GmbH

TL;DR

Standard German limited-liability company: ≥€25k share capital (half paid in at incorporation), notarised formation. Default for German VC startups.

The Gesellschaft mit beschränkter Haftung (GmbH) is Germany's default corporate form for VC-backed startups. Incorporation requires at least €25,000 of share capital (Stammkapital), with at least €12,500 paid in cash before registration, a notarised founding deed (Gesellschaftsvertrag), entry in the local Handelsregister, and tax registration with the Finanzamt.

Unlike a Delaware C-Corp, every cap-table change — share issuances, transfers, option allocations — must be done before a notary, which adds friction and cost (€1–5k per round depending on transaction size). For that reason German founders often hold a UG first and convert to GmbH at Series A, or use VSOPs (Virtual Stock Options) instead of real shares for employee incentives.

Worked example

Two Berlin co-founders incorporate a GmbH with €25,000 share capital (50/50), pay in €12,500 in cash, sign the founding deed before a notary (~€1,200 in fees), and register with the local Amtsgericht's Handelsregister within 4 weeks — total formation cost ~€2,500 all-in.

Common pitfalls

• Underestimating notary fees that scale with transaction value — a €10m round can incur €15–30k of notary costs.
• Trying to issue real shares to employees instead of using VSOPs and paying the notary every time.
• Forgetting that German VAT/tax registration is separate from Handelsregister entry.

When this shows up in a pitch deck

Founders mention 'XYZ GmbH, registered in Berlin (HRB 123456)' on the Company slide; the structure also drives the use of VSOPs on the Cap Table slide.

Related terms

• UG (haftungsbeschränkt) — 'Mini-GmbH' German form founded with as little as €1 capital but must retain 25% of profits annually until €25k, then convert to a full GmbH.
• AG (Aktiengesellschaft) — German stock-corporation form (€50k min capital, two-tier board) used for IPOs and large companies but considered too rigid for venture rounds.
• VSOPs (Virtual Stock Options) — Cash-settled phantom-share grants used by German GmbHs to give employees economic equity exposure without notarisation costs of issuing real shares.
• Notary Requirement (Germany) — German law requiring share allotments, transfers, and capital changes in a GmbH/UG to be witnessed by a notary, adding €1–5k per cap-table change.
• Founder — A person who started or co-started the company and (typically) holds founder common stock subject to founder vesting.

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