One of the largest economy in Europe with access to 450 million consumers, Germany is the motor of Europe creating 22% of European GDP. Germany hosts nowadays 22,000 foreign companies, employing more than 2.1 million staff.
When incorporating, a bank account must be opened immediately after signing the deed of incorporation with the notary, and the share capital must be deposited into that account. Also, a bank statement showing the amount of capital used for the company incorporation needs to be filed with the Court of Registration, along with the Company Statutes.
What are the main German company types?
There are four main forms of German company incorporation, and they are as follows:
- two types of limited liability companies; GmbH or UG (mini-Gmbh)
- stock corporation (AG)
- sole proprietor (sole trader)
Main features of a Limited Liability GmbH/UG
- the minimum share capital for a GmbH is €25,000 (50% minimum to be paid up)
- the minimum share capital for a UG is €1
- these are the most common business entities in Germany
- must have at least one shareholder
A benefit of incorporating a UG company is that when it gains 25,000 EUR it will automatically become an GmbH company at no additional cost. This is great for companies that don’t require a high start-up investment
Setting up a branch in Germany
It's a relatively easy process to establish a German branch office, all you need to do is register with the local trade office and the commercial register. It is important to note that the parent company will retain full responsibility for the branch on all legal and tax matters
Germany hosts excellent technical training institutions and apprenticeship programs, which are keys to success of its industrial sectors. There is a large pool of qualified individuals seeking employment in most areas of Germany, for location with high employment rates. The local government-run employment exchange is a good place to advertise entry-level jobs.
Foreign investors should be aware that local businesses are heavily regulated in Germany, especially when incorporating listed AG companies. All companies must comply with the detailed requirements laid out by the German authorities. Government bodies are responsible for overseeing the activities of financial institutions and insurance offices. The majority of other industries are assigned to varies associations who regulate what their members can and cannot do.
A GmbH is required to file an annual return and maintain a register of officers and accounts. In some instances an audit can be expected.
The federal government offers a wide range of incentive programs, including loans and grants, depending on the nature of the company and its location. Some regions in Germany offer capital investment grants of up to 50% to small and medium enterprises. There are also local government incentives that may be offered in the form of reduced tax rates but these are generally only available in small cities and rural areas.
Please contact us and we will be pleased to discuss matters in greater detail.