial step in isolation.
GmbH or UG
The UG (haftungsbeschränkt) exists from EUR 1 of capital and is the entry-level variant. It is a real company with real limited liability, but it must retain a quarter of its annual profit until it has accumulated EUR 25,000, at which point it can convert to a GmbH.
The trade-off is perception. German counterparties, banks and larger customers read a UG as an undercapitalised starter vehicle, and some will decline to deal with one. If the business will face established German buyers, the GmbH is worth the capital.
Who this is actually for
A credible EU operating company built on genuine substance with full treaty access — a business that will actually sell into Germany, employ people there, or needs the standing that a German entity confers. There is no residency requirement for the managing director, though a non-EU director managing on the ground may need a residence permit.
It is a poor fit for a holding vehicle chasing a low rate — the Netherlands and Luxembourg offer participation exemptions Germany's regime only partly matches, and Hungary charges 9%. It is a poor fit for a light structure: a GmbH carries real bookkeeping, annual accounts and mandatory IHK membership. Audit at least is not a burden for most: small companies are exempt, with statutory audit only for medium and large companies exceeding two of three thresholds — EUR 7.5 million balance sheet, EUR 15 million turnover, 50 employees.
The full, dated reference for this: Company formation in Germany.
Frequently asked
How much capital do you need for a German GmbH?
EUR 25,000 of share capital, of which at least EUR 12,500 must be paid up before the company is entered in the Handelsregister. The UG (haftungsbeschränkt), the mini-GmbH variant, can be formed from EUR 1, but it must retain a quarter of its annual profit until it has accumulated EUR 25,000, at which point it may convert to a full GmbH. The capital has to be paid into a German business bank account, which is why bank onboarding sits on the critical path rather than being a follow-up task.
What is the corporate tax rate in Germany?
Roughly 30 to 33% combined. The federal layer is 15% corporation tax plus a 5.5% solidarity surcharge, giving 15.825%. Municipal trade tax applies a 3.5% base rate multiplied by a locally set multiplier, the Hebesatz, producing an effective 14 to 17% depending on the municipality — which means the company seat materially changes the total. Corporation tax is legislated to fall in annual steps from 15% to 10% between 2028 and 2032, so the current-year rate should be confirmed rather than assumed from either end of that range.
How long does it take to register a company in Germany?
About two to six weeks. A model-protocol formation by natural persons can be registered within days at the notarial stage, but two things reliably extend the timetable: opening a German business bank account, which typically takes two to four weeks and can be slow for non-resident founders, and the Handelsregister review itself. Because the share capital must be paid in before registration, the bank sits directly on the critical path. Quotes promising a German company in a few days describe the notary appointment, not the process.
Can a foreigner set up a GmbH remotely?
Mostly. The notarial deed can be executed by online video notarisation, available since 2022, or through a notarised and apostilled power of attorney. The important caveat is that non-EU founders are frequently excluded from the fully online video route on identity-verification grounds, which pushes them back to the power-of-attorney path and adds time and cost. Check this at the outset. There is no residency requirement for the managing director, though a non-EU director actually managing the business in Germany may need a residence permit.
What is the difference between a GmbH and a UG?
Capital and perception. A GmbH requires EUR 25,000 with EUR 12,500 paid up; a UG (haftungsbeschränkt) can be formed from EUR 1 but must retain a quarter of its annual profit until reserves reach EUR 25,000, when it can convert. Both are real limited-liability companies under the same law. The practical difference is how counterparties read them: German banks, larger customers and suppliers often treat a UG as an undercapitalised starter vehicle and some decline to deal with one. If the business faces established German buyers, the GmbH is usually worth the capital.
Does a German GmbH need an audit?
Not if it is small. Statutory audit applies only to medium and large companies, meaning those exceeding two of three thresholds: a EUR 7.5 million balance-sheet total, EUR 15 million turnover, and 50 employees. Below that the small-company exemption applies. What every GmbH does carry is real ongoing administration: proper bookkeeping under German accounting rules, annual accounts filed with the register, trade-tax and corporation-tax returns, VAT compliance and mandatory membership of the local chamber of commerce, which charges an annual contribution.
Follows where a family's money actually lands when it moves — and where it quietly does not.
If this piece is wrong, tell us. →