FAQ: GmbH or UG Liquidation in Germany

You may want to close your company if:

• The business is no longer profitable or viable
• There’s low market demand or insufficient future business opportunity
• You’re dealing with personal or health-related challenges
• You intend to sell, restructure, or merge the company

The official closure avoids ongoing costs and potential liability.

You remain personally liable as managing director. The company continues to accrue:

• Commercial registry fees
• Tax declaration obligations
• Accounting costs
• IHK (Chamber of Commerce) fees

1. Shareholder Resolution
   The shareholders vote to dissolve the company (§ 60 GmbHG).
2. First Notary Appointment
   Dissolution and appointment of liquidators must be registered with the Commercial Register (§§ 65, 67 GmbHG). This requires notarization.
3. Liquidation Phase
   Liquidators:
   • Settle debts
   • Terminate contracts
   • Sell company assets
   • File a public creditor notice (starts the mandatory blocking year, § 73 GmbHG)
4. Second Notary Appointment
   After the blocking year ends, final distribution occurs. The company is deregistered, and your personal liability ends.

There are no formal prerequisites. Existing debts, tax liabilities, and obligations are resolved during the liquidation itself.

Yes. Tax obligations continue until closure is complete. You must prepare:

• A liquidation opening balance
• Annual financial statements (if liquidation takes more than a year)
• A final liquidation balance

Note: Profits during liquidation can be taxed over the entire liquidation period (max. 3 years) instead of annually.

Liquidation usually takes at least 13 months, due to the legally required one-year creditor blocking period.

The company may be closed without the one-year creditor blocking operiod, but only under strict conditions. There are two procedures that allow this.

a) Asset-Free Deletion by the Registry Court

If the company has:

• No assets
• No debts
• No contracts or ongoing obligations

then the Commercial Register court can delete it ex officio (§ 394 FamFG, § 60 GmbHG). This cannot be directly applied for, but it can be encouraged.

b) Asset-Free Dissolution

If your GmbH or UG meets all of the following:

• No debts (max. 250€ tolerated)
• No assets
• No obligations
• Tax clearance certificate

then you may also dissolve the company without a blocking year. This process typically takes around 3 months. Not all registry courts accept this path.

If your company has debts it cannot pay, you must file for insolvency within 3 weeks. Failing to do so can lead to:

• Personal liability
• Possible criminal charges for delaying insolvency

The court appoints an insolvency administrator who manages the proceedings and creditor payouts.

• Your liability as managing director ends
• No more accounting, tax filings, or IHK fees
• The company no longer legally exists