Types of Companies in Germany: GmbH vs UG vs AG vs KG

The types of companies in Germany fall into a few clear legal forms, and the one you pick decides your liability, your capital, your governance, and how you are taxed. Most founders weigh four of them: the GmbH, the UG, the AG, and the KG (usually in its GmbH & Co. KG form). This guide compares the German company types against the actual law, so you can see what each really involves and choose the right structure for your business.

A quick anchor before we start: “company type” here means a legal form (Rechtsform), not a brand. And if you already know you want to trade quickly, remember that any of these forms can be either built from scratch or bought ready-made as a shelf company.

The two families: corporations versus partnerships

German law sorts business entities into two families, and almost everything else follows from which side a form sits on.

Corporations (Kapitalgesellschaften) are separate legal persons. They need a minimum share capital, they offer limited liability, and they are taxed in their own right. The GmbH, UG, and AG are corporations.

Partnerships and sole traders (Personengesellschaften) are built around the people in them. They usually need no minimum capital, their partners generally carry personal liability for the business, and they are tax-transparent, meaning profits are taxed in the partners’ hands. The GbR, OHG, KG, and the sole proprietorship (Einzelunternehmen) sit here.

The popular GmbH & Co. KG is a deliberate hybrid: a partnership in form, but with a GmbH standing in as the liable partner so that, in practice, nobody is personally on the hook. Most foreign founders end up choosing a corporation, or that hybrid, precisely because of the liability line.

German company types at a glance

The table below sets the four headline forms (plus the GmbH & Co. KG) side by side. It is the fastest way to see the trade-offs before reading the detail.

Note one common error you will see on other sites: the KG has no statutory minimum capital. Any figure quoted for a “KG minimum” usually refers to the GmbH that serves as its general partner in a GmbH & Co. KG.

GmbH — the standard limited company

The Gesellschaft mit beschränkter Haftung is Germany’s default limited liability company and by far the most common choice for foreign founders. It needs a minimum share capital of €25,000 (GmbHG §5). Before the company can be registered, at least a quarter of each share and a total of at least €12,500 must be paid in (GmbHG §7).

Its defining feature is limited liability: the company’s assets alone discharge its debts, so shareholders’ personal assets stay protected (GmbHG §13). Every GmbH must have at least one managing director, the Geschäftsführer, who can be a foreigner and need not live in Germany (GmbHG §6). Banks, suppliers, and partners recognise the form instantly, which is why it carries real credibility.

If you want the full picture, see what a GmbH is. And if speed matters, you can skip formation entirely and take over a ready-made entity through our GmbH for sale service.

UG (haftungsbeschränkt) — the “mini-GmbH”

The Unternehmergesellschaft (haftungsbeschränkt) is a low-capital version of the GmbH, often called the “mini-GmbH”. It can start with as little as €1 in share capital, which makes it the cheapest way into a limited-liability German company (GmbHG §5a). It carries the same limited liability and the same managing-director requirement as a GmbH.

The trade-off is a savings duty. A UG must set aside a quarter of its annual profit as a statutory reserve until that reserve, plus its capital, reaches €25,000. Once it does, the UG can be converted into a full GmbH (GmbHG §5a). In practice the UG is a runway, not a destination.

GmbH vs UG: the choice is mostly about capital and perception. A GmbH meets the €25,000 threshold up front and looks fully established; a UG lets you start lean and grow into a GmbH. The liability protection is the same. For low-capital entry, see buy a UG in Germany.

AG — the stock corporation

The Aktiengesellschaft is Germany’s stock corporation, with a minimum share capital of €50,000 (AktG §7). Its capital is divided into shares, which can be transferred more freely than GmbH shares and, in principle, listed on a stock exchange. That makes the AG the natural form for larger businesses, companies raising outside investment, or those eyeing the capital markets.

An AG is more formal to run than a GmbH. Instead of a single tier of managing directors, it has a two-tier structure: an executive board (Vorstand) that manages the business and a supervisory board (Aufsichtsrat) that oversees it (AktG §76 and §95). That governance brings more reporting, more meetings, and more cost.

GmbH vs AG: for most owner-managed and mid-sized businesses, the GmbH wins on simplicity and lower capital. The AG earns its keep when you need transferable shares, institutional investors, or a path to a listing. If you are not raising public capital, the AG is usually more structure than you need.

KG and the GmbH & Co. KG

The Kommanditgesellschaft is a limited partnership. It needs at least one general partner (Komplementär), who manages the business and carries unlimited liability, and at least one limited partner (Kommanditist), whose liability is capped at the amount they contribute. The KG itself has no statutory minimum capital and is governed by the German Commercial Code (HGB).

The clever twist is the GmbH & Co. KG. Here the general partner is not a person but a GmbH. Because that GmbH only risks its own (limited) assets, the unlimited-liability slot is effectively neutralised, so every human participant enjoys limited liability while the business keeps the flexibility and tax transparency of a partnership. It is a favourite for family businesses, holding structures, and investor groups.

If this hybrid fits your plans, see GmbH & Co. KG for sale, and for parent-level setups, buy a holding company in Europe.

Partnerships and sole proprietorship (OHG, GbR, e.K.)

The remaining German company types trade liability protection for simplicity:

• OHG (Offene Handelsgesellschaft) — a general commercial partnership under the HGB. There is no minimum capital, but all partners are personally and jointly liable for the firm’s debts.
• GbR (Gesellschaft bürgerlichen Rechts) — the civil-law partnership under the Civil Code (BGB §705 and following). It is the simplest way for two or more people to work together, with no minimum capital and joint personal liability. Recent reform (the MoPeG, in force since 1 January 2024) added an optional public register, the eGbR.
• Sole proprietorship (Einzelunternehmen / e.K.) — a single owner trading in their own name, with unlimited personal liability.

These forms are quick and cheap to set up, but the personal liability is why most founders who want protection choose a GmbH or UG instead. For a Europe-wide single-entity option, there is also the SE (Societas Europaea), which needs €120,000 of subscribed capital; see buy an SE company.

How the legal forms are taxed

Tax often decides between two forms that look similar on liability. The headline split mirrors the corporations-versus-partnerships divide.

Corporations (GmbH, UG, AG) pay corporation tax of 15% plus the solidarity surcharge (together 15.825%), plus municipal trade tax (Gewerbesteuer). The combined effective rate lands around 30% in most cities, though it varies with the local trade-tax multiplier. Profits are taxed at company level, and again if distributed to shareholders.

Partnerships (GbR, OHG, KG) are generally tax-transparent: the entity itself does not pay income tax; instead, profits flow to the partners and are taxed in their hands. The partnership still pays trade tax at entity level. Across all forms, VAT applies at the standard 19% (reduced 7%). For the detail, see our guide to German corporate tax.

This section is general information, not tax advice, and the rules change. Confirm your own position with a qualified adviser.

Which company type is best for foreigners?

There is no nationality or residency requirement to own a German company. A foreigner can be the sole shareholder of a GmbH, UG, or AG, and can sit among the partners of a KG. What usually shapes the choice is your capital, your liability appetite, and your plans:

• GmbH — the default for most foreign founders, balancing limited liability with strong credibility.
• UG — a lean, low-capital entry point that converts to a GmbH as it grows.
• AG — for larger operations, outside investors, or future listings.
• GmbH & Co. KG — for family businesses and tax-flexible or holding setups.

A non-resident owner can run the company from abroad, though appointing a local managing director or a nominee director often smooths bank-account opening and day-to-day dealings. If you are starting from outside Germany, our guide on how to buy a company in Germany as a foreigner walks through the practical steps.

Not sure which form fits your plans? Request a free callback with our lawyers, with no commitment. Talk to our team.

Forming a new company versus buying a ready-made one

Whichever legal form you choose, you have two routes to it. You can form a new company, drafting the articles, depositing the capital, and waiting out registration in the Handelsregister, which typically takes several weeks. Or you can buy a ready-made (shelf) company that is already registered and clean, and take it over through a notarised share transfer in a matter of days.

The end result is the same legal entity with the same protections; the difference is only how fast you can start trading and whether you build the structure yourself or step into one. We handle both: see company formation in Germany for the build route, shelf company Germany for the ready-made route, and the same-day shelf company option when you need to move immediately. For what each path costs, see our shelf company cost guide.

Frequently asked questions

Official sources

• German Limited Liability Companies Act (GmbHG), official English text — gesetze-im-internet.de
• German Stock Corporation Act (AktG) — gesetze-im-internet.de
• German Commercial Code (HGB), partnerships and merchants — gesetze-im-internet.de
• German Commercial Register (Handelsregister) — handelsregister.de

Ready to choose the right German company type?

Contact Müller Konsult and we will match your goals to the right legal form, then form it new or supply a clean, ready-made entity, with full support from notary to tax registration. Müller Konsult · Königsallee 27, 40212 Düsseldorf · +49 211 5403 8800 · info@gmbhforsale.com · Request a callback

Reviewed by Stefan Stelthove, Corporate & Commercial Lawyer, Müller Konsult. Last updated 7 June 2026.

Related: What is a GmbH? · GmbH for sale · Buy a UG (mini-GmbH) · GmbH & Co. KG · Shelf company Germany