How to start a business in Germany (GmbH, UG) — 2026

Germany is Europe's largest economy and a magnet for founders, but its company-formation process is famously formal: notaries, a commercial register, and a share-capital requirement all sit between you and your first invoice. This guide walks through the realistic options — sole trader, UG, and GmbH — with the actual costs, capital rules, and tax numbers you need in 2026. It builds on our wider guide to starting an online business in Europe, narrowed to the German specifics.

First decision: sole trader or limited company

You have three practical routes.

• Einzelunternehmen (sole trader). The fastest and cheapest. You register a trade (Gewerbe) at your local trade office (Gewerbeamt), and for most freelancers a business licence isn't even needed. No notary, no share capital. The catch: you're personally liable for business debts with your private assets.
• UG (haftungsbeschränkt) — the "mini-GmbH". A limited-liability company you can form from €1 of share capital. It gives you the liability shield of a GmbH without the €25,000 cheque, which is why it's popular with early-stage and online businesses.
• GmbH — the standard German limited-liability company. Requires €25,000 in share capital, of which at least €12,500 (50%) must be paid in before registration. It carries more credibility with banks, suppliers, and larger clients.

Both the UG and GmbH give you limited liability: the company's assets are legally separate from your personal ones. The UG is not a separate legal form — it's a variant of the GmbH governed by §5a of the German Limited Liability Companies Act (GmbHG).

Sources: IHK Region Stuttgart; NRW.Global Business; German GmbHG §5a.

The UG catch: mandatory profit retention

The €1 start-up capital comes with a condition. A UG must retain 25% of its annual profit as a reserve each year until its capital reaches €25,000. Once it does, the UG can convert into a full GmbH. In practice, most founders start a UG with a few thousand euros anyway — €1 of capital and any early costs would leave the company technically insolvent on day one.

Step by step: forming a UG or GmbH

The process is broadly the same for both; only the capital figure changes.

1. Draft the articles of association (Gesellschaftsvertrag / Satzung). For a simple single-shareholder company, a standardised template (Musterprotokoll) is available and keeps notary costs down.
2. Notarisation. This is non-negotiable — all founders and managing directors must appear before a notary in person or by proxy. The notary certifies the formation documents and files the registration.
3. Open a business bank account and deposit the capital. The account is opened in the company's name with the suffix "i.G." (in Gründung, "in formation"). The bank issues a deposit confirmation the notary needs for the register.
4. Registration in the Handelsregister (commercial register). The notary submits the documents electronically; the court reviews them and issues your entry with an HRB number. Timelines vary by court — roughly one to four weeks.
5. Trade registration (Gewerbeanmeldung) at the Gewerbeamt.
6. Tax registration. You complete the Finanzamt's questionnaire (Fragebogen zur steuerlichen Erfassung) to receive your tax number (Steuernummer), and, if you'll trade across the EU, a VAT ID (USt-IdNr, format DE + 9 digits).

Sources: online.notar.de; NRW.Global Business; firma.de.

What it actually costs

For a straightforward €25,000 GmbH using the standard template, budget roughly:

• Notary fees: around €500–€1,500, set by statute (GNotKG) and scaled to share capital.
• Handelsregister court fee: about €150.
• Bundesanzeiger publication: around €40.
• Trade registration: typically €20–€60.

All in, most GmbH formations land between €1,000 and €2,500. A UG is cheaper because notary fees scale with the smaller capital, but the fixed fees (court, publication) are the same. Remember these are formation costs only — they sit on top of the capital you deposit.

Sources: gmbh-germany.com; stb-thalmeir.de; firma.de.

Corporate tax: what a UG or GmbH pays

A German limited company faces two layers of tax on profit:

• Corporate income tax (Körperschaftsteuer): 15%, flat and nationwide.
• Solidarity surcharge: 5.5% of the corporate tax — not of income — adding about 0.8 percentage points, for a combined ~15.8%.
• Trade tax (Gewerbesteuer): a 3.5% base rate multiplied by your municipality's own multiplier (Hebesatz), which averages above 400%. In practice trade tax runs from roughly 8.75% up to around 20% depending on where you're based.

Add it up and the total corporate tax burden averages around 30%, though some municipalities keep the combined rate below 25%. Note that the 15% corporate rate is scheduled to fall by one percentage point per year over five years starting 2028 — worth factoring into longer-term planning.

Sources: GTAI, Corporate Taxation in Germany; PwC Tax Summaries — Germany.

VAT and the small-business exemption

Germany's standard VAT rate is 19% (a reduced 7% applies to some goods). If you're pricing services or products across borders, our EU VAT calculator is a quick way to work out gross and net figures.

You may be able to skip charging VAT under the Kleinunternehmer (small-business) rule in §19 UStG. As of 2025 — and applying in 2026 — the thresholds are turnover under €25,000 in the previous year and expected under €100,000 in the current year. Stay within both and you can invoice without VAT and avoid regular VAT returns. Cross the €100,000 mark mid-year, though, and the very invoice that tips you over must already include VAT.

Sources: norman.finance; padawanabhi.de; vatinfo.org.

Germany vs. neighbouring options

If Germany's €25,000 GmbH and notary requirement feel heavy, it's worth comparing structures across borders before committing — the Netherlands, for instance, has its own limited-liability route with different capital and cost rules. See our companion guide on starting a business in the Netherlands, and the pan-European overview for the bigger picture on where to incorporate.

For a fully online business, the UG is often the sweet spot: real limited liability, a low capital barrier, and a clean upgrade path to a GmbH once you're profitable.

Getting online

Once your company is registered, the next step is a website that actually brings in clients. We build fast, conversion-focused sites for SMBs across Europe — see our web development service — and if you'd like to talk through your specific setup, book a free consultation and we'll help you plan it.

This is general information, not legal or tax advice — rules vary by country and change; confirm with a qualified professional before acting.