Germany attracts entrepreneurs with the size of its market, a reliable legal environment, and the potential for attractive profits. If you’re considering starting a business in Germany, forming a limited liability company (GmbH) might be the best option for you. But what should you be prepared for?
To establish a classic GmbH in Germany, you need a minimum share capital of €25,000, with at least €12,500 paid in before registration in the commercial register. That’s not a small amount… If you’re looking for an easier way to start a business in Germany, there’s also a form of LLC called a UG (Unternehmergesellschaft), which you can set up with a symbolic contribution starting at just €1. This form is ideal for new entrepreneurs, but it does come with some restrictions and obligations regarding the creation of a reserve fund. It’s definitely worth consulting experts in German business and labor law.
Other Mandatory Fees
In addition to the capital contribution, you’ll also incur notary fees, registration fees for the commercial register, and administrative fees for registering the business. Once established, your German LLC will become a member of either the Chamber of Crafts or the Chamber of Industry and Commerce, depending on your business activity. Membership fees are not fixed—they typically depend on turnover, legal form, and are set by the specific chamber.
Higher Costs in Big Cities
The corporate income tax in Germany, including for GmbHs, is 15%. On top of that is a solidarity surcharge (5.5% of the tax), bringing the effective rate to about 15.83%. You also need to add the trade tax, which is set individually by cities and municipalities. On average, this is around 15%, but it’s highest in large cities like Berlin, Munich, Frankfurt, and Hamburg. Total tax burden can therefore reach up to 30%.
How Much Will You Pay Employees?
If you decide to hire employees in Germany, the general minimum hourly wage is currently €12.82. Some industries and sectors have higher minimum wages—for example, in electrical or installation work, the minimum hourly wage is €14.41. Employee income tax depends on their earnings and tax class, ranging from 14% to 45%.
Want to Ensure Your GmbH Formation Goes Smoothly?
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