REGISTRATION OF COMPANY IN GERMANY
Germany is a country that usually does not need in presentation. Undoubtedly, the country is associated with the economic and political stability of the republic and with its high status in international relations around the world.
Berlin (the capital) and Bonn are the most important cities of Germany in political and economic terms. 16 states constitute the Federal Republic. Geographically, the neighbors of Germany are the Czech Republic, Denmark, Poland, and Belgium.
Germany is one of the most attractive countries in Europe for foreign investments. Its central location, easy access to other EU markets, and its good infrastructure and highly qualified workforce recommend it for investments in several business fields. One sector that stands out, in particular, is research and development but investment opportunities abound, especially in cities like Berlin.
Germany is a member of NATO, the UN, the EU, the G8, and is also part of the Schengen Agreement.
The official language is literary German. Different dialects are used on the borders with other states.
Company formation in Germany
1. Choose the right limited liability company for your business
- Make sure it's the right legal entity for your purposes.
- Check if you have sufficient share capital:
- For a UG the mandatory €1 – but €1,000 or above is recommended.
- For a GmbH the bare minimum is €12,500, but at least €25,000 is best.
2. Come up with a company name
- Check the commercial register (Handelsregister) to find out if the name has already been taken.
3. Decide on the Unternehmensgegenstand (object of the company)
- Under German law, this needs to be quite specific.
- Check the Handelsregister to see what companies similar to yours have used for their Unternehmensgegenstand.
4. Apply to the German Chamber of Commerce and Industry (IHK) for a company name and company purpose check
5. Find a notary and make an appointment to form the company
6. Draft your articles of association
- Use either a:
- standard template for your statutes and registration statement (known as the Musterprotokoll); or
- customized version.
7. Get together your necessary documents for the notary appointment
- You’ll need the following:
- Articles of association
- Shareholder’s list
- Founding documents needed to open a bank account
8. SHOW UP to the notary appointment with your fellow shareholders to make it official!
- Don’t forget to bring your ID and necessary documents!
Foreign founders beware: You’re not a German national or an EU citizen? Germany has some fun in store for you:
- Shareholder: You can be a shareholder of a German company. But, if you use a foreign company as a go-between you need to be well prepared. A notary in your jurisdiction needs to confirm in detail that the company exists and is properly represented. This confirmation needs to be apostilled by the relevant state authority. So get started on this right away or reconsider. This applies to all foreign companies (even in EU countries).
- Managing Director: This is a tricky one which causes a lot of trouble. We recommend you make sure that you have a VISA allowing for multiple entries or some form of permanent residence. Again, double-check with a notary or lawyer EARLY in the process.
- Bank: German “offline” banks often refuse to render services for foreign founders (even worse if you found with a foreign company). Being an EU citizen helps. You may think you can hack this with an online bank. But, they have problems here too. In our experience, you will not be accepted if your country is not on this list: ID Now.
9. Find a bank that will accept you and open a business bank account with them
- Take your formation documents given to you by your notary.
- No need to wait for step number seven. Start your bank search early on in the company formation process.
10. Deposit the Stammkapital (share capital) via cash or wire transfer into the company’s bank account
- Put Stammkapitaleinlage [DATE] in the reference field.
11. Send the share capital’s deposit slip to the notary
- Do this promptly so the notary doesn’t have to chase you up for it (you want to get on your notary’s good side).
12. Pay the notary invoice
- Be a good founder and do this ASAP.
13. Pay the Handelsregister invoice
- Unless the notary has done this for you!
14. Be on alert for the ‘legal’ scams that get sent to you after your company is registered
- There are a number of people sending fake official invoices, usually for a commercial register of some type.
- Before paying anything make sure it’s legitimate by looking out for the following three things:
- The recipient has long German words eg Kosteneinzugsstelle der Justiz;
- A simple IBAN number; and
- The amount should equal €150.00.
15. Your notary will notify you once the company is registered
16. Find a tax adviser
- Do the following:
- Help you complete the tax office questionnaire (Fragebogen zur steuerlichen Erfassung);
- Advise you on different tax implications for your company; and
- Grant them power of attorney.
17. Submit your trade registration form to your local trade office
- Trade registration in Germany is called Gewerbeanmeldung. This is done at your local trade office which is called a Gewerbeamt.
- Can be done in parallel with the previous step.
18. Make sure you’ve got your company’s Tax ID (Ust. -ID) from the Finanzamt (tax office)
- You need this to make your invoices valid!
19. Get the right insurance for your business and as an expatriate
- When moving to Germany there are many different insurances that are mandatory as well as desirable for both your business and you as an individual. The bureaucracy is complex and the choices are broad. You need a partner on the ground in Germany to discover the policies that are the best fit for you and your enterprise.
20. Buchhaltung (Bookkeeping)
- Find a firm to do the bookkeeping for you and integrate it into your operations. Make sure you ask the right questions to get a better idea if a prospective firm is a good fit for you and will deliver a quality service
What are the main German company types?
|
Type of Company |
Main Traits |
|
German GMBH |
GmbH-Private Limited Liability Company can be incorporated in Germany by at least one investor with a minimum share capital of 25,000 EUR. The company's capital can be submitted in cash or kind (in this case, the value of the assets must be shown specifically in the articles of association). One issue to consider is that the shares of the German GMBH cannot be transferred to the public nor registered at the Stock Market. The General Shareholder's Meeting is the one that ensures the management of the GMBH. The day-to-day corporate decisions are made by the company’s direction which is appointed by the general meeting of the shareholders. |
|
AG-German Joint Stock Company |
This is suited to large businesses because of the possibility to increase the initial capital through the registration of the shares to the Stock Market. The German AG requires a share capital of a minimum of 50,000 EUR. The members are only liable up to the amount they have contributed to the capital, just like in the case of the joint-stock companies. The management is assured by the management board which is checked periodically by a supervisory board that is formed by at least three members. For this business type, the accounts must be evaluated by a statutory auditor. |
|
German Limited Partnership |
Formed by two types of partners: the silent partners who must bring a contribution to the entity’s capital and has limited liability to the extent of that contribution and the general partners who don’t necessarily make a contribution to the entity’s capital but who have unlimited liability for the entity’s debts and who can claim profits. The general partners are those who have decisional powers in the German limited partnership while the silent partners cannot participate in any of the management decisions. |
|
Sole Trader |
Formed by a single individual with his own personal assets and no protection from liability in case the entity is facing bankruptcy. |
|
Branch |
Branches are also popular methods of entering the German market and many foreign investors choose it as the first step in their business path. The branch is not a legal entity, this is why its assets and liabilities belong to the parent company. You can reach out to our contact our company formation specialists in Germany for more details regarding the particularities of these types of structures. |
Foreign investments in Germany
Germany is a country that welcomes foreign investors and the Government supports initiatives that create new jobs. The foreign trade law sets forth the main conditions in which foreign entrepreneurs may enter the market. There are a few limitations, namely in areas like defense and there are requirements to maintain public order.
Foreign investors in Germany enjoy the same rights for opening a company, for applying for special permits and licenses, applying for building permits as well as obtaining investment incentives. Company formation in Germany is a straightforward process, however, some investors may find that the language is a barrier. In these cases, we recommend that you reach out to our team who has worked with foreign investors and who can help with the communications needed with various German authorities. We can act as a liaison so that you can start the company formation procedures as smooth as possible.
Costs for forming a company in Germany
- Company formation fee: the company formation fee for opening a legal entity in Germany is approximately 1,800 euros.
- Virtual office costs: a virtual office package has a cost of approximately 208 euros per month.
- Accounting costs: accounting fees for German companies starting from 100 euros per month.
- Registration fee: the usual registration costs for a GmbH in Germany amount to approximately 400 euros and others, like notary fees, will apply.
- Minimum share capital: the minimum share capital for the limited liability company is 25,000 euros and 1,00 EUR for the Mini GmbH.
Frequently asked questions about company formation in Germany
1. Can a non-resident start a company in Germany?
Yes, foreign entrepreneurs can open a company in Germany provided that they respect the requirements of the Commercial Code.
2. Does the company have to be based in Germany?
Yes, a company must have a registered address in Germany.
3. What are the basic steps for setting up a company in Germany?
First, you have to reserve a company name with the German Trade Register, then have the Memorandum and Articles of Association drafted and deposit the required share capital. Once the documents are submitted and the company receives its Certificate of Incorporation it must register for taxation purposes and for social security.
4. What are the most important documents needed for setting up a company in Germany?
The most important documents are the Memorandum and Articles of Association. Our consultants in company registration in Germany can prepare them for you.
5. How fast can you open a company in Germany?
It takes about two weeks for the company registration procedure to be completed.
6. Do I need special permits and licenses for opening a business in Germany?
Depending on the type of activity, you may be required to apply for certain special licenses.
7. How can I open a bank account in Germany?
It is very simple to open a bank account in Germany by making an appointment with a representative. You must have your passport or ID on you. For opening a corporate bank account, you can request the services of our German experts.
Germany has one of the top economies in Europe and also in the world. As one of the top economies worldwide, it attracts numerous foreign investors who want to start new companies. Germany is actually one of the preferred destinations in the world as far as foreign investment is concerned. What's more, Germany is the second most important exporter in the world. The workforce is also a plus for foreign investors who are ready to start a company in Germany, especially since employees bring an important contribution to the business’ development. Quality of life and stable labor relations are of great importance for the employees in Germany. Another advantage is that the social security system is very well structured.