German Legal Glossary

How to use this German legal glossary

This German legal glossary explains the German terms that international managers, investors and in-house lawyers meet most often in contracts, board papers, court documents and letters from authorities. Each entry in the German legal glossary gives the German term, a working English translation and a short plain-English explanation of what it means in practice. Where a term is defined in a statute, we name the provision. The entries are grouped by subject: company law, employment, tax, insolvency and restructuring, and litigation and enforcement.

Translations are approximate. German legal concepts often have no exact equivalent in common law systems: a Prokurist is not quite an officer, and a Betriebsrat is not a trade union. When a contract is bilingual, agree which language prevails. For the numerical tests behind many of these terms, see our German law thresholds at a glance.

Company law terms

• Aktiengesellschaft (AG) – stock corporation. Minimum share capital EUR 50,000 (§ 7 AktG). Two-tier board: management board and supervisory board.
• Aufsichtsrat – supervisory board. Appoints, monitors and dismisses the management board of an AG; mandatory in a GmbH only in certain cases, for example under the co-determination acts.
• Beherrschungs- und Gewinnabführungsvertrag – domination and profit transfer agreement. Creates a contractual group; the parent must compensate the subsidiary's annual losses (§ 302 AktG). Often used for a tax group (Organschaft).
• Geschäftsanteil – share in a GmbH. Transfer requires a notarial deed (§ 15(3) GmbHG).
• Geschäftsführer – managing director of a GmbH. Represents the company externally; bound by shareholder instructions internally.
• Gesellschafterliste – shareholder list filed with the commercial register. Only persons on the list count as shareholders vis-à-vis the company (§ 16 GmbHG).
• Gesellschafterversammlung – shareholders' meeting of a GmbH, the company's supreme body.
• Gesellschaftsvertrag / Satzung – articles of association. For a GmbH, they must be notarised.
• GmbH – limited liability company. Minimum share capital EUR 25,000 (§ 5(1) GmbHG). The standard vehicle for subsidiaries.
• GmbH & Co. KG – limited partnership whose general partner is a GmbH. Combines limited liability with partnership taxation.
• Handelsregister – commercial register, kept by local courts and searchable online. Registration is constitutive for a GmbH or AG.
• Hauptversammlung – general meeting of an AG.
• Notar – notary. An independent public office-holder who records deeds, advises both parties neutrally and files registrations. Not the same as a notary public in common law systems.
• Prokura / Prokurist – statutory commercial power of attorney and its holder. Covers all transactions in running a commercial business, but not selling or encumbering land without special authority (§ 49 HGB). Registered in the commercial register.
• Stammkapital / Grundkapital – share capital of a GmbH / AG.
• Transparenzregister – transparency register of beneficial owners under the Money Laundering Act (GwG).
• Unternehmergesellschaft (haftungsbeschränkt) – "mini-GmbH" with capital below EUR 25,000, which must retain a quarter of its profits until it reaches the GmbH minimum.
• Vorstand – management board of an AG. Manages the company on its own responsibility and is not bound by shareholder instructions.

More detail is in our pages on corporate governance and the GmbH formation checklist.

Employment law terms

• Abfindung – severance payment. There is no general statutory entitlement; severance is usually negotiated in a settlement or social plan.
• Abmahnung – formal warning. Normally required before a dismissal for misconduct.
• Arbeitsgericht – labour court. First instance for employment disputes; appeals go to the Higher Labour Court and the Federal Labour Court (BAG).
• Aufhebungsvertrag – termination agreement. Must be in written form with wet-ink signatures.
• Betrieb – establishment, the organisational unit used for many employment tests. Not the same as the company.
• Betriebsrat – works council, elected by employees of an establishment with at least five permanent employees entitled to vote (§ 1(1) BetrVG).
• Betriebsübergang – transfer of undertaking. Employment relationships pass to the acquirer by law (§ 613a BGB).
• Betriebsvereinbarung – works agreement between employer and works council, with direct effect on employment relationships.
• Einigungsstelle – conciliation committee that settles disputes between employer and works council in co-determination matters.
• Interessenausgleich – reconciliation of interests: the agreement on whether and how an operational change is carried out.
• Kündigungsschutzklage – unfair dismissal claim. Must be filed within three weeks of receipt of the written notice (§ 4 KSchG).
• Massenentlassungsanzeige – collective redundancy notification to the employment agency (§ 17 KSchG).
• Mitbestimmung – co-determination, either at establishment level through the works council or at board level through employee representatives on the supervisory board.
• Sozialauswahl – social selection: in redundancies, the employer must choose among comparable employees by length of service, age, maintenance obligations and severe disability.
• Sozialplan – social plan compensating employees for the economic disadvantages of an operational change; can be imposed by the conciliation committee.
• Tarifvertrag – collective bargaining agreement with a trade union, either sector-wide or company-specific.

See dismissals and workforce restructuring for how these concepts work together.

Tax terms

• Betriebsprüfung / Außenprüfung – tax audit by the tax office, common for larger companies at regular intervals.
• Betriebsstätte – permanent establishment, which creates a taxable presence for foreign companies.
• Finanzamt – local tax office. Disputes go to the finance courts and the Federal Fiscal Court (BFH).
• Gewerbesteuer – trade tax, levied by municipalities at a local multiplier on a federal base rate.
• Grunderwerbsteuer – real estate transfer tax, also triggered by certain share deals of 90% or more.
• Körperschaftsteuer – corporate income tax: 15% until 2027, then falling by one point a year to 10% from 2032 (§ 23(1) KStG), plus solidarity surcharge.
• Organschaft – fiscal unity, a tax group for corporate income and trade tax (requiring a profit transfer agreement) or for VAT.
• Selbstanzeige – voluntary disclosure that can, under strict conditions, avoid criminal liability for tax evasion.
• Umsatzsteuer – value added tax.
• Verdeckte Gewinnausschüttung – constructive dividend, a payment to a shareholder on non-arm's-length terms.

Insolvency and restructuring terms

• Drohende Zahlungsunfähigkeit – imminent illiquidity (§ 18 InsO). Allows, but does not require, a filing; gives access to StaRUG tools.
• Eigenverwaltung – debtor-in-possession proceedings: management stays in charge under the supervision of a custodian (Sachwalter).
• Insolvenzanfechtung – insolvency avoidance (clawback) of transactions before the filing.
• Insolvenzverwalter – insolvency administrator appointed by the court.
• Insolvenzantragspflicht – duty of management to file without culpable delay, at the latest three weeks after illiquidity and six weeks after over-indebtedness (§ 15a(1) InsO).
• Schutzschirmverfahren – protective shield proceedings: a form of self-administration with a plan to be presented within at most three months (§ 270d InsO).
• StaRUG – Corporate Stabilisation and Restructuring Act, which provides out-of-court restructuring plans with cross-class cram-down.
• Überschuldung – over-indebtedness: liabilities exceed assets and there is no positive going-concern forecast over 12 months (§ 19(2) InsO).
• Zahlungsunfähigkeit – illiquidity: inability to pay debts as they fall due (§ 17 InsO).

For the procedures, see insolvency proceedings and self-administration.

Litigation and enforcement terms

Contract and commercial terms in the German legal glossary

Commercial contracts governed by German law use concepts from the Civil Code (Bürgerliches Gesetzbuch, BGB) and the Commercial Code (HGB). The following entries in our German legal glossary come up in almost every negotiation:

• Allgemeine Geschäftsbedingungen (AGB) – standard business terms. Subject to a fairness review under §§ 305–310 BGB, which also applies between businesses and can invalidate clauses that would be accepted in other jurisdictions.
• Bürgschaft – surety, an accessory guarantee that depends on the existence of the secured debt. A merchant can give it without written form.
• Gewährleistung – statutory warranty for defects in sale and work contracts, usually replaced in M&A by an independent guarantee regime (selbständige Garantie).
• Rügeobliegenheit – the duty of a merchant buyer to inspect goods and give notice of defects without undue delay (§ 377 HGB); otherwise warranty claims are lost.
• Verjährung – limitation of claims. The standard period is three years from the end of the year in which the claim arose and the creditor learned of it.
• Vertragsstrafe – contractual penalty, enforceable in principle but subject to review in standard terms.
• Wegfall der Geschäftsgrundlage – frustration or hardship: adjustment of a contract when its basis has changed fundamentally (§ 313 BGB).

Readers using this German legal glossary for contract work should remember that German law fills gaps in a contract with statutory default rules, so a short contract is not necessarily a simple one.

Common translation pitfalls in the German legal glossary

Some terms in this German legal glossary are regularly mistranslated, with real consequences:

• "Director" can mean Geschäftsführer, Vorstand or Aufsichtsrat member. These roles carry different duties and liability.
• "Written form" (Schriftform) means a wet-ink signature, while text form (Textform) can be an email. Dismissals require written form; many commercial notices only text form.
• "Guarantee" may translate as Garantie (independent promise), Bürgschaft (accessory surety) or a warranty in an SPA. The legal effects differ.
• "Good faith" (Treu und Glauben, § 242 BGB) is a general principle that courts apply actively.

When working with a German legal glossary, keep the German term in brackets on first use in English documents. This page is a general explanation, not legal advice.

How TRW & Co helps

We advise international clients in English and German and draft bilingual contracts, board resolutions and policies that use German legal terms accurately. When you receive a German court document, a letter from an authority or a works council request, we explain what it means, what deadlines run and what to do next. Our international clients practice coordinates advice across corporate, employment, tax, restructuring and disputes, so that the terms in this glossary are applied consistently across your German business. Contact us if you need help with a German document.