Inheritance of GmbH and Company Shares in Germany: Guide for Foreign Heirs

For foreign heirs, understanding the basic legal framework governing GmbH shares is an essential first step — both to know what they are entitled to and to identify where complications are likely to arise.

Unlike interests in partnership entities, shares in a German limited liability company (Gesellschaft mit beschränkter Haftung, GmbH) are freely inheritable. Under the principle of universal succession established in Section 1922 of the German Civil Code (Bürgerliches Gesetzbuch, BGB), the entire estate of the deceased — including any GmbH shares — passes to the heir or heirs at the moment of death, without any formal act of acceptance being required. The heir, therefore, steps into the legal position of the deceased shareholder immediately, acquiring both the rights and obligations attached to the share.

What this means in practice, however, is not always straightforward. The fact that GmbH shares are inheritable by law does not mean that the company’s articles of association (Satzung) place no conditions on what happens next. In many cases, the Satzung contains provisions that can materially affect the heir’s position — restricting their ability to remain a shareholder, requiring them to transfer the share, or permitting the company to redeem it against compensation. Understanding the legal starting point is, therefore, only the first step; reviewing the Satzung without delay is equally essential.

Where the deceased is survived by more than one heir, the GmbH shares do not pass individually to each heir in accordance with their quota. Instead, all heirs together form a community of heirs (Erbengemeinschaft), which holds the shares jointly until the estate is divided. During this period, the co-heirs must exercise their shareholder rights collectively. Under Section 18(1) of the German Act on Limited Liability Companies (GmbHG), where a share is held by multiple persons, they may only exercise the rights attaching to it jointly, with decisions within the community taken by majority vote.

This joint ownership structure can create practical difficulties, particularly where co-heirs disagree on how to manage the shareholding or whether to retain or sell the share. A co-heir who cannot reach an agreement with the others has limited unilateral options, and the dispute will often need to be resolved either through negotiation or, ultimately, through the courts. Where the estate includes a GmbH shareholding of significant value, seeking early legal advice on the management of the Erbengemeinschaft is strongly advisable.

The Satzung is the document that governs how the company operates — and, crucially, how shares may be held and transferred. Before taking any practical steps regarding an inherited GmbH share, its contents must be carefully reviewed.

Although GmbH shares are freely inheritable under German law, the Satzung may contain provisions that significantly constrain the heir’s position following the succession. A common mechanism is the Vinkulierung — a restriction on the transferability of shares that typically requires the consent of the company or the other shareholders before a share can be transferred. Importantly, while Vinkulierung cannot prevent the inheritance itself, the Satzung may provide that heirs who do not meet certain criteria — for example, professional qualifications, family membership, or the approval of co-shareholders — are required to transfer the share back to the company or to the existing shareholders, usually against payment of a compensation sum.

In effect, this means that even a legally valid inheritance can be followed relatively quickly by an obligation to exit the company. For a foreign heir who was unaware of these provisions, discovering them after the fact can be a significant shock. This is why the Satzung must be the first document reviewed after a death is confirmed — before any other steps are taken regarding the shareholding.

A related but distinct issue arises when the testator attempts to use their will to direct how the GmbH’s shares should pass, but the testamentary provision conflicts with what the Satzung permits. Under German law, corporate law takes precedence over inheritance law in matters of company succession. A testamentary disposition that contradicts the Satzung does not override it — the corporate law provisions will apply, and the testamentary intention may be rendered ineffective.

This risk is particularly acute where a testator has drafted their own handwritten will (eigenhändiges Testament) without the involvement of a notary or specialist lawyer, and without checking the Satzung in advance. The consequence can be that the intended heir finds themselves obligated to transfer the shares or accept a reduced entitlement, while another party benefits from the outcome the testator specifically sought to avoid. Our lawyers advise both heirs seeking to understand their position and testators wishing to ensure their wishes are properly aligned with the relevant company documents.

The type of succession clause — if any — contained in a partnership agreement determines whether an heir steps into the company at all, and on what terms. The distinctions between the available clause types are significant and not always intuitive for those unfamiliar with German corporate law.

In partnership entities — the Gesellschaft bürgerlichen Rechts (GbR), Offene Handelsgesellschaft (OHG), and Kommanditgesellschaft (KG) — interests are not freely inheritable. Whether an heir can step into the deceased partner’s position at all depends on what the partnership agreement (Gesellschaftsvertrag) provides. Without an express succession clause, the default legal position is that the deceased partner withdraws from the partnership, the surviving partners continue, and the estate receives only a financial compensation claim rather than a shareholding. For foreign heirs, this distinction is easily misunderstood: inheriting a stake in a German partnership does not automatically mean inheriting the partner’s active role in the business.

Where the Gesellschaftsvertrag contains a simple succession clause (einfache Nachfolgeklausel), all heirs of the deceased partner succeed to the partnership interest in proportion to their shares of the estate, each becoming a partner individually through a process of singular succession (Sonderrechtsnachfolge). While this preserves the inheritability of the interest, it carries the risk of shareholder fragmentation — particularly in larger families — which can make the practical management of the partnership significantly more difficult.

To address the fragmentation risk, partnership agreements frequently include a qualified succession clause (qualifizierte Nachfolgeklausel), which limits succession to one or more identified heirs or to heirs meeting defined criteria — such as family status, or other characteristics. Only those heirs who meet the specified conditions step into the partnership; other heirs of the estate receive a financial compensation claim against the successor rather than a share in the company itself. The interaction between the qualified succession clause and the testator’s will must be carefully considered, since a mismatch between the two can result in neither instrument achieving its intended effect.

A further option is the entry clause (Eintrittsklausel), which differs from a succession clause in one important respect: rather than producing automatic succession, it grants the eligible heir a right to join the partnership by their own active decision. This gives the heir flexibility but also places a burden on them to act – and to act within any timeframe the agreement specifies. For foreign heirs unfamiliar with the structure of German partnership law, understanding whether they hold a succession right or merely an entry right is a critical early question, and one our lawyers can advise on promptly. Further background on partnership structures in Germany is available on our partnerships page.

Inheriting a German company share from abroad introduces procedural and legal challenges that domestic heirs do not face to the same degree. From establishing heirship to meeting registration deadlines, the process requires prompt and informed action.

For heirs based outside Germany, the first practical challenge is establishing their entitlement to German authorities, co-shareholders, and the commercial register in a form those parties will accept. Within the European Union, the EU Succession Regulation (Brussels IV) provides a framework for determining which country’s law governs an international succession — generally, the law of the country in which the deceased was habitually resident at the time of death — and the European Certificate of Succession (Europäisches Nachlasszeugnis) provides a recognised instrument for demonstrating heirship across EU member states. Where the deceased was habitually resident in Germany, German law will typically govern the succession, and the Europäisches Nachlasszeugnis can be used in place of the German certificate of inheritance (Erbschein) for most purposes.

For heirs based outside the EU — in the United States, the United Kingdom, Canada, or elsewhere — the position is more complex, and there is no equivalent multilateral instrument. In these cases, a German Erbschein is typically required, and obtaining it from abroad requires careful preparation and early legal advice. Our team regularly advises international heirs on navigating this process efficiently, regardless of their location.

Following the inheritance of a GmbH share or a partnership interest, changes to the shareholding must be reflected in the German commercial register (Handelsregister). In the case of a GmbH, the notarial shareholders’ list (Gesellschafterliste) must be updated to reflect the new ownership, a process that requires submission of appropriate documentation. Until the register is updated, the heir’s position as shareholder is not fully effective against third parties, which can have practical consequences for the exercise of shareholder rights.

The update process can pose particular challenges for foreign heirs, including the documentation required and the procedural steps involved. Our lawyers assist heirs with the full Handelsregister process, coordinating with notaries and ensuring the necessary filings are made correctly and without unnecessary delay.

One of the most significant risks for foreign heirs is the combination of unfamiliarity with German law and the tight deadlines that apply to certain decisions. An heir who becomes a full partner (Vollhafter) in an OHG or GbR through succession inherits not only the partnership interest but also personal, unlimited liability for the partnership’s existing debts. Under Section 131 of the Commercial Code (HGB) and Section 724 BGB, such an heir has the right to demand that their membership be converted to that of a limited partner (Kommanditist), thereby capping their liability — but this right must be exercised within three months of becoming aware of the inheritance.

For a foreign heir who learns of the death weeks after it occurs, or who does not immediately seek legal advice, this window can close before they have had a proper opportunity to assess their position. The same urgency applies to the decision of whether to accept or refuse the inheritance altogether: refusal under German law must be formally declared before the probate court or notarized and is subject to a deadline of six weeks from the point of knowledge — extended to six months where the heir was residing abroad. Once these deadlines pass, the options available to the heir are significantly reduced.

German inheritance tax (Erbschaftsteuer) applies to the transfer of GmbH shares and partnership interests on death, and foreign heirs are not exempt merely by residing outside Germany. Where the company is based in Germany, the shares or interests are treated as domestic assets and fall within the scope of German inheritance tax regardless of where the heir lives. The taxable value is assessed at the date of death, and the applicable personal allowances and tax rates depend on the heir’s relationship to the deceased.

German tax law provides significant reliefs for business assets (Betriebsvermögen) under Sections 13a and 13b of the Inheritance Tax and Gift Tax Act (ErbStG), which can substantially reduce the taxable value of an inherited company share — but these reliefs are not automatic and are subject to conditions, including requirements relating to the continuation of the business and the retention of the shareholding for a defined period. Foreign heirs who are unfamiliar with these provisions may fail to claim them or may inadvertently take steps — such as a quick disposal of the shares — that result in the relief being withdrawn. Early advice from our inheritance tax lawyers is strongly recommended to ensure the tax position is properly assessed and all available reliefs are considered from the outset.

Inheriting a German GmbH share or partnership interest as a foreign heir? Our lawyers advise on succession rights, liability, and inheritance tax.