You have your own GmbH or UG and would like to dissolve it? In this article, we will tell you what reasons can contribute to this desire and what you should know about the dissolution of a GmbH or UG.

Why Dissolve a GmbH or UG?

There are many reasons to dissolve a UG or GmbH. Maybe you want to change your career or the order situation is simply not good enough for the continuation of the business. An insolvency or the foundation of a new company can also lead to dissolution.

Finally, it can also be completely private reasons that cause you to dissolve a GmbH or UG. It is also possible to dissolve a GmbH for reasons of age. No matter what the reason is in your case - certain rules have to be observed during the dissolution.

The GmbH or UG is dissolved, if:

• the shareholders decide to do so, for example for personal reasons
• the GmbH or UG is insolvent
• the duration of the GmbH or UG was already limited in the articles of association
• the dissolution is ordered by the court

If a GmbH or UG no longer has any assets, this is also a reason for dissolution. However, this is not determined by the partners, but ordered by the company court, in many cases at the request of the tax authorities or the chamber of commerce. The company court decides on the dissolution and the GmbH or UG is deleted on the basis of this decision.

Also in the case of an insolvent GmbH or UG, no normal liquidation takes place. Rather, with the initiation of insolvency proceedings, an insolvency administrator is appointed, who then manages and distributes the remaining assets of the GmbH or UG.

Dissolving a GmbH or UG: Procedure

If a GmbH or UG is to be dissolved, this is referred to as liquidation. In the liquidation of the GmbH or the liquidation of the UG, the entry in the commercial register is deleted at the very end. Before that, all assets of the company are sold, debts are settled and the financial means are divided among all shareholders. Only when there are no more assets of the GmbH or UG, because everything has been completely liquidated, the entry in the commercial register can be finally deleted. The liquidation of the GmbH or UG can therefore take several years.

If you are looking for samples for the liquidation of a UG, you will unfortunately not find them; the same applies to the GmbH. For this reason, we have compiled the following instructions for liquidation for you. It also explains the liquidation of the GmbH or UG step by step:

Step 1: The Dissolution

Dissolution Resolution

The dissolution of the GmbH or UG is first decided in the shareholders' meeting. This resolution to dissolve the GmbH or UG appoints the liquidators and determines which items are necessary for the liquidation. The liquidators are responsible for the liquidation of the GmbH or UG. Often the managing directors are also appointed as liquidators.

Registration With the Commercial Register

The liquidators must register the dissolution of the GmbH or UG with the commercial register. The GmbH or UG then receives an addition in the name, either "i.L.", which stands for "in liquidation" or "i.Abw." for "in Abwicklung". In addition, the liquidators themselves must be registered with the commercial register. If the managing directors are not appointed as liquidators but other persons are, it must also be filed with the Commercial Register that the former managing directors are no longer authorized to represent the company.

The applications to the Commercial Register must be submitted electronically in publicly certified form. A notary public must therefore be engaged for this purpose.

Publication

In addition, the liquidators must publish the dissolution resolution and a so-called call for creditors in the electronic Federal Gazette (Bundesanzeiger). In the call to creditors, all creditors are requested to report to the GmbH or UG so that the outstanding claims can be settled in step 2.

Special Features

If a certain duration of the GmbH or UG was specified in the articles of association and the GmbH or UG is to be dissolved earlier, however, the articles of association must be amended for this purpose. Therefore, in this case, the dissolution resolution must be notarized. The notary will then forward the resolution to the commercial register.

Step 2: Liquidation

In the second step, the items specified in the resolution to dissolve the GmbH or UG must be settled. The ongoing business of the company must be terminated, outstanding payments must be settled and all assets must be dissolved or distributed to the shareholders. This step is called liquidation. Often one speaks also of liquidation in the actual sense.

Balance Sheets

Before the liquidators start the liquidation, an opening balance sheet must be prepared. Annual financial statements must be prepared during the liquidation and a liquidation closing balance sheet must be prepared after the liquidation is completed.

Blocking Year

It is important to note that no assets may be paid out to the shareholders within the first year in order to await possible claims from creditors.

Thus, a blocking year is set for the liquidation of a GmbH or UG. Once this has expired, creditors may nevertheless continue to assert claims. Unknown creditors, however, may only do so as long as the remaining assets have not yet been distributed to the shareholders.

Distribution to the Shareholders

Only when all known creditor claims have been paid, it is possible to distribute residual capital to the shareholders. When the residual capital is finally distributed and the GmbH or UG no longer has any assets, the winding up or liquidation is complete.

A checklist can help to speed up the liquidation of the GmbH or UG.

Step 3: Deletion From the Commercial Register

Once the blocking year has expired and the GmbH or UG has been completely wound up, the liquidators can file the completion of the liquidation with the commercial register. After an examination, the company is finally deleted from the commercial register. From this point on, one speaks of full termination. The GmbH or UG no longer exists.

Costs of the Liquidation of a GmbH or UG

Of course, you also have to plan costs for the liquidation of a GmbH. Likewise the liquidation of a UG will cause costs. Namely, the liquidation of the GmbH or UG will incur notary fees and other expenses. These can vary greatly depending on the region and federal state.

For example, the GmbH incurs liquidation costs for the liquidation opening and closing balance sheet. Costs are also incurred for the notarization of an amendment to the articles of association by the notary public and for applications to the commercial register. Depending on the effort involved, several thousand euros are usually necessary.

Does the Dissolution of a GmbH or UG Have Tax Consequences?

Even after the resolution on dissolution, the obligation to pay taxes applies. All taxes for profits generated in the liquidation period must therefore be duly declared and paid. After the dissolution of the GmbH or UG, the following taxes must be paid:

Corporate income tax

As a rule, the corporate income tax amounts to 15 percent.

Trade tax

Trade tax must also be paid until the end of the liquidation. The amount depends on the operating profit in the liquidation period.

Sales tax

If a company continues to exist after the liquidation, it is liable for VAT and is entitled to deduct input VAT.

Income tax

The tax liability for investment income and capital repayments also ends only when the liquidation is completed.