Creating a firm in Germany is a great option, paving the direct gateway to the EU market. Nonetheless, it is crucial to understand the legal landscape of the German industry.
How to register a company in Germany
Germany truly became a big player in the global arena. Give forethought to company registration in Germany—and you will have a chance to establish your profit-making initiative on the global economic stage forthwith.
Jurisdiction features of German companies
Registration of a company in Germany without a residency in Germany or another state of the European Union is possible. If that is the case, you are able to found your project as a capital community, particularly:
- GmbH. What is it, and whether is it the same as LLC? While the technical answer is no, GmbH functions as the counterpart of LLC. Creating a corporate ecosystem may be one of the steps of founding a GmbH.
- UG. It’s a viable alternative to a GmbH, also known as ‘mini-Gmbh’, since it requires only 1 euro of minimal investment.
- AG. They are likewise recognized as a Joint Stock Company.
GmbH: Legal features
- Company formation in Germany administers a specific set of laws in the matter of the founding of a GmbH. Foundation agreement is its key document.
- The minimal investment prerequisite comprises 25,000 euros (12,500 of which should be paid upfront). In the case of having two and more founding members, the enrollment course demands just a part of the approved funds. A remaining sum is to be paid after the firm has begun functioning during the 1st year period.
- Registration of a company for foreigners in Germany allows both residents and foreigners to be appointed as founders.
- A minimum of one individual as a manager is mandatory. Additionally, non-residents are eligible to uphold the positions of directors.
UG: Legal features
- When registering a company in Germany as a UG, guidelines are pretty specific, with the foundation document included.
- As stated earlier, the monetary requirement for this type of company is lower, consisting only of 1 euro (per stockholder). UG is the great upstart associated with decreased risks. Once such a company obtains 25,000 euros, it is consequently converted into an GmbH, which happens automatically and with no fiscal charge, which is ideal for firms devoid of a high advance payment.
- Germany company registration rules applied to foreigners are just like those for a GmbH.
- The upper management requirements are identical to those for a GmbH.
- This category is the foremost prevalent category of business in Germany.
AG: Legal features
- To register company in Germany as AG, the obedience to comply with a special law is compulsory, foundation document encompassed.
- Those entities are characterized by higher funding demands in the amount of 50,000 €. Simultaneously, during the legitimation, 25% is allegeable to payment straight away. The legitimation entails the recording of any stocks in the company’s possession.
- Investors may consist of non-residents.
- Top management must consist of at least a single person, and a supervisory board demands a minimum of three members, which is not restricted to foreign citizens.
Organization Maintenance Costs
After the legitimation, ongoing expenses arise from maintaining its operations. Those fees in Germany generally comprise costs for accounting, fiscal obligations, and achieving corporate governance demands.
- Annual Compliance and Financial Reporting. Every German firm must file annual reports and periodic fiscal statements, determined by its size. To learn more about taxation, see below.
- Registered Office and Administrative Cost. Companies often face regular costs for hiring local representatives, renting office space, and using bookkeeping or accounting services.
Because of strict regulatory oversight, it is usually vital to employ specialists who ensure compliance. These professionals handle legal, financial, and auditing tasks, contributing to the total firm’s legalization and maintenance costs in Germany.
German Taxation
All of the above jurisdictions are liable to the consecutive base rates:
- VAT equals 19%. Certain types of activities have a preferential rate, which can reduce VAT down to 7%.
- Corporate Income Tax equals 15%. Together with Solidarity surcharge and Trade tax, you can expect around a 28-32% tariff.
- Overall income and dividends derived from qualifying shareholdings are commonly 95% exempt under the participation exemption regime. The remaining 5% may be treated as non-deductible expenses.
- For non-qualifying shareholdings, capital gains may be subject to the typical corporate profit tax levy (commonly 14–17%). Each case requires an individual assessment.
- The dividend withholding consists of 25%, but can be reduced under EU directives/treaties. This amount is on the shoulders of the company’s subsidiaries, which ought to be registered in Germany.
- Giving – 7-50%. Amounts up to 75 thousand euros are taxed at the lowest total allowed.
Registering a company: step-by-step
Registration of a business (firm) in Germany may be skipped by securing a ready-made company for sale. But if that alternative is not suited for you, here’s a guide to register a company in Germany online.
To register a company in Germany would involve undergoing a series of key stages. Generally speaking, the main legitimation actions are as follows:
- Make up your mind on your company’s name that must be unique, not misleading, and suit your business’s nature. Make sure your Company’s Statute reflects only the areas in which the firm will work and progress.
- Obtain a legal address. This address will be included in all the records related to the firm.
- Sign the foundation papers. This step will necessitate notary involvement. Every founder will be able to sign this document.
- Create a bank account, then establish a money deposit. The process is really quick and will not drag the days on end—only roughly 30 minutes. As soon as the firm is recorded in the corporate registry, its funds are allegeable to be used to develop your endeavor.
- Tax number, custom number, and other essential data will be received by the owner of a company.
If you need guidance going through any part of the listed procedure, you can confide in our specialists. Eternity Law International can assist through a complete list of the essential preparations to set up your firm. Reach out to us via our CRM form and get the precise assistance you need.
Re registering a company
If you’ve moved, changed your firm’s purpose, or are transferring ownership, an obligation is to re register company in Germany. Certain sort of firms may further require updating the registry—this can be done through a notary. Re registering a company in Germany includes such subsequent measures as:
- Notifying the authorities. It is pivotal presuming your firm has moved premises, changed its purpose, or been transferred to a new owner. It is feasible to be done via the Internet or physically.
- Securing the new register with all updated data about your firm. Hand over the form, followed by submitting any papers needed.
- Paying the registry fee that extends from approximately 20 to 60 euros.
- A trade registration certificate would be given to you after successful application approval.
- Follow-up includes the trade office automatically informing the tax office; you will receive the new tax number thereafter. It would be imperative for a notary to file the updated information with the central registry if your firm framework requires it.
Company incorporation Germany
If simply functioning lawfully at a local level isn’t enough, you may want to dig into the possibility of incorporation. It can protect the private assets, creating a safeguard which serves to separate personal assets and the business’s debts and liabilities.
- Determine the business’s shares and establish stock funds. Each of the stockholders needs to distribute the exact figures of shares an individual will get in the firm. Stock money ought to be redistributed proportionally between everyone involved.
- Notarize the partnership agreement and a corporate charter. All the respective signatures from the parties involved ought to be signed in the notary office.
- Pay the stock funds via a newly opened account. Upon the payment, the obligation of the holdings shifts from the shoulders of the individual stockholders to the firm.
- Admit to the transparency register. Given step is compulsory; failing to do as such will result in a fine. The record formulation is free of charge and achievable via the Internet.
- Create the records in the trade, then the tax offices. Upon this step being finalized, the tax authority must be notified in the period of one month since the company’s incorporation.
Summary
Whether you’re forming a GmbH, UG, or AG, it is imperative that you are coming from the place of a comprehensive understanding, an insightful overview, and qualified specialists easily accessible at your disposal.Whether you need to register the new firm, re register the existing one, establish the offshore company, or go through company incorporation in Germany, Eternity Law International will happily lend a hand. Our group of highly skilled jurists will provide you with help at any and every step you require.
FAQ
Can a foreigner set up a company in Germany?
This goal is achievable. Every corporate body creation in Germany for a non-citizen remains viable.
How much does it cost to register a company in Germany?
The total cost of Germany company formation depends on what kind of the authorized entity you choose. While an AG has the highest amount of the front money required, a UG allows you to begin from just 1 euro.
How can I register my company in Germany?
To register a company in Germany, the imperative part is to define a judicial model suited to your needs. Above you can find a short comparison on the matter.