Germany has one of the strongest economies in the European Union, and many multinational companies are based there. Company formation in Germany certainly has some benefits for your business, to name a few:
- 0% VAT for trade between EU member states
- Leading economy in Europe
- considered an essential member of the EU
- High-tech infrastructure and home to many multinationals
- access to qualified professionals
- Possibility of business immigration from other countries
- Remote company formation is possible
With the professional support from Bradford & Jacobs, the set-up process for a company in Germany is straight forward, and we will find the most suitable solution for you and your business. Get in touch to learn more.
How to incorporate a company in Germany?
Forming a company in Germany is not as complicated as you might assume. However, some steps have to be followed to establish your business; they might be different according to the company type you choose. We are happy to assist you with these steps to establish a suitable company for you.
- Selection of the right limited liability company for your business.
- Find a company name. The commercial register (Handelsregister) needs to be checked before assure that your name is not already taken.
- Establish the object of your company (Unternehmensgegenstand).
- Application for the name of the company with the German Chamber of Commerce and Industry (IHK).
- Draft articles of association and notarize them.
- Opening a bank account for your business
- Deposit the share capital (Stammkapital) in your account and file the bank statement with your documents
- Application Tax ID and registration with the local trade registration (Gewerbeamt)
- Some companies require insurance, depending on the sector.
We take care of these steps for you. A company in Germany can be formed remotely, so your physical presence throughout the formation process is not necessarily required. Get in touch to receive more information form us.
Legal Requirements & Accounting
For the formation of a company in Germany, the following documents have to be presented at a notary:
- the directors’ and shareholders’ identity information
- A copy of the passport from all directors, shareholders, and ultimate beneficial owners
- A company incorporation form filled in by you
- The company name needs to be verified in advance for availability.
Opening a local bank account is also requires for incorporating your company in Germany. We assist you with that and make sure to open the most suitable one for your business. It is obligatory to work with an accountant and tax advisor to make sure your finances are filed correctly. Bradford & Jacobs will also assist you in that field.
Taxation of your company in Germany
The German Tax system is somewhat complex, that is why we advise to partner with a professional like us to avoid pitfalls. The company tax rate in Germany is 15% but might vary in some cases. A 5.5% solidarity surcharge has to be paid on top of the company tax. The municipalities additionally apply a trade tax and set the rate for it. It is at an average of 13.96 %. The combined rate of company tax, trade tax, and the solidarity surcharge is approximately 30%.
Company types to incorporate in Germany
There are different company types with different legal requirements and objectives in Germany. It is crucial to establish a suitable type for your company; we will guide you through that process.
These are types to consider for your company formation in Germany:
- German UG
An Unternehmergesellschaft (UG) is the equivalent to the English LTD. This type is most popular for new businesses and start-ups. It is more flexible than GmbH, and the minimum capital is as low as €1.
- German GMBH
A GmbH (Gesellschaft mit beschränkter Haftung) is equivalent to a private limited liability company (LTD.). The GmbH is the most chosen type for a company formation in Germany. It is managed by a director, who is appointed by the meeting of shareholders.
The GMBH’s company shares are not allowed to be listed on the stock markets, and they may not be traded publicly.
No restrictions on repatriation of profits apply in this case.
- German AG
A Joint Stock Company is most suitable for larger businesses and publicly traded companies. The members of the AG are liable for the contribution of capital. A board of directors manages the company while being supervised by a separate board. A registered auditor must audit the company’s accounts.
- German KG – limited partnership
Option for two or more collaborating partners. These can be silent or general partners. General partners are fully liable while silent partners are liable for the contributed capital. Silent partners cannot intervene with daily business decisions and actions.
- Subsidiaries and Branches
The formation of a German branch to an international company is possible, but the branch is not a legal entity. The parent company holds liability and profits.
A subsidiary formed in Germany, however, is a separate legal entity. A foreign company can hold shares.
How much does a company formation in Germany cost?
The set-up cost for a company in Germany, and the capital you have to present depend on the company type. For an UG, the mandatory capital is €1; however, a capital of €1,000 is suggested. For setting up a GmbH, the minimum is €12,500. For an AG, the minimum required capital is €50,000.
How long does the process of a company formation in Germany take?
A company in Germany could be incorporated within 2-5 days if all the documents are submitted accordingly. The timeframe might change depending on the company type and the individual case.
Ready to set up your company in Germany?