Germany company formation
Company formation in Germany is generally a straightforward process, including a number of formalities that have to be performed. Our firm can help you with the formation of a company in Germany. A German UG or GmbH company could be formed within 2-5 days. The procedures and regulations are not significantly different than in other countries.
The corporate tax rate in Germany is around 31% on average.
The corporate tax rate includes a corporate income tax of 15%, solidarity surcharge 0.825% and a regional trade tax. The local tax for trade varies between 14-17.15%. The local German tax is not deductible as a business expense.
Germany has a 19% VAT rate on services and goods delivered in Germany. Within the European Union, VAT is 0% between VAT companies. Corporations may claim back VAT.
Germany is the leading economy of Europe, and many multinationals are operating from Germany as a base for the European Union. Germany offers a great climate for the formation of a business, due to the high quality of workforce and advanced infrastructure.
For Non-EU entrepreneurs, it is also possible to start a company in Germany and obtain local residency through the German business immigration.
Why you should consider the formation of a business in Germany:
- 0% VAT for business between EU member states
- Leading economy in Europe
- 4th largest economy in the world
- 3th largest exporter in the world
- Core member of the EU
- High-tech infrastructure
- Hub for multinationals (Volkswagen, Allianz, BMW, Siemens, Bayer)
- Qualified personnel
- Possibility of business immigration
- Remote company formation
Types of companies in Germany – Germany GMBH
German law distinguishes between limited companies, joint companies and other types of partnership companies. It is important to be aware of the different types of business structures within Germany, as well as the legal process for the company formation in Germany.
The Unternehmergesellschaft (UG), equivalent to the English LTD, known as ‘mini-GmbH’, could also be established with a capital of only €1. This entity is most popular for new businesses as it is more flexible than the regular GmbH. The formation of a UG can be completed in less than a week. We can take care of the formation of UG companies remotely. Entrepreneurs have the possibility of obtaining a permanent residency permit as director of a UG company.
GmbH (Gessellschaft mit beschrankter Haftung) also known as private limited liability company. This is the most common type of business in Germany and is equivalent to a limited company (LTD). Currently, the minimum share capital (Stammkapital/Grundkapital) is €25,000.
The capital can be brought into the company through assets or cash. If assets are brought in, the value of the underlying assets must be presented in the company articles of association. The shares of the German GMBH company are not allowed to be listed on the stock markets, the shares may not be traded publicly. The GMBH management is guaranteed by the annual meeting of shareholders. The day-to-day decisions are made by the corporate director, who is appointed by the meeting of shareholders.
There are no restrictions on repatriation of profits.
The German law of residency ultimately determines the conditions and circumstances for running a business in the form of self-employment in Germany. In accordance with the European law, citizens of the European Union are able to start a company in any of the European states. However, it is required to inform the local registration office (Einwohnermeldeamt) and provide the necessary funds.
The formation of a German branch to enter the market is possible. However, this is not a legal entity. The liability and profits lay with the parent company.
A German subsidiary is a separate legal entity used to enter the market with a local independent business, the shares may be held by a foreign legal entity.
German AG – Joint Stock Company is a legal entity mostly used by large businesses and publicly traded companies. A minimum share capital of EUR 50.000 is required to form an AG company. The members are liable only for the contribution of capital. The board of directors manages the company, a separate board supervises them. The German AG must have its accounts audited by a registered auditor.
German KG – limited partnership
When two or more partners collaborate, the formation of a KG is also an option. The partners may be silent partners or general partners; silent partners are only liable for the capital brought in and general partners are fully liable. The silent partners are not allowed to interfere with the day-to-day business and management decisions.
German economy: great for the formation of any business
Germany is a leading world economy and global trade partner. As the largest economy in Europe and the fourth largest economy in the world, Germany is well known in all industries. For these reasons, Germany attracts foreign investors and entrepreneurs. It is one of the best jurisdictions in the world for investing. As the second importer in the world, Germany has a vast market of trade. Germany does not have a single economic center, instead, there are economic opportunities in numerous regions. As you can see, there are plenty of reasons to decide upon the formation of a business in Germany.
Company formation in Germany: how does it work?
If you want us to take care of the formation of your company in Germany, we will need some information to get started. For opening a German UG, this would be:
- Identity information on the directors and shareholders of the German UG or German GMBH;
- Copy of the passport of all ultimate beneficial owners, directors, and shareholders;
- Our company incorporation form filled in by you;
- Preference for the company name, this needs to be verified in advance for availability.
After we prepared the initial documents, in general, a local visit by the shareholders and directors is required. This can all be done in one day. The company will be formed and the bank account will be opened on this day. We have possibilities to incorporate fully remotely as well. In this case, a Power of Attorney will be drafted, which can be signed at your local notary public. In this case, you will not have to visit the country for the formation of the company.
Our firm shall present the business formation documents from the notary to the local court. The capital deposit needs to be contributed at the bank before the company can be finalized. Capital investment recommended for German UG is a minimum of EUR 1000.
The formation process, opening of the bank account, and registration with the chamber of commerce will take 1-2 weeks on average. Incorporations can be made very swiftly through our firm.
We can assist you with your incorporation, setting up virtual office and the opening of a bank account – remotely. Through our procedures, no personal visits are required. The formation of your business abroad has never been easier!
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