gGmbH: What is the German non-profit limited liability company?

updated on 29. August 2022 6 minutes reading time
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Entrepreneurship, tax benefits and giving something back to society – the German non-profit limited liability company (gGmbH) combines all of this in one legal form. With almost a third of the 2.6 million people in the non-profit sector in Germany working for a gGmbH, it’s a tried and tested structure for social enterprises.

But, what is it? How is it different from a charitable association (gemeinnütziger Verein)? Is it viable option for you? Learn how to answer these questions here.




gGmbH: Definition and meaning

If you look up the definition of a gGmbH, you’ll quickly find an answer: a gGmbH is a ‘non-profit company with limited liability under German law’ (gemeinnützige Gesellschaft mit beschränkter Haftung, or gGmbH for short).

Here ‘non-profit’ (gemeinnützig) means that the purpose of the company is to benefit the common good. ‘GmbH’ is the abbreviation for Gesellschaft mit beschränkter Haftung (limited liability company in English). This means that in Germany, the legal form of a gGmbH is bound by GmbH law. The increasing number of hospitals, kindergartens and museums now being conducted as gGmbHs serve as a good example.

Do you have a charitable mission and don’t need much share capital to form a company? Then establish a non-profit entrepreneurial company (gemeinnützige Unternehmergesellschaft, or gUG) with limited liability (haftungsbeschränkt) instead. This requires as little as a €1 investment.

The gGmbH is the non-profit variety of the GmbH (the German limited liability company). You can find out more about the GmbH legal form in our guide.

Purpose of the gGmbH

The legal form of the gGmbH aims to combine the benefits of a non-profit with those of a GmbH. The increase in economic demands on charitable organisations have made gGmbHs more attractive and relevant for healthcare, cultural, and educational institutions. For example, a gGmbH makes long-term planning and implementation easier through the employment of a professional full-time executive director, while also continuing to benefit from tax breaks.


Forming a gGmbH

The most important requirement and difference between the GmbH and gGmbH legal forms is the charitable aspect. A gGmbH must serve a charitable function. This is be established in the articles of incorporation (Satzung). These articles must be approved by the competent financial authority (Finanzamt). Learn more about the pros and cons of the corporate form GmbH.

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When does my GmbH qualify as non-profit?

  • A gGmbH is considered non-profit if it serves a non-commercial, charitable, or religious function. You can find an overview about these functions in the general fiscal law (Abgabenordnung) under Sections 52 and 53 (§ 52 AO/§ 53 AO). For further information about what constitutes a charitable non-profit, check out our article.
  • The company objective must clearly fulfil this charitable function.
  • The objectives of a gGmbH must be altruistic, direct, and for a specific purpose. Profits must not be distributed among the shareholders but must instead be put towards the company objective. Additionally, all salaries must be kept in relation to work performance. You can learn about the rights and duties of gGmbH shareholders in our article.
  • The articles of incorporation need to establish a beneficiary (Begünstigter). If the gGmbH is disbanded or loses its non-profit status, the company assets go to this beneficiary. However, the initial investment is paid out to the shareholders. The beneficiary must also be recognised as a non-profit. Beneficiaries can also fall under the category gGmbH, as well as foundations (Stiftungen), charitable organisations (gemeinnützige Vereinegemeinnützige Vereine) or gUGs, for example.

Source: German Charity Council (Deutscher Spendenrat)


Prerequisites for forming a gGmbH

  • The legal form of gGmbH dictates that a charitable purpose must be established in the articles of incorporation.
  • The company must directly work towards fulfilling this charitable function.
  • A charitable beneficiary must be established in the articles of incorporation.
  • The share capital must be deposited. We’ve outlined the things to look out for when depositing your gGmbH capital in a helpful article.


The information published on our site is all written and checked by experts with the utmost care. Nevertheless, we cannot guarantee its accuracy, as laws and regulations are subject to constant change. Therefore, always consult an expert in a specific case – we will be happy to put you in touch. does not take over any liability for damages, which resulted from errors in the texts.


The Master list of all Company Formation articles can be found here.

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