Germany is one of the most attractive countries in Europe for foreign investments. Its central location, easy access to other EU markets and its good infrastructure and highly qualified workforce recommend it for investments in several business fields. One sector that stands out, in particular, is research and development but investment opportunities abound, especially in cities like Berlin.
Company formation in Germany consists of several basic steps that refer to the preparation of the company’s documents and its effective registration with the German authorities. Among the initial steps for starting a company in Germany, we can mention the drafting of the articles of association and all other required documents, such as the specimen signatures, a set of passport copies and the special forms from the company registration office. Investors must officially sign part of the documents 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 in terms of corporate tax, dividend tax, and VAT, please use our instant tax calculator.
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|Types of companies|| |
Private limited liability company
European stock corporation
Minimum share capital
for LTD Company
|25,000 EUR paid in full upon incorporation|
Minimum number of
shareholders for Limited Company
|Time frame for the incorporation|| 5 weeks |
|Corporate tax rate||15% + solidarity surcharge of 5.5%|
|Dividend tax rate|| |
|VAT Rate|| |
19%, a reduced rate of 7% also applies to certain goods
|Number of double taxation treaties (approx. )||90|
|Do you supply a Registered Address/Virtual Office?||Yes|
|Local Director Required||No|
|Annual Meeting Required||Yes|
|Is Accounting/Annual Return Required?||Yes|
|Any tax exemptions available?||95% tax exemption on received dividends|
|Any tax incentives (if applicable)||Research and development subsidies|
In case you are interested in opening a business in Germany, please check out our table below which highlights the characteristics of the main business entity types in this country:
Type of Company
GmbH-Private Limited Liability Company can be incorporated in Germany by at least one investor with a minimum share capital of 25,000 EUR. If you want to open a company in Germany as a GMBH, you should know that the company's capital can be submitted in cash or kind (in this case, the value of the assets must be shown specifically in the articles of association). One issue to consider is that the shares of the German GMBH cannot be transferred to the public nor registered at the Stock Market. The General Shareholder's Meeting is the one that ensures the management of the GMBH. The day-to-day corporate decisions are made by the company’s director which is appointed by the general meeting of the shareholders.
AG-German Joint Stock Company
This is suited to large businesses because of the possibility to increase the initial capital through the registration of the shares to the Stock Market. The German AG requires a share capital of minimum 50,000 EUR. The members are only liable up to the amount they have contributed 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. For this business type, the accounts must be evaluated by a statutory auditor.
German Limited Partnership
Formed by two types of partners: the silent partners who must bring a contribution to the entity’s capital and has limited liability to the extent of that contribution and the general partners who don’t necessarily make a contribution to the entity’s capital but who have unlimited liability for the entity’s debts and who can claim profits. The general partners are those who have decisional powers in the German limited partnership while the silent partners cannot participate in any of the management decisions.
Formed by a single individual with his own personal assets and no protection from liability in case the entity is facing bankruptcy.
Branches are also popular methods of entering the German market and many foreign investors choose it as the first step in their business path. The branch is not a legal entity, this is why its assets and liabilities belong to the parent company. You can reach out to our contact our company formation specialists in Germany for more details regarding the particularities of these types of structures.
You can always contact our company formation specialists in Germany for more details regarding the advantages of these types of structures.
All rules and regulation regarding the formation of German companies are included in the Company Act.
The first steps for company incorporation in Germany include the verification the company name at the local chamber of industry and commerce and are followed by the preparation of the company's Articles of Association and opening a bank account. The minimum share capital as per the chosen business structure is deposited in that account.
Below, we list the steps for company formation in Germany:
choose a company type: this can be the limited liability company, the joint stock company or the partnership.
choose a company name: the name of the new legal entity needs to be unique and can be checked for availability.
execute the deed of formation: this is performed before a notary in Germany; the founders also prepare the Articles of Association.
deposit the share capital: some business forms require a minimum share capital, that is deposited in a bank account.
register the business: the formation ends with registering the company in the commercial register.
The founders of the company need to sign the application for registration in front of the notary public. Once the company is registered, the liability of the founders enters into effect.
The main steps for opening a business in Germany are presented in our infographic below:
The following documents are to be submitted to the German Commercial Register in 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 deposited. The documents must be submitted in an electronic form. The registration of the new legal entity is recorded by the Commercial Register on an electronic platform.
After the submission of the documents, company incorporation in Germany continues by is applying for the trading license from the local Office of Business and Standards followed by the registration with 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 will issue an eight-digit operating number which must be reported for social security purposes. The entity must then apply for the federal health insurance office. A notification must be sent to the Tax Office which reports the formation of the new business entity, this leading to the registration for the corporate taxes and VAT.
After the company is registered, the business can start its commercial activity. Most of the German companies will also hire employees soon after they are incorporated. Employers have access to a well-trained workforce and they can recruit either on job websites or by working with recruitment agencies. The selection process is important so that the employees can find suitable candidates for the open position.
Companies are required to comply with the local accounting, filing and audit rules. The German Generally Accepted Accounting Principles are the standard that is followed for accounting purposes, along with the International Financial Reporting Standards. Medium and large companies need to comply file the annual financial statements, the management report and other supporting documentation within three months following the end of the financial year (which can also be the calendar year). These types of companies must also audit these documents.
Our company formation agents can offer incorporation services in the most important German cities and states, such as: Berlin, Hamburg, Dresden, Nuremberg, Koln, Cologne, Bavaria, Saxony, Hesse. They can definitely help businessmen interested in opening a business in Germany.
When entrepreneurs need to make a change regarding the trade or business activities, they can do so through a point of single contact. The modifications need to be registered when the business changes its operations or changes the location of the branch in Germany. Company owners must also notify of any changes involving the expansion of the business activities (in addition to the change of the primary activities), changes to the company names, changes that occur in the managerial hierarchy of a company registered with the Commercial Register, as well as changes in the publicly available information about the company directors. A fee will apply for the newly registered changes. One of our agents can help you if you wish to de-register a company or discontinue the activities of a legal entity.
Germany is a country that welcomes foreign investors and the Government supports initiatives that create new jobs. The foreign trade law sets forth the main conditions in which foreign entrepreneurs may enter the market. There are a few limitations, namely in areas like defense and there are requirements to maintain public order.
Foreign investors in Germany enjoy the same rights for opening a company, for applying for special permits and licenses, applying for building permits as well as obtaining investment incentives. Company formation in Germany is a straightforward process, however, some investors may find that the language is a barrier. In these cases, we recommend that you reach out to our team who has worked with foreign investors and who can help with the communications needed with various German authorities. If you want to open a company in Germany, we can act as a liaison so that you can start the company formation procedures as smoothly as possible.
Company formation fee: the company formation fee for opening a legal entity in Germany is approximately 1,800 euros.
Virtual office costs: a virtual office package has a cost of approximately 208 euros per month.
Accounting costs: accounting fees for German companies starting from 100 euros per month.
Registration fee: the usual registration costs for a GmbH in Germany amount to approximately 400 euros and other, like notary fees, will apply.
Minimum share capital: the minimum share capital for the limited liability company is 25,000 euros and 1,00 EUR for the Mini GmbH.
Direct subsidies, grants, and loans are examples of tax incentives for doing business in Germany. Special investment programs can also be implemented at a federal or regional level, this is why we recommend that investors contact us before starting new projects. We can help entrepreneurs find suitable solutions in terms of tax incentives for their type of business. The country is well known for its special focus on research and development projects but other business areas such as those concerning renewable energy, social housing, health care agriculture and the recruitment of long-term unemployed individuals can benefit from various assistance.
Before starting a business in Germany, a legal entity can be established in this country in approximately 11 days when investors follow all of the presented steps and prepare their documents accordingly.
Having the proper legal aid during the incorporation phase can be useful to investors in order to make sure that every document is compliant and that the process runs smoothly. Our team of lawyers in Germany who specialize in company incorporation can help investors start a business. we can guide you throughout all of the steps and provide personalized counseling, as need when opening a business in a particular business field. Moreover, we can also assist business owners in applying for additional special permits and licenses once the business is registered.
Once the company is incorporated, it may also need to apply for special permits and licenses as well as for EORI registration in Germany, if involved in trading activities within and outside of the EU.
The process of hiring personnel in Germany is usually time-consuming so it’s advisable to contact a recruitment agency in order to find the suitable candidates for the vacancies.
Before hiring a foreign person, the entities must be aware that besides the passport, a residence permit is necessary. The residence permits include work and residence authorization. The permits are issued by the embassy / general consulate in the home country or by the Alien Registration Authority in case the person is already in Germany. Usually a residence permit is usually issued for a period of time so it’s advisable to make employment contracts only on that period of time.
Usually the following documents must be provided after signing the contract: the Wage Tax Card, the German Social Security Card, the Certificate of the Receipt of Child Allowance, the Holiday Certificate, documents on asset-creating benefits, work reference or leaving certificate and for foreign employees from non-EU-member states, their residence permit.
Germany is by far the most attractive European country for investment. With the largest market in Europe and with a central location, Germany is considered the third strongest economy in the world. The German economy is characterized by the fact that 85% of all businesses are small or medium-sized (Mittelstand). The quality of the products made in Germany is internationally recognized, the exports are also contributing to the German high standard economy. The economy is mainly formed by the service sector with a contribution of around 70% of the total GDP, industry 29.1%, and agriculture 0.9%. Businessmen who are interested in starting a business in Germany should know that the rights of the investors are protected by the transparent and reasonable laws. Actually the legal system is copied by many jurisdictions and the country is situated on the fourth place in the top of legal security issue.
Germany is also in the top of innovations, resulted from the good collaboration between the industry and the research institutes. Import and export activities are popular among investors in Germany and EORI registration is required for these.
The holding company beneficiates from a number of advantages which makes Germany an appealing destination for foreign investments. Among the advantages, there are the following: no withholding taxes on incoming and outgoing dividends, no withholding taxes on liquidation distributions, exemption of capital gains on the disposal of shares, deductibility of finance costs, current-value depreciation and goodwill, liberal anti avoidance legislation and thin cap rules, no controlled foreign corporation rules, a large double tax treaty network, low corporate income tax rate (only 15%), low VAT taxation (19% and in certain cases only 9 %) and also no exit taxation.
Germany attracts many foreign investors on an annual basis. The first thing to take into account when starting a business in Germany are the business regulations and etiquette which is very important. Here are ten of the most important business etiquette in Germany:
When doing business in Germany it is very important to treat them with respect and correctitude as any unethical behavior could damage business relations with your German counterpart.
2. Business communication
In order to have a successful cooperation with a German company you must get familiar with the notions imposed by the business etiquette. Business communication should be direct and focused on the subject.
3. Business relations
The German people puts a great price on order, punctuality and privacy. They are also perfectionists which is why they are focused on achieving their goals. You must make sure you respect hierarchy and make a clear distinction between private and business matters.
German businessmen are reluctant to physical contact. The usual greeting accepted in German companies’ business meetings are usually restricted to handshakes.
5. Addressing a German partner
Both German citizens and businessmen are very strict about personal titles. You have to try and address people by their full name and title.
6. Corporate social responsibility
German companies are very concerned about environmental issues. That is why it is in the Germans’ business culture to use every opportunity and organize social responsibility actions. Showing them you know some their social achievements is a great sing of respect in the German business culture.
7. Time management
Punctuality defines the German people. In German companies every action is carefully calculated and each calendar or agenda is duly respected, therefore it is very important to be punctual in both business and ordinary meetings.
8. Business dress code
German managers take pride in dressing well which is why the business dress code imposes a certain etiquette. Suits are the most appropriate for men, while conservative dresses are recommended for women.
9. Business meeting planning
It is very important to plan a meeting ahead when doing business in Germany. Appointments are mandatory when going into business with a German company and should be made a few weeks in advance.
10. Follow up after a meeting
Unlike in other countries, German companies are keen on follow-up discussions after a meeting. Emails or letter sent after a meeting will reinforce the importance of the appointment.
Many foreign investors wanting to open a company Germany are interested what the registration procedure implies and what to do in order to start operating as soon as possible. Our specialists in company formation in Germany have answered some of the most frequently asked questions related to starting a business in this country.
1. Can a non-resident start a company in Germany?
Yes, foreign entrepreneurs can open a company in Germany provided that they respect the requirements of the Commercial Code.
2. Does the company have to be based in Germany?
Yes, a company must have a registered address in Germany.
3. What types of companies can I open in Germany?
There are several types of companies you can open in Germany. These are limited liability companies, which are also the most popular, joint stock companies and general and limited partnership. Individuals can also start sole traders in Germany.
4. What is the minimum share capital in Germany?
You will need 25,000 euros to start a limited liability company and 50.000 euros for opening a business in Germany as a joint stock company or a limited partnership in Germany.
5. What are the basic steps for setting up a company in Germany?
First you have to reserve a company name with the German Trade Register, then have the Memorandum and Articles of Association drafted and deposit the required share capital. Once the documents are submitted and the company receives its Certificate of Incorporation it must register for taxation purposes and for social security.
6. What are the most important documents needed for setting up a company in Germany?
The most important documents are the Memorandum and Articles of Association. Our consultants in company registration in Germany can prepare them for you.
7. How fast can you open a company in Germany?
It takes about two weeks for the company registration procedure to be completed.
8. Do I need special permits and licenses for opening a business in Germany?
Depending on the type of activity, you may be required to apply for certain special licenses.
9. How can I open a bank account in Germany?
It is very simple to open a bank account in Germany by making an appointment with a representative. You must have you passport or ID on you. For opening a corporate bank account you can request the services of our German experts.
10. What are the taxes that I have to pay after setting up my company in Germany?
Taxes in Germany are levied at federal, state and local levels. The most important taxes are the income tax for individuals and the corporate tax for companies. The corporate tax rate in Germany is 15%, but an additional 5.5% solidarity charge also applies.
We also invite you to watch the video on our company formation services in Germany:
Germany’s has one of the top economies in Europe and also in the world. As one of the top economies worldwide, it attracts numerous foreign investors who want to start new companies. Germany is actually one of the preferred destinations in the world as far as foreign investment is concerned. What's more, Germany is the second most important exporter in the world. The 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 importance for the employees in Germany. Another advantage is that the social security system is very well structured.
Foreign investors who want to open a company in Germany can get in touch with our team of local consultants, who can successfully assist them with the company registration process.