For 95% of mid-sized companies, the GmbH is the right legal form. For 5%, converting to an AG pays off — and it is precisely these 5% that often make for the most strategically interesting engagements. So when does the switch make sense?
The fundamental difference
GmbH and AG are both corporations and are treated identically for tax purposes (corporation tax, trade tax). The difference lies in the governance structure and in capital market access:
- GmbH: Shareholders' meeting + managing director. Lean, flexible, and largely free to shape in the articles of association.
- AG: General meeting + supervisory board + management board. A three-tier structure with clearly separated responsibilities. Ownership interests are shares and are, in principle, freely transferable.
When the AG is genuinely worth it
1. A planned capital market listing
If you are planning an IPO (including on the Open Market or in the Scale segment), there is no way around the AG. For private placements with institutional investors, too, the AG is the format they know and expect.
2. A broad shareholder base
With more than 10–15 shareholders, the GmbH becomes unwieldy: every share transfer requires notarisation. AG shares can be transferred without notarial form — a significant advantage for employee participation programmes or investor pools.
3. A reputation signal
For family offices, major investors and international groups, the AG is a familiar format. At the negotiating table, the legal form alone makes a difference — even when the substance is identical.
4. Separating ownership from management
The AG formally enforces a separation: shareholders decide on the supervisory board, the supervisory board on the management board, the management board on day-to-day business. For structures that want or need this separation (family succession, foundations, private equity investment), the AG is the natural framework.
An AG costs considerably more to run than a GmbH: supervisory board remuneration, an annual general meeting, and heavier audit and disclosure obligations. For companies below ~€10 million in revenue, this effort rarely pays off.
Converting from GmbH to AG
The change of legal form under §§ 190 ff. UmwG (German Transformation Act) can be carried out on a tax-neutral basis. The requirements:
- Minimum capital of €50,000 must be in place (versus €25,000 for the GmbH)
- Notarisation of the conversion resolution
- Appointment of a supervisory board (at least 3 members)
- Valuation review
Typical timeline: 3–4 months from resolution to registration. Costs for notarisation and the valuation review: from approx. €15,000 for mid-sized companies.
The hybrid: GmbH under AG (or vice versa)
In practice, we frequently see a family AG as the parent, holding operating GmbHs. The advantage: the AG structure governs the asset sphere (with a supervisory board as the oversight body), while the GmbH's flexibility handles operational matters. This model combines capital market options with operational speed.
The bottom line
The GmbH remains the standard tool for 95% of all engagements — even with six- or seven-figure annual profits. The AG becomes relevant at the following thresholds: a planned exit via the capital markets, employee participation of more than 10 people, an investor pool with several family offices, or the separation of ownership and management.
For everyone else, the rule is simple: a GmbH plus a clean holding structure solves 95% of requirements — at a fraction of the running costs of an AG.
More than 20 years advising entrepreneurs, investors and family businesses. Reserved tax services are provided by our partner tax firm, TABAK Steuerberatung.
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