TypesofCompaniesinGermany—GmbH,UG,AG,KG,OHGExplained

Which company type is best for a foreign investor in Germany?

GmbH is the standard and recommended choice for most foreign investors — limited liability, professional credibility, widely understood by German banks and counterparties, and straightforward formation process. For very low capital (under €12,500): UG. For institutional capital requirements and potential public listing: AG. For professional services firms (law, accountancy): PartGmbB. For tax-transparent real estate investment: GmbH & Co. KG.

What is the difference between GmbH and AG in Germany?

GmbH (Gesellschaft mit beschränkter Haftung): most common form, €25,000 minimum capital, ownership via Geschäftsanteile (quota interests), share transfer requires notarisation. AG (Aktiengesellschaft): €50,000 minimum capital, ownership via shares (Aktien), shares freely transferable without notary, mandatory Aufsichtsrat (supervisory board) with at least 3 members, mandatory annual audit by Wirtschaftsprüfer. AG has more governance complexity but enables stock option plans, public listing, and broad investor participation.

What is a UG (haftungsbeschränkt) and how does it differ from a GmbH?

UG (Unternehmergesellschaft haftungsbeschränkt) is Germany's low-capital limited company, introduced in 2008. Key differences from GmbH: minimum €1 capital (vs €25,000), must retain 25% of annual net profit as Pflichtreserve until accumulated reserves + capital reaches €25,000 (then can convert to GmbH). Formation process is identical to GmbH. UG is perceived as less established than GmbH in B2B contexts but is legally valid.

Can I later convert a GbR or OHG to a GmbH?

Yes — German law allows conversion (Umwandlung) between most entity types under the Umwandlungsgesetz (UmwG). Conversion of OHG/KG to GmbH: by Formwechsel (change of form) — the entity continues legally, only the form changes, preserving all contracts and relationships. Conversion of GbR: requires contribution of assets (Einbringung) into a new GmbH. Tax treatment varies — §20 UmwStG may allow book value transfer. We advise on the optimal conversion route and timing.

What is the SE (Societas Europaea) and when is it used?

The SE (Societas Europaea) is a European company form created by EU Regulation 2157/2001, used in Germany. Minimum capital: €120,000. Used by large companies operating across multiple EU states (Volkswagen, BASF, and many DAX companies use SE). Benefits: single governance structure across EU subsidiaries, worker participation framework under SEVOL. For most SMEs and foreign investors, GmbH or AG is more practical and less expensive to maintain.

What is the GmbH & Co. KG and why is it popular in Germany?

The GmbH & Co. KG combines limited liability with tax transparency. A GmbH acts as the Komplementär (general partner with unlimited liability) of a KG (limited partnership). Because the GmbH limits actual personal liability, and the KG is transparent for tax purposes (profits flow directly to individual Kommanditisten without corporate-level taxation), it is the preferred structure for German real estate investment, family businesses, and professional investors. The complexity: two separate legal entities must be maintained, each with their own Handelsregister entry and annual accounts.

What is an OHG and how does it differ from a GbR?

An OHG (Offene Handelsgesellschaft) is a general partnership operating a commercial trade (Handelsgewerbe) - it must be registered in the Handelsregister (HRA entry) and follows the HGB (commercial code). All OHG partners are jointly and severally personally liable with all personal assets. A GbR (Gesellschaft bürgerlichen Rechts) is a simple informal partnership under the BGB (civil code), used for non-commercial purposes or small activities. GbRs are not required to enter the Handelsregister (though the new Gesellschaftsregister for GbR was introduced in 2024). Both have unlimited personal liability for all partners.

Can a GmbH or UG later convert to an AG?

Yes - conversion (Umwandlung) between legal forms is possible under the Umwandlungsgesetz (UmwG). Converting a GmbH to an AG: by Formwechsel (change of legal form) - the entity continues with all contracts and relationships intact, only the form changes. Requirements: minimum EUR 50,000 share capital (must be raised if GmbH capital is below this), mandatory Aufsichtsrat formation, annual audit obligation, and notarial deed. The conversion is appropriate when a company plans to seek public listing, issue stock options at scale, or needs AG corporate governance for institutional investors.

What is the PartGmbB and when do professional firms use it?

The Partnerschaftsgesellschaft mit beschränkter Berufshaftung (PartGmbB) is a partnership form available to professional firms (Rechtsanwälte, Steuerberater, Wirtschaftsprüfer, Architekten, etc.) that provides limited liability for professional negligence claims. Unlike a regular Partnerschaftsgesellschaft, the PartGmbB means that only the partner directly responsible for a negligent act bears personal liability - not all partners. It requires professional liability insurance meeting minimum coverage thresholds. The PartGmbB is registered in the Partnerschaftsregister (not Handelsregister). It is the preferred structure for mid-size professional service firms.

What is a Genossenschaft (cooperative) in Germany?

A Genossenschaft (eG - eingetragene Genossenschaft) is a cooperative legal form under GenG with 3+ founding members. Members contribute to and benefit from the cooperative collectively. Key features: democratic governance (one member, one vote regardless of contribution size), profit sharing based on use/participation, flexible membership. Supervision by a Genossenschaftsverband (cooperative audit association) is mandatory. Used for: energy cooperatives (Bürgerenergiegenossenschaften), housing cooperatives, agricultural cooperatives, credit unions (Volksbanken, Raiffeisenbanken), and worker cooperatives. Formation is cheaper than AG but more complex than GmbH.