What does Foundation in Kind Stand for?

Every time a company is set up, the important question arises as to which legal form the new company should have. Do you want to set up a business alone, do you want to set up a business with partners? Above all, it is important that the legal form also suits you and your company. The GmbH is particularly popular, but the high hurdle of share capital is waiting for you here. But did you know that you also have a kind of foundation can perform?

What is a foundation in kind?

A foundation in kind is the establishment of a corporation in which the shareholders do not make their contribution in the form of money. The deposits can also be made in the form of tangible or intangible assets . This can be, for example, machines, buildings, but also licenses or patents.

What is the difference between incorporation in kind and incorporation in cash?

For the establishment of a corporation, each shareholder has to contribute a corresponding share of the share capital . This capital contribution is required by law. When establishing a GmbH , this is described, for example, under Section 14.19 (2) GmbHG . The minimum share capital for a GmbH is 25,000 euros . In order to meet this contribution obligation, the shareholder has two options. Both options are also available for any other form of corporation, for example when founding an AG.

What is the difference between incorporation in kind and incorporation in cash?

Cash formation

You have the option to make your contribution in cash . But that doesn’t mean that you need a suitcase of money and have to put the money on the table in cash. Of course, this can also take the form of a transfer. It is important, however, that it is a money deposit . In Section 7 (2) sentence 1 of the GmbHG it is described that the full amount does not have to be paid for the cash formation. At the beginning it is sufficient if you first make a quarter of your respective nominal amount as a deposit. It is important, however, that at least half of the share capital is available as at least 25,000 euros.

Establishment in kind

The amount of the share capital represents a high hurdle for many founders. If you do not have the full amount of money at your disposal, you can also set up a company in kind . This means that you do not make your contributions with cash contributions, but with contributions in kind. This can be done, for example, by:

  • Transfer of property
  • through property brought in
  • machinery
  • Patent rights etc.

Also outstanding receivables from deliveries made or services performed can be introduced as a tangible asset. One always speaks of a foundation in kind when at least one shareholder makes a contribution in kind instead of money . However, you must note that, in contrast to a cash foundation, a contribution in kind must always be made in full .

Which assets are considered as contributions in kind?

Contributions in kind are divided into five main groups . These groups depend on which item is being transferred.

Main group description
Material contributions in kind In this main group, as a partner, you transfer your property, consisting of material assets, to the company without any consideration. These objects can be buildings, land, machines, securities, receivables or supplies.
Intangible contributions in kind In this case, you provide the company with assets that can be capitalized without consideration. Intangible contributions in kind can consist of patents, licenses or copyrights.
Services You can only provide services as a contribution in kind to partnerships . This can be, for example, free management. This is not permitted for GmbH and AG.
Surrender of use At this point, you as a partner will not transfer your property to the company as property. Only free use is affected. In a corporation, however, this is only possible if you are the sole shareholder or if the transfer of use also corresponds to your participation quota.
Concealed contribution in kind With the hidden contribution in kind, you circumvent the regulations as described in Section 19 (4) GmbHG and Section 27 (3) AktG . Officially, you make a cash contribution, but with the agreement that you will later exchange it for an asset. However, the exchange does not release you from the deposit obligation.

What requirements do you have to consider for the establishment in kind?

The valuation of contributions in kind is not that easy and in most cases turns out to be very time-consuming. You must also note that contributions in kind must always be made immediately at the time of entry in the commercial register . It is important for you to know that only at this point in time the value of the contribution in kind counts. It depends on what kind of contribution in kind it is. A distinction must be made between the value under the capitalized earnings value, the current value and the replacement value.

  • Current value: A current value always refers to those tangible assets that you do not want to leave in the company for long . The objects are calculated according to the realizable value. This means that the realizable value is the selling price minus the costs incurred through the sale.
  • Earning value: The earnings value indicates how you can value the contributions in kind and the income that can be expected. For example, how much you get in fees for using your patents. Unfortunately, you cannot determine this yourself, but have this determination determined by an expert. Unfortunately, this costs a lot.
  • Replacement value : The replacement value is used to determine the value of objects that are brought into the company . This means that, for example, a computer that you bought two years ago for 2000 euros will have a value of 1500 euros when the company is founded.


Regardless of whether a company is founded in kind or in cash, whoever founds a company has to consider far more aspects than the legal form. This includes, for example, bookkeeping and an overview of all business processes. Make your everyday life as a founder easier with online business software !

Foundation in Kind