Open a German Company

Can a foreigner or non-resident set up a German company remotely?

Yes. German law does not require the shareholders or the managing director of a GmbH or UG to be German citizens or to live in Germany. The managing director must be a natural person with full legal capacity who is not disqualified, for example by certain criminal convictions. In practice there are three ways to complete the formation without travelling to Germany.

Online notarisation by video

The articles of association of a GmbH or UG can be notarised by video call through the platform of the German Federal Chamber of Notaries, and the register application can be signed in the same way. The founders sign with a qualified electronic signature instead of a handwritten one. To take part, each person needs an identity document with an activated online ID function: a German identity card, an EU/EEA eID card, a German electronic residence permit, or another document on the chamber's list of accepted eIDs. A passport may also be needed so that the photo can be read. Many founders from outside the EU do not hold such a document, so this route does not suit everyone.

Through a power of attorney

A founder can also be represented at the German notary. The law requires the power of attorney to be drawn up or certified by a notary; a plain signed letter is not enough. A founder abroad can sign it before a local notary or at a German embassy or consulate. Documents certified by German consular officers have the same standing as those of a German notary.

Apostille, legalisation and translations

A power of attorney signed before a foreign notary, and documents such as a register extract of a foreign corporate shareholder, usually need an apostille if the country is a party to the Hague Apostille Convention with Germany, or legalisation by the German mission in that country if it is not. Documents in another language also need a German translation. We tell you in advance exactly which documents are needed for your country.

Should you choose a UG or a GmbH?

Both are limited liability companies governed by the same law, and both can be formed with a single shareholder who can also be the managing director. The UG (haftungsbeschränkt), often called a mini-GmbH, is a GmbH with share capital below the GmbH minimum. The main differences are:

The UG suits founders who want limited liability with very little capital, such as consultants and online businesses. Its weak point is perception: a company with a few euros of capital can find it harder to obtain credit from suppliers or banks. The reserve rule applies until the UG raises its share capital to at least EUR 25,000; it can then change its name to GmbH without being dissolved.

The GmbH is the usual choice for subsidiaries of foreign groups, holding companies and businesses that need credibility with banks and larger customers from the start. If you are not sure which form fits, we compare both for your specific plans before anything is signed.

Does a German company need an address in Germany?

Yes. The articles of association must name a town or city in Germany as the registered seat, and the application to the commercial register must state a business address in Germany. This address is entered in the register and is where official letters, for example from the tax office, will be sent.

The managing director does not have to live in Germany, and the company does not need to rent a full office to be registered. Many foreign founders use a virtual office address, which we can arrange as a separate service. Before choosing an address, keep three points in mind:

• Trade tax depends on the municipality. Each municipality sets its own trade tax multiplier, so the same profit can be taxed differently in two neighbouring towns.
• The trade registration is local. The business must be registered with the trade office of the place where it operates.
• Place of management matters for tax. A company with its registered seat or its place of management in Germany is fully liable to German corporate tax. If the real decisions are taken in another country, that country may also treat the company as tax resident, so this should be planned with a tax adviser.

How are companies taxed in Germany?

A GmbH or UG pays two taxes on its profit: corporate income tax plus the solidarity surcharge, which are federal taxes, and trade tax, which goes to the municipality.

• Corporate income tax: 15% of taxable income. A solidarity surcharge of 5.5% is added on top of the tax amount, so the combined rate is 15.825%. The law already provides for a reduction of one percentage point per year from 2028, down to 10% from 2032.
• Trade tax: the activity of a GmbH or UG always counts as a trade business, so trade tax is always due. It is calculated by applying a base rate of 3.5% to the trade income and then the multiplier set by the municipality. For example, with a multiplier of 400% the trade tax is 14% of the trade income. The legal minimum multiplier is 200% and rises to 280% from the trade tax year 2027.
• VAT: the standard rate is 19% and the reduced rate, for certain goods and services, is 7%. A small business whose turnover did not exceed EUR 25,000 in the previous year and does not exceed EUR 100,000 in the current year can apply the small business scheme and not charge VAT, but then it cannot deduct input VAT either.

Within one month of starting its activity, the company must send the tax office a registration form with information about its business, electronically through the ELSTER portal. The tax office then issues a tax number; where needed, the VAT identification number is issued by the Federal Central Tax Office (Bundeszentralamt für Steuern). We prepare this registration as part of the formation.

How are dividends paid to foreign shareholders taxed?

When a German company distributes profit, it must withhold the German withholding tax on investment income (Kapitalertragsteuer) of 25% plus the 5.5% solidarity surcharge on that tax, which is 26.375% of the dividend, and pay it to the tax office. The withholding can often be reduced:

• Foreign corporate shareholders can reclaim two fifths of the tax withheld, which brings the tax down to 15% plus the solidarity surcharge.
• EU parent companies that hold at least 10% of the German company directly, for at least 12 months without interruption, can receive dividends free of withholding tax under the EU Parent-Subsidiary Directive, if they meet the other conditions.
• Double tax treaties between Germany and the shareholder's country often provide a lower rate.

Relief is not automatic. The shareholder must apply to the Federal Central Tax Office (Bundeszentralamt für Steuern) either for an exemption certificate before the payment or for a refund afterwards. Because these rules also contain anti-abuse conditions, a holding structure should be checked before the first dividend is paid.

What does a German company have to do every year?

• Transparency Register: the company must identify its beneficial owners, meaning the natural persons who hold or control more than 25% of the capital or voting rights, and report them to the Transparency Register without undue delay. Since August 2021 it is no longer enough that the shareholders appear in the commercial register; new companies must file themselves. Changes must be reported as well.
• Bookkeeping and annual accounts: the managing directors must prepare the annual financial statements within three months after the end of the financial year. Small companies may take up to six months.
• Publication: the annual financial statements must be submitted electronically to the company register (Unternehmensregister) no later than twelve months after the end of the financial year.
• Tax returns: annual corporate tax, trade tax and VAT returns, plus regular VAT returns during the year, are filed electronically.
• Electronic invoices: every German business must be able to receive structured electronic invoices. Issuing them becomes mandatory, with limited exceptions, for supplies from 2027, or from 2028 if the previous year's turnover did not exceed EUR 800,000.

Most foreign-owned companies use a local accountant or tax adviser for these tasks. Our accounting service can take them over from the first month.

What is included in our service and what is not?

Our fees cover the legal work needed to take your company from the first discussion to a registered company with a tax number:

• advice on the company form and the name, and a check that the name is available;
• drafting the articles of association and the other formation documents;
• organising the notary appointment, in person, by video or through a power of attorney;
• support with opening the corporate bank account for the share capital;
• filing with the commercial register through the notary;
• tax registration with the tax office.

Our prices: Mini-GmbH (UG) from EUR 1,250 · GmbH from EUR 3,050. A branch office starts from EUR 1,750, a subsidiary or holding company (GmbH) from EUR 3,050, and a shelf GmbH with bank account from EUR 5,150.

Not included: state, notary and registry fees, which are charged separately; the share capital itself, which stays in the company's account; translations and apostilles of foreign documents; and ongoing services such as a virtual office address or accounting, which are offered separately. We send a detailed quote before any work starts, so you know the total in advance.