Starting a business in Germany
Starting a business in Germany is generally a straightforward process that has a series of formalities that are required to be followed. The company formation Germany can be performed remotely. A German GmbH company could be formed within 2 weeks. The procedures and regulations do not have significant differences compared to English speaking 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, many multinationals are operating from Germany as a base for the European Union, 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.
- 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
Types of Business in Germany – Germany GMBH
German law distinguishes 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 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. It is possible to start a UG within less than 2 weeks. We can form UG companies remotely. The possibility of obtaining a permanent residency permit.
GmbH (Gessellschaft mit beschrankter Haftung)
GmbH, 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 in to the company by assets or cash, in the case 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 conducted 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 deliver the necessary funds.
A German branch may be formed to enter the market, it 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, a KG may be formed. 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 in the day to day business and management decisions.
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. Plenty of reasons to start a company in Germany.
Incorporation procedure in Germany
Presenting all information to our team for preparing the documentation. For opening a German UG, the most common legal entity for new businesses. We require certain documents.
- 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.
- Preference for the company name, this needs to be verified in advance for availability.
After preparation of initial documents. A local visit is required by the shareholders and directors for one day. The company will be formed and the bank will be opened 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, it is not needed to visit Germany.
Our firm shall present the incorporation 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 process of formation of the bank account opening and registration in the chamber of commerce will take 2 weeks on average.
We can assist you with your incorporation, virtual office and the opening of a bank account – remotely. Through our procedures, no personal visits are required.
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