FAQ

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A gGmbH (gemeinnützige Gesellschaft mit beschränkter Haftung) is a non-profit company with limited liability under German law. Its purpose is to benefit the common good, combining the advantages of a commercially managed GmbH with those of a non-profit organization. A gGmbH is prohibited from setting aside or distributing profits, as all profits must be used to fund the purpose defined in its articles of association.

Advantages of a gGmbH:

1. Tax Benefits – A gGmbH enjoys significant tax advantages, including exemptions from corporate tax (Körperschaftsteuer) and trade tax (Gewerbesteuer), if it serves charitable, educational, or social purposes.
2. Limited Liability – Like a regular GmbH, the liability of shareholders is limited to their contributions, protecting personal assets.
3. Credibility & Trust – Being a nonprofit entity builds credibility with donors, sponsors, and the public. It signals a clear social mission.
4. Flexibility – Compared to associations (e.V.), a gGmbH offers more professionalized management structures and can engage in commercial activities as long as profits support the nonprofit purpose.
5. Eligibility for Grants & Donations – A gGmbH can receive tax-deductible donations and apply for government or foundation grants.
6. Salaries & Professional Management – Unlike some other nonprofit structures, a gGmbH can pay competitive salaries to employees and executives.

Obligations:

• Initial Capital Requirement – Requires a minimum share capital of €25,000, like a standard GmbH.
• Strict Nonprofit Rules – Profits must be reinvested into the nonprofit purpose, and distributions to shareholders are not allowed.
• Regulatory Oversight – Subject to strict reporting requirements to ensure it remains nonprofit in nature.