Introduction to Incorporating in Germany
Germany is a global powerhouse of technological advancement, responsible for 20% of Europe’s GDP; it has the largest economy in Europe with access to 450 million consumers. The country is the second largest exporter in the world making it a lucrative target for international investors. There are over 25,000 foreign companies operating in Germany, employing more than 2.1 million staff, generating trillions of Euro in turnover. In addition, the economy is very stable enabling it to house 37 of the world’s 500 largest listed companies.
Our German company formation
Service makes it easy for you to establish whatever kind of German company you want, from a sole trader through to a partnership or corporation.
What are the main German company types?
There are four main forms of German company incorporation, and they are as follows:
- two types of limited liability companies; GmbH or UG (mini-GmbH)
- stock Corporation (AG)
The main features of a Limited Liability GmbH/UG company
- the minimum share capital for a GmbH is €25,000 (50% minimum to be paid up)
- the minimum share capital for a UG is €1
- these are the most common business entities in Germany
- must have at least one shareholder
A benefit of incorporating a UG company is that when it gains 25,000 EUR it will automatically become an GmbH company at no additional cost. This is great for companies that don’t require a high start-up investment.
The main features of an AG company
- the minimum share capital is €50,000
- this is the standard corporate form for major public companies
- must have at least one shareholder
- subject to heavy regulation as a listed company
The main features of a partnership
- two partnership types; general OHG or limited KG partnership
- must have two partners, one of which can be a GmbH company
- commonly used for small and family-owned businesses
- foreign investors tend to prefer limited-liability KG partnerships
mr Rolf Peter Rothuizen LL.M.
Expert in Business Law, Company Law and Tax Optimisation
Tel: +31 20 697 4000
Mob: +31 6 50 87 48 38
Can I set up a branch of my company in Germany?
Yes, setting up a German branch to a parent company is popular for foreign investors, especially when they aren’t certain about long-term operations. It’s a relatively easy process to establish a German branch office; all you need to do is register with the local trade office and the commercial register.
It is important to note that the parent company will retain full responsibility for the branch on all legal and tax matters. Germany’s fiscal laws are complex but our German tax specialists will help you to find what you need to know.
Our answers to start your Germany business operation
How can I recruit staff in Germany?
Germany is home to excellent technical training institutions and apprenticeship programs are the key to success for most industrial sectors.
There is a large pool of qualified individuals seeking employment in most areas of Germany, particularly is areas where unemployment is high such as the eastern side of the country and in the in district of Ruhr.
The local government-run employment exchange is a good place to advertise entry-level jobs but we advise you to use an executive search agency if you require specialist staff and senior management.
What are the regulatory environmental factors German Companies faces?
Foreign investors should be aware that local businesses are heavily regulated in Germany, especially when incorporating listed AG companies. All companies must comply with the detailed requirements laid out by the German authorities.
Government bodies are responsible for overseeing the activities of financial institutions and insurance offices. The majority of other industries are assigned to varies associations who regulate what their members can and cannot do.
Having knowledge of Germany’s regulatory system is essential to your business success.
What are the financial incentives to doing business in Germany?
The federal government offers a wide range of incentive programs, including loans and grants, depending on the nature of the company and its location. Some regions in Germany offer capital investment grants of up to 50% to small and medium enterprises.
There are also local government incentives that may be offered in the form of reduced tax rates but these are generally only available in small cities and rural areas.
How can I get a corporate bank account for my German business?
Germany has world-class international banking facilities and the first step in opening a German company should be to open a local bank account – we can arrange this for you.
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