Foreign investors have two possibilities of establishing a company in Germany: by incorporating a new business or by purchasing a shelf company. A shelf company in Germany is a legal entity that is already incorporated and has no previous business activities. According to the German Company Law, foreing investors have the same rights for registering a company. What's more, the Government encourages foreign businessmen by providing them several types of companies they may register.
Among these the most preferred are:
- limited liability companies,
- joint stock companies
The shelf company has the advantage of being already incorporated, with all of the needed documents up to date and submitted according to the current regulations. This offers a distinct advantage of significantly shortening the time needed for the investor to be able to actually engage in business activities with the legal entity. This is why the shelf company is largely preferred by those investors who with to start trading as soon as possible.
Legal entities available for shelf company
Limited liability companies, private (GmbH) and public (AG)
Time required for purchasing the company
A few days
Types of features it includes (corporate bank account, VAT number, etc)
Trading name, legal address, Articles of Association, director, tax identification number
The advantages of a shelf company
Easy acquisitions, availability of various legal entities, easiness in opening bank account (approx. 4 weeks)
Appointing new directors (yes/no)
Capital increase allowed (yes/no)
Certificate of no commercial activities (yes/no)
Modify the objects of activity (yes/no)
Participants in the purchase procedure
Seller and buyer or legal representative
The cost of buying a shelf company
Costs depend on the type of company and age
Below, our team of agents who specialize in company registration in Germany answer some of the common questions about this company and highlight its main advantages. It is always recommended to discuss a purchase with an expert in company formation in order to make sure that the company’s details are indeed those presented by the seller. Our team can address any concerned and can provide investors with assistance for company verification.
Why purchase an already made company in Germany?
A German shelf company offers the following benefits:
Faster engagement: the owner of the company will be able to engage in business activities much quicker than when starting a company from zero.
Credibility: one of the top advantages of a shelf company is that its seniority offers more credibility to other business partners and even banks, for credit purposes.
Customization: our specialists in company formation in Germany can help customize the company according to the client’s needs.
Saved time: the company owner will not need to invest much time in the transfer process, compared to when he would have to open an entirely new company.
One of the greatest advantages of German shelf companies is that being already registered, an investor will no longer waste time with the incorporation procedure. Aged German shelf companies allow the incorporation of any previous history and thus will provide more credibility to its owner when going into business. Our specialists in company formation in Germany can also customize the company according to the client’s needs.
Among the advantages of purchasing shelf companies in Germany is also the exclusion from accountability compared to registering a new company. Depending on where a businessman buys a shelf company from, our agents in Germany may conduct an extensive due diligence procedure before the purchase is concluded.
How can an investor buy a shelf company?
Purchasing a shelf company in Germany is quite simple. The only requirement is to transfer the shares from the company to the new owner. The transfer must be completed before a public notary in Germany. Also, when purchasing a German shelf company, all documents must be authenticated by the notary and the buyer must provide his or her identification documents. Once the transfer is completed, the new owner may bring the following changes to the company:
- change the name of the company,
- change the main business activity,
- change the registered address,
- appoint a new board of directors or management.
Once all modifications are in accordance to the new owner’s requirements, one must notify the German Trade Register.
When buying a ready made company in Germany, investors need to be well aware of the fact that they must perform a thorough verification of the company. This is recommended in order to avoid the situation in which the seller of the company claims that the legal entity was not involved in business transactions when, in fact, the legal entity was previously used and can even have debts. In order to avoid a most unfortunate scenario, we recommend reaching out to our team of agents who specialize in company registration in Germany. They are able to verify the company information and confirm the status of the legal entity.
In summary, the information that is generally provided when purchasing a ready made company in Germany is the following:
- the company type: this can be a private limited liability company or a public limited liability company.
- the name: the company has a unique name which also includes the abbreviation for the legal entity type.
- the incorporation date: this is the date on which the company was registered with the German trade register.
- the capital: the share capital of the company as well as the value of the shares.
- the tax status: this must reflect the true financial situation of the company and the VAT registration.
Here is an infographic on this subject:
The usual costs for buying a company will include those for the actual purchase of the legal entity as well as the notary fees and the costs for submitting the company changes with the trade register. Investors have the option to keep the existing name or to change it if they wish to do so. In some situations, the seller of the company will allow the buyer to keep the existing registered address for the company, however, this will imply additional costs.
The costs associated with buying a ready-made company in Germany can be higher in some cases compared to the incorporation of a new legal entity. This is due to the fact that companies that have been incorporated for some years, for example three or four years, will be substantially more expensive than companies that have only been incorporated for one year. However, for most investors interested in this option, the costs are well worth their business goals. A company that has seniority will have more credibility both in front of other business partners and for the possible clients in Germany.
A shelf company, or a dormant company, is ideally incorporated for a number of years and it is not used for any previous business purposes. This way, the new buyer is free to engage in the desired business activities with no bad debt and by using a legal entity that has a credibility guaranteed by the fact that is was present on the market for some time, with no liabilities or issues. The main reason why foreign investors choose to purchase a shelf company remains saving the time needed to incorporate a new business entity. For those entrepreneurs for which the name of the company is not important, the process is even simpler as they will not need to make any other subsequent changes to their acquired legal entity.
When purchasing a ready made company in Germany, we do recommend performing the needed verifications in order to make sure that the company is legitimate and that it will meet the business needs.
What are the documents a German shelf company comes with?
The acquisition of a turnkey company does not only cover the transfer of ownership, as the selected entity must come with all the original registration documents in order to ensure a safe purchase. If you plan on buying a ready-made company in Germany, here is what your business entity should be accompanied by in terms of documents:
- the Certificate of Registration in original;
- the Memorandum (where available) and Articles of Association in original;
- the tax identification number.
The Memorandum and Articles of Association are required as they need to be amended and filed again with the local office of the Companies Register. The Certificate of Registration must also be turned in, for a new one to be released.
If you are interested in a shelf company in Germany, we are at your service with tailored support in making the right choice.
We can also help you open a company in Germany from scratch if you are not in a hurry to start operating as soon as possible.
What are the main features of shelf companies in Germany in 2021?
Over the years, many things have changed for the better and technology has also shaped the business environment as most people knew it. When setting up a business in Germany or any other country around the world, the procedures have been streamlined thanks to the possibility of making a few customs arrangements that fit the most popular types of entities. Among these, the appearance of virtual office and nominee services which have helped providers to provide shelf companies to more and more people interested in this solution.
Upon purchase, a German ready-made company will have:
- a trading name which is mandatory when registering any legal form;
- a legal address which is another mandatory requirement for any company;
- a corporate bank account, where the share capital was deposited;
- a tax identification number;
- a the VAT number (however, this is optional, meaning that you can find shelf companies with or without such a number)
- a company director which is mandatory under the law.
The most important changes to a shelf company in Germany in 2021 can be made quicky as the virtual office can be used to alter the legal address while nominee services can be used to replace the director. However, these are temporary solutions that can be used if you have not decided on a specific registered address and do no have a director to appoint at the moment of the purchase.
Opening a business in Germany is subject to several steps, however, when choosing to buy a shelf company, many of these steps have already been performed. The name of the company is one that was available, and the business also has its articles of association drawn up in the prescribed form. As needed, investors will make subsequent changes to the business once the transfer is complete.
Our German company formation officers are at your service to help you make the necessary arrangements for the takeover of your shelf company.
Reasons for which shelf companies are bought in Germany
A German turnkey company can be used for various operations, which is why it is quite requested. Often preferred by foreign investor who have not done business in Germany before and want to start right away.
Here are the main reasons an investor would choose to purchase a shelf company in Germany:
- for relocating a business from another country to Germany and incorporate the history of the former company into the German one;
- for obtaining financing from German banks which usually do background checks;
- for entering private-public partnerships with government-owned enterprises and carrying out various projects.
The purchase of a shelf company in Germany is quick and efficient which might create the feeling that it is a better alternative to a new company, however, the entire cost of the former will usually be higher than the former’s. This is why before making such a decision you must carefully consider both options. Moreover, you can also use the experience of our local specialists who can help you choose based on the information provided.
Our company registration advisors in Germany are at your disposal with various services, which is why we invite you to send an email with your requirements, so we can make an offer. You can also watch our video below:
The German economy on the path to recovery
After the COVID-19 pandemic has affected all European countries, Germany was the first country to make a slight comeback during 2021. Even if this situation is not over yet, for the German economy things are starting to look more optimistic, according to TradingEconomics:
- the second quarter of 2021 brought a slight economic increase of 1.6%;
- the growth was driven by private consumption which increased 3.2%, a spectacular growth considering the -5.2% drop in the first quarter;
- imports also increase by 2.1% indicating businesses have started to work again;
- exports also marked a slight growth of 0.5%;
- on an annual basis, the economy grew by 9.4%, and by the end of the year it is expected to grow to 3.7%.
If you are interested in setting up a company in Germany, our team can help you. Moreover, our consultants in company formation in Germany will provide you information about corporate requirements for companies. You can also contact usif you need accounting services such as registration for taxation purposes or preparing annual financial statements.
Marco Rössel is a Partner at Liesegang & Partner and an experienced Attorney at Law. He is specialized in commercial and corporate law and can help you open your company in Germany as fast as possible.
Call us now at +49 69 71 67 2 67 0to 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 benefit 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.