What you should know about the GmbH as a company form

Deutsche GmbH important basic data

Is it a non-domicile company?

No, the GmbH (limited liability company) is not a non-domiciled company. A GmbH is founded in the country in which it has its registered office and is subject to national laws and regulations.

Is this legal form internationally recognized?

Yes, the GmbH is an internationally recognized legal form, as it is a variation of the globally widespread concept of the "Limited Liability Company" (LLC) or "Private Limited Company" (Pte Ltd).

What are the rules for dissolution or liquidation?

A GmbH can be dissolved for various reasons (e.g. by resolution of the shareholders' meeting, insolvency, etc.). Liquidation is carried out by a liquidator who manages the company's assets and distributes them to creditors and shareholders. The exact regulations may vary from country to country.

What are the requirements regarding the company structure and the managing directors?

A GmbH must have a legal representative (e.g. managing director) who is responsible for the day-to-day management of the company. The shareholders can be natural persons or legal entities. The exact requirements regarding the company structure and the managing directors depend on national laws and regulations.

What accounting and reporting obligations exist?

A GmbH is subject to statutory accounting and reporting obligations, which normally include the keeping of accounts, the retention of commercial documents and the preparation of annual financial statements and balance sheets. Compliance with these obligations is of great importance for the company's transparency and accountability.

Is it a legal entity and does it have limited liability?

Yes, GmbH is a legal entity and has limited liability. This means that the shareholders are generally not personally liable for the company's liabilities, but only to the extent of their capital investment.

How high should the share capital be?

The share capital of a GmbH varies according to national laws, but in Germany, for example, the share capital must be at least EUR 25,000.

What does the foundation cost?

The cost of setting up a GmbH depends on various factors, including national fees, taxes and fee-based services from lawyers or notaries. In Germany, the total cost of setting up a GmbH can be between 1,000 and 2,500 euros.

Is such a company subject to corporation or trade tax? If yes, what is the percentage?

Yes, a GmbH is generally subject to both corporation tax and trade tax. The corporation tax varies depending on the country, in Germany the corporation tax is currently 15% plus SolZ (solidarity surcharge), which effectively results in a tax burden of approx. 15.825%.
The trade tax depends on the municipal trade tax rates, which can vary depending on the municipality. In Germany, it is usually between 7% and 19%.

How high is the VAT allowance for online trade, services and trade in tangible goods?

If the GmbH falls below the tax-free amount of EUR 22,000 and makes use of the small business regulation, it does not have to pay any tax. Value added tax or submit it to the tax office. However, they must still prepare quarterly reports on their turnover and submit an advance VAT return once a year. There are no separate allowances for online trade, services and trade in tangible goods.

Are any other taxes due?

Apart from corporation and trade taxes, other taxes may apply, e.g. value added tax, import and export taxes or taxes on dividends, if applicable.

Is the company's income included in the managing director's income? If not, do the directors and employees only have to pay personal income tax on their own income?

No, the income of the GmbH is not included in the personal income of the managing director. The GmbH is a legal entity and its income is taxed separately. The managing director and employees only have to pay income tax on their private income, e.g. salaries, dividends or other income.