Company Registration in Germany
No limit for registered capital
No requirement for local partnership
Complete foreign ownership allowed
Joint venture registration is allowed
Germany market entry strategy
If someone is planning to start with company incorporation in European continent then Germany ought to be the first preferred destination. This is primarily because of its location, i.e., Germany being centric in the European continent which manages to provide a vast opportunity for networking and business development. Each country in the entire continent is easily accessible from Germany either by car, train or flight routes and services.
Germany is one of the most prosperous countries in the Eurozone because of its solid infrastructure, skilled workforce, education system, an efficient banking system, highly qualified labour power, low level of corruption and high level of innovation.
Before starting a company in Germany, its registration is mandatory. However, Company Registration in Germany is a tedious and rigid task but however, it is a straightforward process if done with proper caution and patience.
Business Structures in Germany
Mentioned below are the different types of business entities in Germany:
- Sole Proprietorship
- Partnership (Includes Limited Liability Partnership)
Formation of Sole proprietorship is easy and it is least regulated but however, it has unlimited liability on the owner and profits are subject to Individual Income tax rates.
There are two types of partnership-Limited liability partnership (KG) and unlimited liability partnership (OHG). For formation of a partnership, it requires 2 or more partners. The partnership is generally used for small and family-owned businesses. Investors generally tend to invest in KG partnership as compare to OHG partnership.
Generally, foreigners want to establish a branch of their company in Germany which is an easy task. It requires registration with local trade office and the commercial registration. It is the duty of parent company to keep an eye on all the legal and tax matters of its branch.
Company Incorporation in Germany
Private Limited Liability Company (GMBH)
The first step before incorporation of a company is to draft the Article of Association (AOA) and compile other documents which include a specimen of signatures, passport copies, special forms from company registration office, opening a bank account, hiring a local accountant etc. is properly prepared and duly notarized by the public notary officer in Germany.
The minimum share capital for incorporation of a Private Limited Company is 25000EUR. Transfer of shares to the public or registration at the stock market is not allowed for GMBH. Management decision of the GMBH is assured by the general meeting of the shareholders and daily decision to be taken by company’s director.
Even mini GMBH(UG) company can start with a minimum share capital of one euro. Once the company earns the profit of 25000 EUR it will automatically become a GMBH company at no additional cost.
Joint Stock Company (AG)
The first step before incorporation of a company is drafting of the Article of Association (AOA) and the compilation of other documents which includes a specimen of signatures, passport copies, special forms from company registration office, opening a bank account, hiring a local accountant etc. is properly prepared and duly notarized by the public notary officer in Germany.
Joint Stock Company can start with a minimum share capital of 50000 EUR which can be easily increased. Shares of the AG can freely register to the stock market and partners will have limited liability. The management board will check the management of the company regularly by a supervisory board which is formed by at least three members. A statutory auditor will check the accounts of the AG.
Steps for Company Registration in Germany
- Apply for Verification of Company Name at Local Chamber of Industry and Commerce.
- Draft the Company’s AOA and notarized it
- Open a Bank Account.
- Following documents to be submitted to the German Commercial Register which includes an application for registration, notarized AOA, a document showing management board structure, a certificate showing that share capital. All these documents can be either send in or be an electronic form.
- Next is to apply for a trading license from the local office of Business Standards at the Chamber of Industry and Commerce and the Labour Office. Labour office issues an eight-digit operating number which must be reported as social security.
- Company then needs to apply to tax office regarding the newly formed business entity, required for registration of corporate taxes and VAT.
- After all this, officially the company can start the business in Germany.
Before establishing the business in any country, one has to follow the rules and regulations of that country properly. With the growth of economy and development in Germany, it always attracts the foreigners to make an investment or incorporate a company in the country. However, company registration in Germany is a necessary process.
For any help regarding company registration in Germany, one can contact Impanix