Lexi Webster
GmbH is the abbreviation for Gesellschaft mit beschränkter Haftung, which translates to company with limited liability. It is a type of legal entity in German-speaking countries, including Austria, and is considered a legal person under Austrian law. The GmbH is the most common form of corporation in Austria, and offers benefits such as 100% foreign ownership, limited liability, and low minimum share capital. The formation of a GmbH in Austria can be done quickly and flexibly, either online or through an analogue process.
| Characteristics | Values |
|---|---|
| Full form | Gesellschaft mit beschränkter Haftung |
| English Translation | Company with limited liability |
| Abbreviation | GmbH |
| Austria-specific Abbreviation | Ges.m.b.H. |
| Most common company form in | Austria, Germany |
| Registration | Must be registered with the Companies' Register |
| Minimum Share Capital | EUR 10,000 (EUR 35,000 until 31 December 2023) |
| Formation Costs | EUR 1000 to EUR 3000 |
| Number of Shareholders | Minimum of 1 |
| Number of Directors | Minimum of 1 |
| Ownership | 100% foreign ownership allowed |
| EU Membership | Yes |
| Formation | Quick, flexible, and online |
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What You'll Learn
GmbH abbreviation meaning
GmbH is the abbreviation for "Gesellschaft mit beschränkter Haftung", which means "company with limited liability". It is the most common form of incorporation in Germany, Switzerland, Liechtenstein, and Austria. In Austria, it is the most common type of company in the Austrian Business Register.
The GmbH form emphasizes that the owners (Gesellschafter, or members) of the entity are not personally liable for the company's debts. This means that the shareholders are not responsible for the company's debts, thus protecting their personal assets if the company becomes insolvent. GmbHs are considered legal persons under German, Swiss, and Austrian law.
A GmbH is formed in three stages: the founding association, which is regarded as a private partnership with full liability of the founding partners/members; the founded company (often styled as "GmbH i.G.", with "i.G." standing for "in Gründung", meaning "registration pending"); and finally, the fully registered GmbH. The formation of a GmbH in Austria can be done quickly and flexibly, and completely online. The founding process is generally expensive, costing about €1,000 to €3,000. The minimum share capital for a GmbH in Austria is €35,000, although this was reduced to €10,000 in 2024.
Other variations of the GmbH abbreviation include mbH (used when the term Gesellschaft is part of the company name itself) and gGmbH (gemeinnützige GmbH) for non-profit companies. In 2008, a derived form called Unternehmergesellschaft (haftungsbeschränkt), or UG (haftungsbeschränkt), was introduced in Germany. This requires a minimum founding capital of €1 and was introduced to assist company founders in setting up a new company.
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GmbH formation process
A GmbH, or Gesellschaft mit beschränkter Haftung, is a limited liability company in Austria. This is a common form of business entity in German-speaking countries, and the GmbH suffix is often seen in company names. The GmbH structure offers limited liability protection for its shareholders, known as "members", and this liability is limited to the amount of capital they have invested. This means that the personal assets of the members are protected if the company faces financial difficulties. Forming a GmbH in Austria involves a detailed process, and there are specific steps that must be followed.
Firstly, a unique company name must be chosen, and this name must include the suffix "GmbH". This name must then be registered with the Austrian Company Register, and this step also involves providing the company's address and details of the managing director(s). It is also necessary to draft and notarize the company's articles of association, which outline the company's structure, purpose, and the responsibilities of its members. This document must be signed by all members and witnessed by a notary.
The next step is to verify that the company name is indeed unique and that there are no similar company names already registered. This can be done via an online database search. Once this is complete, the company must then be entered into the commercial register, and this involves providing various documents, including the articles of association, proof of identity, and details of the company's share capital. A minimum share capital of €35,000 is required, and at least 50% of this must be paid up-front when registering the company. The remaining 50% must be paid within ten years of the company's formation.
Finally, the company must be registered for tax purposes, and this involves obtaining a tax identification number and registering for VAT if applicable. It is also necessary to open a business bank account in the company's name and deposit the share capital. Once these steps are complete, the GmbH is officially formed and can begin trading. It is a relatively complex process with specific requirements, and it is important to ensure that each step is carefully followed to ensure compliance with Austrian law.
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GmbH formation costs
GmbH is the abbreviation for "Gesellschaft mit beschränkter Haftung", which means a “company with limited liability”. It is a type of legal entity in German-speaking countries like Germany, Switzerland, Liechtenstein, and Austria. GmbH is the most common type of company in the Austrian Business Register.
There is no set cost for forming a GmbH as notary fees can vary. However, the largest portion of the costs comes from its share capital. The amount is determined by legislation designed to offer various options involving different risks. To incorporate a GmbH, you need a minimum of €25,000 in share capital, which can be contributed by one or multiple shareholders. Shareholders must deposit their share capital into the GmbH's bank account. The receipt for the deposit is then submitted to the notary who formed the company. The founding act and the articles of association must be notarized, as must a number of business transactions, such as the transfer of shares, issuing of stock, and amendments to the articles of association. Many of these documents must be filed with the company registry, where they are checked by special judges or other judicial officers. This can be a time-consuming process, as the transactions are only legally valid once filed with the registry. The founding process is expensive, normally costing about €1000 to €3000.
If you are unable to raise the minimum capital requirement of €25,000 to form a GmbH, your best alternative is the UG (haftungsbeschränkt), colloquially known as the "Mini-GmbH" or "1-Euro-GmbH". The UG is a special variation of the GmbH and caters to the needs of startups with limited starting capital that still want to benefit from limited liability. The UG requires a minimum founding capital of €1 and is legally obligated to put 25% of its profits into a special reserve account until its share capital reaches €25,000.
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GmbH ownership rules
GmbH is the abbreviation for "Gesellschaft mit beschränkter Haftung", which means "company with limited liability". It is a type of legal entity in German-speaking countries, equivalent to a private limited company in the United Kingdom and many Commonwealth countries, and a limited liability company (LLC) in the United States. GmbHs are considered legal persons under German, Swiss, and Austrian law.
The rules for owning a GmbH differ slightly between Germany, Austria, and Switzerland, each of which has its own legal provisions for the designation.
Germany
In Germany, a GmbH can be owned by various entities, including individuals, public companies, or partners. The founding act and articles of association must be notarized, and a number of business transactions, such as the transfer of shares, issuing of stock, and amendments to the articles of association. The founding process is expensive, costing about €1000 to €3000. The GmbH law outlines the minimum content of the articles of association, but additional rules can be included if requested. The minimum founding capital is €25,000, half of which must be raised before registering in the commercial register.
Austria
Austrian GmbHs offer 100% foreign ownership, with no minimum number of shareholders required. Shareholders can be citizens of any country and can be natural persons or corporations. The minimum share capital is €35,000, half of which must be paid when incorporating. The company name must include the surname of one or all of the shareholders and end with the "GmbH" abbreviation.
Switzerland
Switzerland uses the GmbH designation, but it is unclear whether the ownership rules differ from those of Germany and Austria.
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GmbH vs. AG
GmbH is the abbreviation for "Gesellschaft mit beschränkter Haftung", which translates to "company with limited liability". It is a type of legal entity in German-speaking countries, including Austria, Germany, Switzerland, and Liechtenstein. GmbH companies are considered legal persons and offer limited liability, meaning that owners are not personally liable for the company's debts. This form of company is commonly used by small and medium-sized enterprises due to its simplicity and flexibility.
In Austria, a GmbH must have at least one shareholder and one director, who can be of any nationality and reside anywhere in the world. Additionally, GmbH companies must have a local registered office in Austria. The minimum share capital required to form a GmbH is €35,000, with 50% needed at the time of incorporation.
Now, comparing GmbH vs. AG:
AG, short for "Aktiengesellschaft", is the German word for a corporation limited by shares and owned by shareholders. It is a public limited company, and until recently, it was much more complicated to form and operate than a GmbH. An AG must have a board of directors and is required to publicly disclose financial statements and shareholder details. The minimum capital requirement for an AG is higher than that of a GmbH, typically starting at CHF 100,000 or €50,000, with at least half paid upfront during incorporation.
The choice between GmbH and AG depends on the specific business needs and preferences. GmbHs offer more privacy, flexibility, and simplicity, making them attractive to small and medium-sized businesses. On the other hand, AGs allow for the acquisition of large sums of capital and provide easier transferability of shares.
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Frequently asked questions
GmbH is an abbreviation for "Gesellschaft mit beschränkter Haftung", which means "company with limited liability".
A GmbH in Austria offers benefits such as complete ownership by foreigners, EU membership, low minimum share capital, limited liability, and the requirement of only one shareholder who can be the sole director.
The formation of a GmbH in Austria can be done online and is quick and flexible. The process requires a minimum of one shareholder, who can be a natural person or a corporation, and one director. The company name must end with "GmbH" and include the surname of the shareholder(s). The minimum share capital is €10,000 for the first ten years, after which it increases to €35,000.
