Summary
Setting up a gGmbH combines the entrepreneurial structure of a GmbH with the benefits of charitable status. Founders must define a non-profit purpose, draft legally compliant articles of association, and obtain approval from the tax office before notarisation. Afterward, the share capital must be deposited in a business account, and the company entered in the Commercial Register. The process concludes with tax registration, where the authorities determine the provisional charitable status of the gGmbH.
Contents
Things to consider before forming a gGmbH
A gGmbH gives all the entrepreneurial advantages of a GmbH with the benefits of a non-profit status. Before starting the formation process you have to make some fundamental decisions.
Company purpose & gGmbH
Determine the charitable purpose before forming the gGmbH. The purpose must be non-profit, charitable or religious.
Legal requirements
In order to be able to fulfill your non-profit purpose, you might need a number of certificates and permits depending on your industry. You can ask the German Chamber of Industry and Commerce (IHK) for more information.
Share capital
Come up with a strategy on how you to raise the minimum share capital of €25,000.
Shareholders
Who should set up the gGmbH with you? Who should be shareholder in your gGmbH and help you to achieve your mission? Also consider that you and the partners should be a good match, both professionally and personally, and that you should all pursue the same goal.
Articles of association
The next step in setting up your gGmbH is to draft the customised articles of association 💬Satzung with a lawyer. The non-profit purpose must be defined carefully. It is the most important component for the recognition of the non-profit status by the tax office.
In order for the tax office to recognise the non-profit status, the following criteria must be met.
Directness
The profits generated must flow directly and immediately to the charitable purpose.
Altruism
All funds generated must be used altruistically for the charitable purpose. A distribution of profits to the shareholders is not permitted. Furthermore, all salaries must be in relation to the services rendered to the non-profit limited liability company.
Beneficiary
The articles of association of your gGmbH must specify a beneficiary non-profit organisation. In the event of dissolution of the gGmbH, this organisation will receive the surpluses generated. The share capital will be paid out to the shareholders in such a case.
The charitable purpose should be carefully formulated, as it will determine whether the tax office will grant your company provisional charitable status. Due to this individual customisation, it is mandatory to use customised articles 💬Satzung. Using the standard articles 💬Musterprotokoll is not possible.
When your customised articles are finalised by a specialised lawyer you need a notary appointment. After the notarisation you receive the certificate of incorporation and your company gains the status “gGmbH in Gründung” or “gGmbH i.G.”. What this means is that your company is “in formation” and is not incorporated yet.
Bank account to deposit share capital
As soon as your non-profit limited liability company has been notarised, you can open the company’s business bank account and pay in the share capital of your gGmbH. The share capital is usually paid in cash or as a contribution in kind by several shareholders.
Entry into the commercial register
Once the share capital has been paid in, the notary can finalise the application for the commercial register. If there are no further complications the gGmbH will be entered in the register after a few weeks. Then the non-profit GmbH is incorporated and the limited liability comes into effect.
Tax registration
One of the first duties of the shareholders of a non-profit GmbH is to register with the local tax office and trade office. The following documents must be submitted to the tax office via ELSTER:
- Tax registration company details
- Articles of association of the gGmbH
- Extract from the commercial register
- Opening balance sheet
Be aware that your non-profit status is going to be granted retroactively for the previous year.
Takeaways
A gGmbH offers credibility and limited liability for charitable ventures but involves careful preparation. Define your purpose precisely, ensure the articles of association meet tax requirements, and coordinate closely with your tax office before notarisation. Proper planning helps you avoid costly revisions and ensures your non-profit gains official recognition without unnecessary delays.
