Note: * The notary fees and the costs for entry in the commercial register (Handelsregister) are not included in the price and will be charged separately. ** firma.de Firmenbaukasten AG does not provide legal advice itself but works exclusively with lawyers and independent tax advisers who specialise in the field of limited liability entrepreneurial companies. The 30-minute attorney consultation is carried out by Werthing Rechtsanwaltsgesellschaft mbH, Günthersburgallee 37a, 60316 Frankfurt am Main. Please make an appointment: +49 611 17207-0 or by e-mail at email@example.com. complete comprehensive
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Shareholders of a gGmbH are not personally responsible for the organisation’s debts and liabilities but only liable with their share capital. The minimum capital share for a gGmbH is € 25,000.
Non-profit corporations such as gUG or gGmbH are exempt from corporate tax (Körperschaftssteuer) and trade tax (Gewerbesteuer). These corporations are also authorised to issue donation receipts and may benefit from lower VAT.
Greater shareholder control
Unlike the management structures of registered societies or associations that give voting rights to their members, gUG and gGmbH shareholders are in full control of the organisation.
Set up your business with firma.de
You authorise firma.de to set up your company.
You receive expert advice from our consultants.
We arrange your company name check with the IHK (chamber of commerce).
We arrange and schedule your notary appointment in your city of choice.
After your notary appointment we arrange the opening of your company bank account.
Immediately after your Handelsregister (commercial register) registration, we prepare your Gewerbeanmeldung (business registration) and Finanzamtfragebogen (tax office questionnaire).
We refer you to a qualified tax adviser for an opening balance sheet consultation session.
You're ready to do business!
Startup specialist Dr. Benjamin Werthmann counsels you on the preparation of the company’s articles of association.
Dr. Werthmann submits the articles of association to the Finanzamt (tax office) for review of the non-profit status.
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Frequently asked questions about the gGmbH
What is a gemeinnützige GmbH (gGmbH)?
The gGmbH is a non-profit company with limited liability. The abbreviation stands for "gemeinnützige Gesellschaft mit beschränkter Haftung".
Non-profit GmbHs as well as non-profit UGs have a charitable purpose and consequently benefit from tax exemptions.
Both the gGmbH and gUG are special forms of the regular GmbH and are subject to the same German Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung).
What is a non-profit UG (gUG)?
The gUG (gemeinnützige Unternehmergesellschaft) is a non-profit organisation, just like the gGmbH. The gUG is the smaller version of the gGmbH, just like the UG is the smaller version of the GmbH.
What is the difference between a non-profit UG (gUG) and a non-profit GmbH (gGmbH)?
The main difference between the two legal forms is the shareholders’ required share capital. gUG founders only need a minimum of € 1.00 per shareholder, while to set up a non-profit GmbH, founders have to come up with € 25,000.
Due to this difference in share capital, the gUG shareholders must build up annual reserves until the company's share capital has reached € 25,000. The differences parallel those that exist between the regular versions of the UG and GmbH.
What is the liability of a gGmbH?
The gGmbH is only liable for damages with the company's capital and not with the shareholders’ private assets.
What rights do partners of a gGmbH have?
The articles of association set out the obligations and rights of the shareholders. For example, the statues contain the right to dismiss managing directors and certain rights to information and inspection.
What advantages does a gGmbH offer?
Independent decision making
Within the other form of a not-for-profit association called a Verein, usually every member has one vote in deciding business decisions. Within a gUG or gGmbH, the shareholders make the business decisions.
Although it is possible to vote on the business procedure of a gUG or gGmbH, such voting is not legally binding.
When conducting your business within a gUG or gGmbH, you are not dependent on member decisions, as is the case when working in an association.
The gGmbH is only liable for damages with the company's capital and does not extend to the shareholders’ private assets.
Non-profit companies like gUG or gGmbH are exempt from corporation tax and trade tax. They are also authorised to issue donation receipts and under certain conditions benefit from reduced VAT.
A gGmbh can use its profits or donations to employ full-time management to become a more professional operation. In comparison, regular associations (Vereine) are run by members on a voluntary basis.
What is a charitable corporate purpose?
Compliance with the following German laws for non-profit organisations (Gemeinnützigkeitsrecht, §52 Abgabenordnung) ensures a gGmbH receives and maintains its non-profit legal status:
The company has to pursue at least one charitable, benevolent or religious corporate purpose.
The company's purpose must be exclusively altruistic and transparent.
Business activities must be designed to fulfil the company's charitable purpose.
The articles of association of the company must state that its assets cannot be distributed if the company is dissolved or the charitable purpose is no longer pursued (the shareholders' share capital is exempt from this rule). Distribution of its assets is only possible if the shareholders themselves are non-profit legal entities.
How can the profits of a gGmbh be used?
While shareholders of a regular GmbH can distribute the company profits annually, this option is not available to owners of a gGmbH. Building up capital reserves is also restricted.
What are the tax benefits of the gGmbh?
gGmbHs are exempt from corporation and trade tax companies can issue donation receipts which are tax deductable for donors.
If a gGmbH generates profits or other economic benefits, it is designated as a special purpose enterprise (Zweckbetrieb) and must pay VAT. However, due to its non-profit status, the VAT is at the low rate of 7%.
What is important for the annual accounts of your gGmbH?
The annual accounts of a GmbH and a gGmbH are very different. Depending on the company size, different rules apply to the balance of accounts, publication and disclosure.
Does the disclosure obligation apply to the gGmbH as well?
Whether a gGmbH has to disclose its annual accounts and publish it in the German Federal Gazette (Bundesanzeiger), depends on company size, sales and total assets.
When should you convert an association (Verein) into a gGmbH?
This option is especially beneficial if your association has a large amount of capital.
The gGmbH combines the benefits of a public charity (gemeinnütziger Verein) with those of a limited liability company.