gGmbH formation in Germany – setting up a German non-profit limited liability company

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gGmbH formation in Germany – setting up a German non-profit limited liability company

Do you want to become active in a non-profit organisation and still benefit from the entrepreneurial advantages of a corporation? As an experienced law firm in the field of corporate law  we know all the important details of setting up a non-profit GmbH. A  lawyer will draw up your articles of association. Fast, legally secure and at a fixed price.

If you have questions like:

  • “What is a gGmbH?”
  • “How do I run a non-profit?” or
  • “What costs will I incur?”

you will find many answers and tips on the following pages.

We set up your gGmbH. You focus on business

Key points gGmbH formation

Table of Contents

Andre Kraus, lawyer and founder of the  KRAUS GHENDLER RUVINSKIJ law firm, is your contact in matters of company formation, trade mark law, reputation protection and corporate law.

Online company formation or in-person appointment

You can form a company directly online, book a free initial consultation online or send us a message.

Free initial consultation

You will receive a comprehensive initial consultation for the formation of your UG free of charge. During this meeting, we will clarify any open questions you may have and advise you on the most important basic issues in company formation, such as the right legal form or the costs and procedure involved in forming a company.

Forming your company

We start by forming your company. We will support you, from providing legal advice on forming a company, drafting tailored articles of association, arranging a notary appointment and entering your company in the commercial register, to registering a trademark, drawing up your application for tax and business registration, and handling your bookkeeping.

Overview of gGmbH formation in Germany

Forming a gemeinnützige Gesellschaft mit beschränkter Haftung (gGmbH, non-profit limited liability company)

The gGmbH – gemeinnützige Gesellschaft mit beschränkter Haftung – is a special sub-form of the GmbH, which was created in 2013 and brings enormous tax advantages to the shareholders. GmbHs whose business purposes are purely charitable, benevolent or ecclesiastical are exempt from corporation and trade tax. However, profit distributions are not possible. Categories of non-profit activities include the following in particular:

  • the welfare of young people,
  • the welfare of the elderly,
  • environmental protection,
  • animal welfare,
  • consumer protection, and
  • the protection of historical monuments.

The formation of a non-profit GmbH is particularly worthwhile for founders who wish to become active in non-profit activities alone, or those who wish to use the entrepreneurial advantages of a GmbH for their business.

We set up your gGmbH. You focus on business

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Forming a gGmbH: an overview of the forming packages

Our Packages

gGmbHRechtssicher

€799,–zzgl. € 151,81 USt.

  • For founders who want a foundation with legal advice .

  • Legal advice
    • Initial consultation 30 min.
    • Start-up advice 60 min.
    • -
  • Support and organization
    • Always available
    • Notary appointment for certification
    • Account opening
    • Commercial register
    • IHK company examination
    • -
    • -
  • Comprehensive contract package
    • Individual articles of association
    • Managing director employment contract
    • Sample contract package
    • Sample opening balance sheet
    • Certificate of non-profit status for submission to the tax office
    • -
    • -
FOUNDING ONLINE NOW
Reserve appointments online
Or download the documents.

gGmbH Plus

€1.479,–zzgl. € 281,01 USt.

  • For founders who want to hand over the entire process to us . We take care of everything.

  • Legal advice
    • Initial consultation 30 min.
    • Start-up advice 60 min.
    • Closing advice 60 Min.
  • Support and organization
    • Always available
    • Notary appointment for certification
    • Account opening
    • Commercial register
    • IHK company examination
    • Business registration
    • Tax registration
  • Comprehensive contract package
    • Individual articles of association / statutes
    • Managing director employment contract
    • Sample contract package PLUS
    • Opening balance
    • Certificate of non-profit status for submission to the tax office
    • Business registration
    • Tax office questionnaire
    • VAT ID registration
FOUNDING ONLINE NOW!
Reserve appointments online
Or download the documents.

Request a Callback or call us direct 0221 – 6777 00 55

gGmbH founding by a lawyer

✔ CHEAP✔ FAST✔ LEGALLY SECURE

Over

20000

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↪ or reserve a free initial consultation.

Open questions? – Just call us:

0221 – 6777 00 55

(Mo. – So. from 9am to 22pm / NATIONWIDE – German landline)

What is a gGmbH?

The gemeinnützige GmbH was created by a special regulation in 2013. This was the legislator’s response to the increasing popularity of social entrepreneurship and the need for a non-profit commercially organised legal form.

Definition of a gemeinnützige GmbH

The gGmbH is a limited liability corporation, which mainly serves a non-profit, charitable or ecclesiastical purpose. The purpose must be firmly anchored in the statute of the company and pursued selflessly, directly and exclusively. If the charitable purpose is recognised by the tax office, the gGmbH can enjoy numerous tax exemptions. At the same time, the gGmbH benefits from the commercial organisation

The gGmbH has its own legal personhood

The gemeinnützige GmbH is a legal person and a corporation. It therefore has its own legal personhood, which enables it to act as a participant in legal transactions. If you conclude an employment contract with an employee or rent a property, the contract does not involve you or the founders, but the gGmbH.

More about gGmbH

Aims of forming a gemeinnützige GmbH

The gGmbH enjoys great popularity due to its commercial structure for a non-profit organisation. Short decision-making chains paired with generous tax exemptions favour the social enterprise. It offers you all the advantages of a corporation and at the same time the privileges of charitable work.

  • Objective 1

    Tax freedoms and benefits

    A GmbH that is recognised by the tax office as a non-profit company enjoys tax benefits. You do not have to pay corporate income tax or trade tax with your company, and turnover in the non-profit sector, also called the charitable sector, is exempt from VAT. Other income is only taxed at 7%. Furthermore, the gGmbH is exempt from inheritance or gift tax and from real estate tax. Finally, certificates can be issued to the donor for donations to the company, which also grant the donor tax advantages.

    The gGmbH thereby offers a unique advantage in tax benefits for shareholders.

  • Objective 2

    Commercial organisation with the advantages of non-profit status

    Forming a gGmbH combines the advantages of the commercial organisation and quick decision-making chains of a GmbH with the relief afforded to a non-profit association. Full-time management enables decisions to be made directly and quickly, which greatly simplifies administration for social entrepreneurs. At the same time, the gGmbH enables you to apply for state subsidies and privileges in the use of public resources. The gGmbH is therefore perfectly suited for efficient social entrepreneurship.

    Objective 2

  • Objective 3

    Releasing shareholders from liability

    As a sub-form of the GmbH, the gemeinnützige Gesellschaft also offers its founders release from private liability. Entrepreneurial risks only endanger your company’s assets, but not your private assets.

  • Objektive 4

    Legally secure formation

    As a company formation firm with years of experience in company formations, we can form your gGmbH with a legal guarantee. We take care of the whole process: from drawing up formation documents and providing legal advice to registering your company for tax and having it entered in the commercial register. Since the non-profit status of the gGmbH depends largely on the anchoring of the selfless purpose in the contract, we place a special focus on its presentation and have it checked for you by the tax office.

    Objektive 4

  • Objektive 5

    Minimising formal overheads

    Forming a GmbH with us allows you to skip most of the formalities of the formation process. You can concentrate on the business orientation of your non-profit organisation and a successful start to your project. We only need your input for necessary information.

gGmbH founding by a lawyer

✔ CHEAP✔ FAST✔ LEGALLY SECURE

Over

20000

checked cases

FOUNDING ONLINE NOW
Download Documents
↪ or reserve a free initial consultation.

Open questions? – Just call us:

0221 – 6777 00 55

(Mo. – So. from 9am to 22pm / NATIONWIDE – German landline)

Forming a gGmbH in 10 steps – Process step by step

Overview: Process of forming a GmbH:

  1. Free initial consultation 
  2. Intensive legal advice
  3. Checking the company name
  4. Drawing up the formation documents
  5. Checking non-profit status 
  6. Notarisation meeting
  7. Entry in the transparency register
  8. Opening the business account and paying in share capital
  9. Entering the gGmbH in the commercial register 
  10. Final consultation

Bild von Vertrag

  • Start-Up Gründung

Procedure for forming a gGmbH

  • Step 1 – Free initial consultation

    Before you decide to set up a company with our firm, you are welcome to take advantage of a free consultation. First of all, we clarify all important legal questions, and check whether the gGmbH is suited to your project. The focus here is on the question of whether the charitable purpose can be plausibly presented to the tax office. It is important that the principle of selflessness is permanently maintained. After the free initial consultation, you will have a sufficient overview to be able to decide independently for or against a certain legal form.

  • Step 2 – Intensive legal consultation

    If you have decided to form a gGmbH with us, we welcome you as a client of our law firm. We introduce you to your personal lawyer, who will accompany you through the formation process. First of all, all the legal questions on which the subsequent process is based are clarified. You should allow adequate time for the intensive consultation. It lays the foundation for the success of your business. Extensive preparation removes the need for later correction. Our goal is to understand all your personal preferences in order to create the optimal legal framework for your business. We therefore deal with the following topics, among others:

    choosing the right legal form
    excluding your personal liability
    selflessness of the charitable purpose of the company
    beneficiary
    share capital
    shareholders
    succession
    distribution of profits
    disposal over company shares
    management

    Step 2 – Intensive legal consultation

  • Step 3 – Checking the company name

    Next, we check that your company name is eligible for registration. If this is the case, we can proceed with drawing up the formation documents.

  • Step 4 – Drawing up the formation documents

    After we have gathered all the relevant information and understood your preferences, we can create the legal framework for your gGmbH: We prepare the articles of association and all the other formation documents. In the case of the gGmbH, we pay special attention to the presentation of the non-profit purpose. Convincingly anchoring it in the company’s articles of association is especially important for later recognition by the tax authorities.

    We also incorporate all your personal preferences into the articles of association. Many founders prefer to save time by forming a company using a “standard record” (Annex to Section 2(1a), GmbHG). We tailor the articles of association to your personal preferences.

    You decide how your company formation should look

    You personally decide how detailed and tailored your formation documents should be:

    Would you like to include individual provisions in the statute? We will draw up tailored articles of association for your gGmbH.
    There are no risks – we adapt your standard record to your purposes.
    The fixed price remains the same – our law firm offers the gGmbH at a fixed price. How tailored you want your company formation to be does not affect the overall price.
    Deduct formation expenses: We tailor your articles of association.

    Formation costs are not always tax deductible. If you form your company using a standard record, you can only deduct up to €300. A full tax deduction is possible if you are forming your company with a tailored statute.

    Provision for crisis or dispute

    The articles of association are of particular importance for the gemeinnützige GmbH, even beyond the legal obligation. Through appropriate presentation, it not only secures non-profit status but also shores up the company’s position in the event of a crisis or dispute. If individual liability issues are not clarified or responsibilities are not clearly allocated, the existence of a company is not secured in the event of a dispute. The articles of association especially serve to provide for unforeseen scenarios. A clear division of responsibilities ensures smooth-running business operations, even in the event of a dispute.

    Further documents for forming a gGmbH

    Not only the articles of association, but also other formation documents must be drawn up for the gGmbH:

    Company resolutions and resolutions of the general meeting
    List of shareholders and entry in the commercial register

    Step 4 – Drawing up the formation documents

  • Step 5 – Checking non-profit status

    After drawing up your documents, we send your gGmbH’s articles of association to the responsible tax office. The tax office then checks your company’s non-profit status. Only when this has been positively confirmed can the documents be notarised. If the tax office rejects your non-profit status, we will correct your articles of association until it becomes possible to form the company.

  • Step 6 – Notarisation

    Once all important documents have been drawn up, they must be certified by a notary. We organise a notary appointment at your desired time in your vicinity. We forward the formation documents to the notary.

    Step 6 – Notarisation

  • Step 7 – Entry in the transparency register

    Since 2019, companies must be entered in the federal transparency register under the Geldwäschegesetz (GwG; German Money Laundering Act) of 2017. This should make it possible to recognise the economically responsible persons of a company at a glance. The first and last names, dates of birth, places of residence and the nature and extent of the economic interest of the beneficial owners must be entered. Registration may be waived if this information can already be retrieved from the commercial register or another public register.

    If necessary, your company will be entered in the transparency register after notarisation.

  • Step 8 – Opening the business account and paying in share capital

    Once your company formation has been notarised, you can open a business account at the appropriate bank. We arrange the bank appointment for you and provide you with a power of attorney and a checklist for the appointment.

    Step 8 – Opening the business account and paying in share capital

  • Step 9 – Entering the gGmbH in the commercial register

    Your gGmbH will then be entered in the commercial register (Section 7 GmbHG).

  • Step 10 – Final consultation

    Once most of the formalities have been completed, we offer our clients a final consultation. We clarify all legal questions that have arisen during the formation process. As a rule, these relate to:

    tax obligations
    commercial registration
    legal requirements
    business letters
    legal advertising
    copyright
    dubious bills and fraud prevention
    necessary insurance

    Step 10 – Final consultation

  • Step 11 – Tax and business registration

    Finally, we register your gGmbH for tax purposes with the tax office, and commercially with the IHK. You can then start your business activities.

Advantages and disadvantages of forming a gGmbH

The gGmbH as a legal form offers founders many advantages. First and foremost, the release of private assets from liability. This enables you to do business with your private assets protected. Of course, there are also some disadvantages. Please see below for an overview of the advantages and disadvantages of a gGmbH.

Advantages of forming a gGmbH

  • NUMEROUS TAX BREAKS

    The gGmbH enjoys numerous tax advantages. For example, neither corporation tax nor trade tax is payable on the company’s profits.

  • CHEAPER USE OF PUBLIC RESOURCES

    The gGmbH has privileges granted by public authorities. These include reduced or simplified access to public resources, as well as advice and subsidies.

  • EXCLUSION OF PERSONAL LIABILITY

    No shareholder of the gGmbH is liable with their private assets. Only the business assets are liable for the gGmbH’s liabilities (Sections 5a, 13 GmbHG).

  • POSITIVE IMAGE FOR YOUR COMPANY

    Through the non-profit status, your company benefits from the positive image this creates for the outside world. Some gGmbHs are also formed by companies as subsidiaries to pursue a non-profit purpose.

  • EXTERNAL MANAGEMENT POSSIBLE

    As a corporation, the gGmbH has the right to appoint a managing director who is not a shareholder. They can thus hive off the risk of management to an outside person.

  • SIMPLE CHANGE OF SHAREHOLDERS

    The structure of the gGmbH offers the possibility of a simple change of managing directors. If the articles of association are drafted accordingly, shareholders can also sell their shares to a third party without complications.

  • ADVANTAGEOUS DONATION SYSTEM

    The gGmbH is able to accept donations and issue tax relief certificates for them. Companies and private individuals are thus encouraged to make donations to your gGmbH in order to deduct them from tax.

  • COMBINATION OF COMMERCIAL ORGANISATION AND NON-PROFIT PURPOSE

    Forming a gGmbH allows you to combine commercial organisation, short decision-making chains and clear structures with the advantages of the non-profit status. Since its introduction, many charitable organisations have decided to form a gGmbH instead of a Verein (association).

  • POSSIBILITY OF FORMATION WITH A CONTRIBUTION IN KIND

    The gGmbH, just like the ordinary GmbH, can be formed with a contribution in kind. By contributing material assets from your property to the share capital, the enormous hurdle of the formation can be circumvented with at least €12,500 or €25,000.

  • FORMATION AS ONE-PERSON GGMBH

    You can also form the gemeinnützige GmbH alone, thus forming a “one-person gGmbH”. As the founder, you are then the sole shareholder of the company and at the same time the managing director. Compared to forming an eingetragener Verein (registered association) with at least seven persons, it is much simpler to form a gGmbH.

Disadvantages of forming a gGmbH

  • FORMALITIES FOR FORMING A GGMBH

    Forming a gGmbH is accompanied by an increase in formal overheads. Extensive formation documents must be drawn up and a notary appointment must be made.

    Alternative: The pursuit of a non-profit purpose can also be realised by forming a GbR or Verein. The ongoing administrative costs are lower.

  • NON-PROFIT STATUS IS STRICTLY CHECKED

    The company’s non-profit status must be firmly anchored in the gGmbH’s statute, and must be precisely defined in advance. In addition, the tax office audits the company’s actual charitable orientation on an annual or three-yearly basis. After the audit, the status is confirmed retroactively, which means that the gGmbH is under a constant obligation to provide evidence. Subsequent changes to the object of the company require a new inspection by the tax office. If the gGmbH loses its non-profit status, additional tax payments fall due.

    Alternative: An eingetragener Verein also has a non-profit purpose. However, since there is no business-oriented alternative, the non-profit status is not as “provisional” as that of a gGmbH.

  • SALARIES MUST NOT BE TOO HIGH

    The salaries of the employees of a gGmbH must always be proportionate to the services rendered. Otherwise, the tax office could interpret this as a hidden profit distribution, which in turn would lead to loss of the non-profit status.

    Alternative: If you are pursuing a charitable purpose but do not want to be exposed to the pressure of salary appropriateness, you could also do so with a conventional GmbH.

  • NO DISTRIBUTION OF PROFITS IS POSSIBLE

    The principles of selflessness are contradicted by the distribution of profits. It is therefore prohibited in any form for gemeinnützige GmbHs that wish to maintain their non-profit status.

    Alternative: If you would like to pursue a charitable purpose, but still want to make occasional profit distributions as required, you could form a GmbH or a GmbH & Co KG.

  • ONLY LIMITED RESERVES CAN BE FORMED

    A gGmbH is only able to form limited reserves. In order to maintain non-profit status, 75% of operating profits must be reinvested in the pursuit of the company’s charitable purpose. The build-up of share capital is only permitted if savings have to be made for an investment that, in turn, is related to the company’s charitable purpose, or indirectly serves this purpose in the economic sphere.

    Alternative: Capital accumulation is possible with a profit-oriented GmbH or UG.

  • HIGHER ACCOUNTING EXPENSES THAN WITH A VEREIN

    The commercial organisation brings more structure and shorter decision-making chains, but is also accompanied by higher administrative costs. Regardless of the size of the turnover, the gGmbH has to engage in double-entry bookkeeping and prepare balance sheets. The Verein only has to do this once its turnover reaches €500,000 per year.

    Alternative: If you only expect small turnover and want to avoid the administrative overhead associated with double-entry bookkeeping, you could also form a GbR to realise your project. However, there are no tax concessions for GbRs.

  • NOTARIAL CERTIFICATION REQUIRED

    The gGmbH must be entered in the commercial register as a company under commercial law. This requires that the formation documents be certified by a notary. The appointment takes time and entails costs. The assignment of shares or the admission of new shareholders must also be notarised.

    Alternative: If you form a GbR you cannot claim any tax advantages, but you also do not need notarial certification. In the long run, this time saving is insignificant compared to the benefit of the tax savings.

Taxes of a gGmbH

A gemeinnützige GmbH does not have to pay corporation tax, trade tax and solidarity surcharge. The gGmbH is exempt from paying VAT in the charitable area. Only reduced VAT is payable for income from the business-oriented sector.

The gGmbH may not pay out any profits to its shareholders, which is why no capital gains tax is payable. Regular wage taxes must be regularly paid for employees and other staff. The gGmbH is entitled to donate, and is therefore exempt from inheritance and gift tax. No real estate tax is payable on properties used for the company’s charitable purpose.

No corporation tax for the gGmbH

As a non-profit, the gGmbH does not have to pay corporate income tax to the tax office. This results in a saving of 15.6% on operating profits, which can be used to pursue the company’s charitable purpose. However, the company must maintain its non-profit status throughout its lifespan. As a rule, the tax office carries out an audit of the status at least once every three years.

No trade tax payable

Its non-profit status also means that the gGmbH does not have to pay trade tax. Although an application must be made to the tax office, as long as the non-profit status is maintained, no taxes have to be paid.

Exempt from the solidarity surcharge

A gGmbH does not have to pay the solidarity surcharge.

Salaries must be in proportion to services rendered

In order for the gGmbH to maintain its non-profit status the salaries it pays out must bear a comprehensible relation to the services rendered. Otherwise, the tax office may view this as a hidden profit distribution, which will lead to its non-profit status being withdrawn.

Donations to the company are tax-free

When third parties donate to your company, you can issue donation receipts, which the donor can deduct from their tax. Again, you are not subject to gift tax.

Costs

Our Packages

gGmbHRechtssicher

€799,–zzgl. € 151,81 USt.

  • For founders who want a foundation with legal advice .

  • Legal advice
    • Initial consultation 30 min.
    • Start-up advice 60 min.
    • -
  • Support and organization
    • Always available
    • Notary appointment for certification
    • Account opening
    • Commercial register
    • IHK company examination
    • -
    • -
  • Comprehensive contract package
    • Individual articles of association
    • Managing director employment contract
    • Sample contract package
    • Sample opening balance sheet
    • Certificate of non-profit status for submission to the tax office
    • -
    • -
FOUNDING ONLINE NOW
Reserve appointments online
Or download the documents.

gGmbH Plus

€1.479,–zzgl. € 281,01 USt.

  • For founders who want to hand over the entire process to us . We take care of everything.

  • Legal advice
    • Initial consultation 30 min.
    • Start-up advice 60 min.
    • Closing advice 60 Min.
  • Support and organization
    • Always available
    • Notary appointment for certification
    • Account opening
    • Commercial register
    • IHK company examination
    • Business registration
    • Tax registration
  • Comprehensive contract package
    • Individual articles of association / statutes
    • Managing director employment contract
    • Sample contract package PLUS
    • Opening balance
    • Certificate of non-profit status for submission to the tax office
    • Business registration
    • Tax office questionnaire
    • VAT ID registration
FOUNDING ONLINE NOW!
Reserve appointments online
Or download the documents.

Request a Callback or call us direct 0221 – 6777 00 55

The following costs are incurred when a gGmbH is formed:

DESCRIPTIONCOSTS (NET AMOUNTS)
Formation costsAdvice on the choice of legal form, advice on forming a company, organisation of the formation, representation during the formation process, contracts, final consultationFixed price: 799,– € (“Rechtssicher”) or 1.479,– € (“Rechtssicher PLUS”)

Notarisation costsNotarisation of the articles of association and other forming documents. By providing prior advice on formation and drawing up the articles of association and the formation documents for a fixed price, we may save you the significantly higher costs of a contract drawn up by the lawyer notary on the basis of the RVG (German Law on Lawyer’s Fees), or when invoicing on an hourly basis.Between €207.00 and €678.00 on average
IHK contributionFrom €115.00
Entry in the commercial registerOften between €150.00 and €240.00
Tax registrationFree of charge

Questions and answers regarding the formation of a gemeinnützige GmbH

When setting up a gemeinnützige GmbH, clients often have specific questions such as:

“What does liability look like at a gGmbH?” or
“How is the profit of a gGmbH distributed?”

Below you will find the frequently asked questions and our answers regarding the formation of a gGmbH.

Under certain circumstances, you can do business even before the gGmbH is entered in the commercial register:

  • In business transactions, the abbreviation “i.G.” for “in formation” is added to your company name
  • Your liability is not limited to the business assets
  • You are privately liable for debts
  • You have applied for a temporary tax number from the tax office, which you can use to issue invoices.

You can choose a free and creative company name that is in line with your marketing strategy and conveys your charitable values. Nevertheless, the requirements of commercial law apply. The name:

  • cannot be misleading
  • cannot be already in use (Section 30(1) HGB), and
  • must be distinctive (Section 18(1) HGB).

In addition, the abbreviation “gGmbH” or “gemeinnützige Gesellschaft mit beschränkter Haftung” must be appended in business transactions.

A classic GmbH is usually formed with the aim of maximising profits and building up capital. The gemeinnützige GmbH, on the other hand, pursues a purpose that serves the general public.

In contrast to the classic GmbH, the following rules apply to the gGmbH:

  • No right to distribution of profits
  • Proportionality of salaries to services rendered
  • Anchoring of the charitable purpose in the articles of association
  • Tax exemptions if the non-profit purpose is recognised
  • Identification of a beneficiary
  • No possibility to build up capital: 75% of profits must be re-invested in the same financial year for the pursuit of a non-profit purpose.

The gGmbH benefits from numerous tax advantages. They go hand in hand with the non-profit status, which must be checked and recognised by the tax office.

In concrete terms, the tax advantages look like this:

  • The gGmbH does not have to pay corporation tax, trade tax or, in the charitable area, VAT
  • In the business area, only reduced VAT applies
  • Inheritance or gift tax and real estate tax do not apply to transfers made for charitable purposes.

In order for the tax advantages to retained, the company’s charitable purpose must be recognised. If a distribution of profit is detected, whether overt or covert, the status will be revoked.

A GmbH is a non-profit organisation if the non-profit status is recognised by the tax office. The requirements of Section 52 AO (German Fiscal Code) apply:

  • The GmbH must pursue a purpose that is non-profit, charitable or ecclesiastical
  • The pursuit of the purpose or realisation of the project must be selfless, direct and exclusive. If, for example, too much profit is paid out, a hidden profit distribution is assumed and the selflessness is forfeited
  • The purpose of the company must be for the public good. It must not only benefit a limited group of people
  • The articles of association define a beneficiary to whom the share capital is transferred in the event of the company’s dissolution. Beneficiaries may only be legal persons under public law and other tax-privileged organisations.

In general, the business assets are liable for the gGmbH’s operational debts. The management can only be held liable with their private assets in certain cases. These cases must involve gross misconduct and breaches of duty.

In most cases, liable conduct can be found in the following areas:

  • Tax law and social security
  • Insolvency law
  • Causing damage through misconduct and neglect of duty

Your gGmbH must be entered in the commercial register before you can start your business activity. Although this process cannot be actively accelerated, arrangements can be made to encourage the fastest possible registration.

  • Selecting a correct company name: As a company under commercial law, you can choose a free and creative name for your gGmbH. It must nevertheless comply with the legal requirements. We check your company name before registration. If the name cannot be registered, entry in the commercial register is refused and the process is delayed.
  • Correctly labelling the company postbox: If the company postbox is not correctly labelled, your post may not be delivered. This delays the registration process by approximately one month.
  • Specify the purpose of the company: It must be possible to precisely describe the company’s purpose when it is registered. In the case of a gemeinnützige GmbH, it is identical with the non-profit purpose. We correctly designate the purpose of your company and anchor it in the articles of association.
  • Payment of the advance on costs: For the fastest possible registration, the advance on costs should already be paid at the cash desk or deposited with the notary.

An across-the-board calculation of accounting costs is not appropriate, as the costs depend to a large extent on various factors:

  • Complexity of the business model
  • Number of bookings
  • Regional focus of the company
  • Size of the company

The gGmbH is obliged to engage in double-entry bookkeeping and to prepare a balance sheet. An approximate cost framework would be the following: 30 bookings per month would cost €800, while 100 bookings would cost €1,500.

Founders of a gGmbH may well be obliged to pay into a social security scheme. This is especially the case if self-employment is not recognised as a full-time occupation. If you work less than 20 hours per week in the company, for example, this would not be a full-time job and you would be subject to a social security obligation.

A gGmbH must use its profits correctly in order to maintain its non-profit status. The principles of selflessness and directness are decisive for this. Profits may not be distributed or used for personal enrichment, but must directly serve the company’s purpose. Therefore, it is prescribed that 75% of profits must be invested in the company’s charitable purpose in the same financial year.

It may be possible to create reserves

25% of the remaining profits may be used to build up share capital. If profits are to be saved, this must be done for a comprehensible larger investment, which in turn serves the company’s charitable purpose.

Hidden profit distributions put the company’s non-profit purpose at risk

Hidden profit distributions can be assumed, for example, when businesses pay out excessive salaries or organise unnecessary company events. These violate the principle of selflessness and therefore endanger the company’s non-profit status.

The gemeinnützige GmbH benefits from numerous tax advantages. For example, it does not have to pay VAT on turnover generated in the charitable area, i.e. in connection with the non-profit purpose. However, no input tax can be deducted for expenditure in this area either.

Nevertheless, the gGmbH is entitled to deduct input tax for income and expenditure in the business sector. This can be divided into three sections:

  • Asset management
  • Special-purpose operations
  • Other business operations

Only 7% of all income from special-purpose operations and asset management must be paid. However, input taxes are fully deductible. In other business operations, the normal rate of 19% VAT is payable.

So if VAT is levied, reduced and regular, input taxes can be deducted.

Social entrepreneurship is becoming increasingly popular in Germany. Since the introduction of the gemeinnützige Kapitalgesellschaft (non-profit corporation) in 2013, the gGmbH and the gUG have increasingly replaced the Verein as the preferred legal form for non-profit projects.

The reasons are obvious: The gemeinnützige GmbH combines the tax and economic advantages of a legal form recognised as non-profit with the commercial organisation of a GmbH. Short decision-making chains make the gGmbH more agile than the Verein.

A gGmbH could be the right legal form for you if the following apply to you: You would like to form a non-profit organisation that has short decision-making chains, has a commercial organisation and can claim tax advantages.

Simply being a non-profit does not make drawing up a gGmbH’s annual financial statement any simpler. As a corporation, the gGmbH has to engage in double-entry bookkeeping and prepare annual financial statements. Only classification as a small capital company in accordance with Section 267a HGB can provide relief.

Especially after the entering your company in the commercial register, you should check all invoices that you receive carefully. The data is publicly accessible to everyone. Fraudsters take advantage of this and illegally send out invoices for certain services that most businesses use after they are formed. For example, you may receive an invoice for the commercial register entry or for your recently registered company domain, even though you have already paid for it.

Start-ups very often fall victim to fraud. You should therefore be particularly vigilant in the initial phase.

It is certainly possible to convert a Verein into a corporation, such as the gGmbH or the gUG. Since its introduction in 2013, the non-profit legal forms have increasingly replaced the Verein.

Conversion is complex but feasible.

It is not necessary to re-form the company from scratch.

You do not need to form a completely new company, so business relationships and existing contracts with suppliers and other business partners can be retained. The following is required, however:

  • a resolution of the general meeting regarding conversion and legal examination
  • a new company statute anchoring the non-profit purpose, and
  • a beneficiary to whom capital will be transferred in the event of dissolution or liquidation.

If the members decide to convert the Verein into a gGmbH, the usual process for a new formation must then be carried out.

Advertising legally is an elementary part of running any company. The legal framework must not be exceeded, otherwise there is a risk of warnings or even legal action by competitors.

In Germany, the legal framework is mainly regulated by the Gesetz gegen unlauteren Wettbewerb (UWG; German Act Against Unfair Competition). It applies to all common advertising formats:

  • advertising on your own website
  • advertising over the phone
  • advertising by SMS
  • email marketing
  • advertising on social media
  • advertising on search engines, and
  • advertising by post.

The decisive factor here is that the advertising must not be misleading or unethical comparative advertising.

An advertisement is misleading if it is likely to deceive its target audience, or is generally untruthful (Section 5b UWG).

Comparative advertising is popular because of its effectiveness. It seems obvious to entrepreneurs to differentiate their own offer from that of their competitors by means of unique selling propositions. Comparative advertising is generally permissible, but it must not be unethical (Section 6(2) UWG).

If the legal framework has been exceeded, competitors can issue warnings or even bring legal actions.

As part of our formation consultation, we discuss the legally permissible framework of advertising for your charitable project.

The easy access to media that the Internet offers has many advantages for entrepreneurs. However, this also leads to numerous copyright mistakes. As there are different opinions on the legal admissibility of this, we feel obliged to clarify the matter.

All works of any creative or intellectual nature in the fields of art, literature and science are protected by copyright. This includes:

  • images
  • photos
  • graphics
  • logos
  • text
  • software
  • films
  • pieces of music
  • tables
  • etc. (Section 2 UrhG (German Copyright Act)).

It is worth noting that any copyrighted work can only be used by a third party with the express permission of the author. This is often done in the form of a purchased user licence.

This is equally true for professional works or amateur photographs. Consent must always be obtained.

A reference is not enough

A common misconception is that works may be used if reference is made to the author. Thus, website operators often use images and refer to the photographer, or shop operators use product descriptions without the express consent of the manufacturer. If there is no licence, this is a copyright infringement, which usually results in high legal costs.

The abbreviation AGB stands for allgemeine Geschäftsbedingungen, in other words, general terms and conditions (GTC). These can be understood as the company’s own guidelines for business transactions. Since companies often conduct repetitive and similar business, it is worth working out a single set of conditions. This means that important agreements concerning your products or services do not have to be renegotiated every time you do business.

The following topics are frequently included in the GTC:

  • delivery times
  • payment methods
  • liability
  • postage and packaging costs
  • reservations of title
  • place of jurisdiction
  • revocation and return, and
  • rights of use.

Due to the individual freedom of contract, the GTC may even deviate from the legal provisions. Only an absurd deviation is not allowed. Since the GTC are only valid if they stand up to legal scrutiny, you should have your GTC drawn up by a lawyer.

The theft of intellectual property is a damaging factor for many companies. Once products, services or marketing strategies have been successful, competitors usually copy them quite quickly. By registering a trademark, you enable your company to defend itself legally.

If your trademark has been successfully registered, you have various means of defence at your disposal. If a competitor has copied your protected element despite trademark protection, or has committed any other trademark infringement, you could:

  • make an authorisation request
  • dun
  • sue, or
  • obtain a court order.

German trademark law is considered to be comprehensive and efficient. It is for good reason that European trademark law, which covers the entire EU area, was modelled on German law. Not only logos, names and graphics can be protected, but also product shapes, smells and audio formats.

We recommend that you have elements of your non-profit GmbH that are worthy of protection protected. If you would like to learn more about this topic, please read our article on how to apply for a German trademark.

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    • gGmbH Gründen

    Frage zur unrechtmäßigen Bewertung

    30 Sep. 2025/1 Kommentar/in

    Kann die Bewertung auf unserer Trustpilot-Seite entfernt werden, wenn der Kunde das Produkt ausschließlich über den Reseller Digistore erworben hat, niemals direkt bei uns Käufer war, sämtliche Warnhinweise und Risikomanagement-Regeln ignoriert hat und uns anschließend fälschlicherweise für seine Verluste verantwortlich macht? Danke

    Weiterlesen →

    Personalaufwand für Buchführung bei gUG und gGmbH

    22 Jan. 2025/0 Kommentare/in

    Grüße Sie, welche Qualifikaton muss mein Buchhalter/in haben um alle rechtlichen vorgegebenen Aufgaben erfüllen zu können? Bitte nach gUG und gGmbh unterscheiden und mir per Mail mitteilen. Welche Nachteile hat eine gGmbH gegenüberr gUG noch? Mit herzlichen Grüßen

    Weiterlesen →

    Invoicing

    29 Nov. 2023/0 Kommentare/in

    Dear Sir/Madam, We have recently grounded a gGmbH and within our scope are advising an Argentinian Foundation. Our question is how we invoice them? We understand VAT is not applicable, but there is any other tax that should be added when invoicing them?. Many thanks in advance, Jimena Zapata Ophelia Deroy

    Weiterlesen →

    Could you help us set up a company in Germany?

    10 Nov. 2023/1 Kommentar/in

    Could you help us set up a company in Germany?

    Weiterlesen →

    Gründung gGmbH

    15 Apr. 2023/1 Kommentar/in

    Guten Tag, ich beabsichtige, eine gGmbH zu gründen. Eine wichtige Frage zuvor: Dürfen Gelder, die man als gGmbH erhält ausschließlich an die in der Satzung genannte gemeinnützige Organisation “ausgeschüttet” werden oder auch an beliebige andere ebenfalls natürlich gemeinnützige Organisationen? Beispiel: Wir erhalten eine Zahlung/Spende von € 100,00. Davon sollen auf Wunsch des Spenders € 90,00 […]

    Weiterlesen →
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