Company formation in Germany is developed on a set of standard actions that must be taken in order for all the legal requirements to be met. The actions necessary for starting a company in Germany include drafting the articles of association and all other document required, such as specimen signatures, passport copies and the special forms from the company registration office. All procedures involving signing of papers must be performed in front of a public notary in Germany.
Company formation in Germany also refers to finding a registered office, opening a bank account and hiring a local accountant for the company. Businessmen interested in forming a company in this country are invited to try our Cost Estimator, a free calculator that shows the average cost for starting and operating a company in Germany for an initial 3-month period. Furthermore, if you want to find out what is the amount of money you have to pay as corporate tax, dividend tax and VAT, please use our instant tax calculator.
Types of Companies in Germany
Incorporation of a German GMBH. The Gesellschaftmitbeschränkter Haftung – GmbH-Private Limited Liability Company can be incorporated in Germany by at least one investor with a minimum share capital of 25000 EUR. The company capital can be constituted by cash or kind (in this case, the value of the assets must be shown specifically in the articles of association). As a particularity, the shares of the German GMBH cannot be transferred to the public nor registered at the Stock Market. The management of the GMBH is assured by the general meeting of the shareholders. The daily decisions are taken by the company’s director which is appointed by the general meeting of the shareholders.
In Germany, the large businesses are usually organized as Aktiengesellschaft – AG-German Joint Stock Company due to the advantages granted to it and the possibility to increase the initial capital thorough the registration of the shares to the Stock Market. The German AG requires a share capital of minimum 50000 EUR. The liability of its members is limited by their contribution 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 which is formed by at least three members. The accounts of this business type are assured by a statutory auditor.
Other forms of German business. The simplest form of business in Germany is the sole proprietorship which is formed by a single individual with his own personal assets not protected in case the entity is facing bankruptcy.
A form of business which doesn’t require a minimum share capital but in which the liability of its members its unlimited is the OffeneHandelsgesellschaft – OHG- German General Partnership which is formed by at least two investors joined together by the same economic purposes. All members can take management decisions and they can claim profits after paying all the necessary taxes.
Another form of partnership is the Kommanditgesellschaft – KG- GermanLimited Partnership formed by two types of partners: the silent partners who must bring a contribution to the entity’s capital and have limited liability in extend of that contribution and the general partners which don’t necessarily make a contribution to the entity’s capital but who have unlimited liability on the entity’s debts and which can claim profits. The decisional powers of the German limited partnership are owned by the general partners and the silent partners cannot participate in taking the management decisions.
Branches are also popular methods of entering the German market and many foreign investors choose it as a fisrt step in their business path. The German branch is not considered a legal entity, therefore its assets and liabilities belong to the parent company. Please feel free to contact our company formation specialists in Germany for more details regarding the advantages of these types of structures.
Incorporation Procedure in Germany
All rules and regulation regarding the formation of German companies are included in theCompany Act.
Preliminary procedures of company incorporation in Germany imply the verification of the name uniqueness at the local chamber of industry and commerce, notarize the company’s articles of association and the opening of a bank account where the minimum share capital or the initial capital of a partnership must be deposit.
The following documents must be delivered to the German Commercial Registerin order to start the registration process: an application for registration, the notarized articles of association, a document showing the management board structure, a certificate showing that the share capital was deposit. All the above must be submitted in an electronic form. The registration of the newly formed company is made on a central electronic platform by the Commercial Register.
The next step in company incorporation in Germany is applying for receiving the trading license from the local Office of Business and Standards followed by the registration at the statistical office (which will send a questionnaire that must be filled with the company's business data) and at the chamber of industry and commerce and the labor office. The labor office is issuing an eight-digit operating number which must be reported at the social security. The entity must then apply for the federal health insurance office. A notification must be sent to the Tax Office regarding the newly formed business entity, this leading to the registration for the corporate taxes and VAT.
After company registrationin Germany, the business can begin its commercial activity. The majority of the companies started in Germany need employees. Employers are offered a well-trained workforce. They can ask for help on job websites and recruitment agencies. In this way, work providers can find the best suited personnel for the jobs offered.
Germany’s economy is highly ranked on the world’s map. It is actually considered the fourth largest economy in the world. This is the reason why the country attracts numerous foreign investors who want to start new companies. Germany is actually one of the best destinations in the world as far as the foreign investment is concerned. Besides, Germany is the second most important exporter in the world. 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 important for the employees in Germany. Moreover, the social security system is very well structured.
Dennis Veurmeulen is the manager of INCO Business Group, a company specialized in incorporating companies in Germany and in other countries. He has a vast experience in helping investors open German companies and he is ready to assist both local and foreign businessmen.
Call us now at (+31)-765870401 to set up an appointment with our company formation experts in Germany. Alternatively you can incorporate your company without traveling to Germany.
As our client, you will beneficiate from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Germany.