Managing a GmbH in Germany? All About Personal Liability

However,in reality, the role carries serious responsibilities and potential for personal liability. In some cases, even criminal consequences may follow if duties are breached.

Let’s break it down. A managing director in Germany is expected to act with the “diligence of a prudent businessman” – meaning they must manage the company’s affairs with the same care and attention as if it were their own. This includes safeguarding the company’s interests, meeting tax and social security obligations, avoiding conflicts of interest, and filing for insolvency in due time when required.

📌 This is what we call internal liability – where the director may be held accountable by the company itself for mismanagement or negligence. But it doesn’t stop there.

📎 External liability comes into play when a director’s actions affect third parties. While the company is generally liable for its own business dealings, certain actions by a director – like failing to pay taxes on time, or not making it clear they’re acting on behalf of the company – can result in personal liability. German tort law can also apply if damage is caused through culpable behavior.

👉 There are more nuanced scenarios too, such as liability during the formation phase of a GmbH, or in group structures – but the key takeaway is this: holding the title of “managing director” in Germany means wearing multiple hats – with legal, financial, and reputational responsibilities attached.

✅ At Greenfields, we help founders, executives, and investors understand what’s expected under German law – and how to stay compliant while focusing on growth. Let’s stay in touch!