Company IncorporationLegal Advice

Company Formation in Germany – Benefits

If you want to start a business on the European continent, Germany should be your first choice. Germany's central location on the European continent helps to provide a large number of opportunities for networking and company development across the continent.

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Every European country is easily accessible in a few hours from Germany through various modes of transportation. Thus, making Germany the favorite choice to startup your business. Germany is one of the most successful European Union countries. For a number of reasons, it is also a good place to start a business. High educational standards, a qualified and competent workforce, an efficient financial and banking system, low levels of corruption, a strong infrastructure, and technological innovation are just a few examples.

Benefits of Starting a Business in Germany

  • Germany has an extremely low rate of corruption
  • Business loans have a relatively low interest rate
  • The German government offers a lot of assistance to business owners in terms of training and recruitment
  • Government banks act as guarantors for the general public
  • Smaller firms benefit greatly from incentive schemes such as grants and low-interest loans.

Registration of a Private Limited Company and a Joint Stock Company in Germany

Private Limited Liability Company

  • The first step of company registration in Germany usually starts with the drafting of the AoA (article of association) and compilation of other accompanying documents
  • A copy of your passport, a specimen signature, bank account documents, other special forms from the company incorporation office, proof of hiring a local accountant, and so on are some of these documents
  • In Germany, all of these documents must be notarised by a notary officer
  • In Germany, a private limited company must have a minimum share capital of 25000 EUR to be incorporated
  • However, you can also start with the minimum share capital of even 1 EUR
  • You will be classified as a mini GMBH (UG) company in this situation
  • You will be promoted to the GMBH category without incurring any additional costs once you have made a profit of 25000 EUR.

Joint Stock Company

  • To start a joint stock company in Germany, you’ll need a draft of the articles of association (AOA) as well as other documents including signature samples, passport copies, a business registration form, a local bank account, and hiring a local accountant, among other things
  • The documents should be notarised by a public notary officer in Germany after they are completed
  • In Germany, a minimum share capital of 50000 EUR is required to form a joint stock company
  • The partners will have limited liability in this sort of business, and the firm shares can be freely traded on the stock market
  • A supervisory board of at least three people will monitor the company’s management’s performance on a regular basis
  • The AG accounts will also be audited by a statutory auditor.

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Steps to Forming a Company in Germany

  • Step 1: The company needs to file an application with the local chamber of the Department of Industry & Commerce for verification of its company name
  • Step 2: After the company name has been approved, you must develop a draught of the company’s articles of association and have it notarised by a public notary officer in Germany
  • Step 3: Following that, you must open a local bank account in Germany
  • Step 4: The application for registration, notarised AOA, details of management board structure and share capital have to be submitted to the German Commercial Register. All these documents can also be submitted in electronic form
  • Step 5: The business should then apply to the Department of Industry & Commerce’s Business Standards Office or for a trade license
  • Step 6: The labour office must also provide the company with an 8-digit operating number
  • Step 7: This number will also be provided as the company’s social security number (SSN)
  • Step 8: The company must then apply for corporate tax registration with the appropriate tax authority
  • Step 9: The company can formally begin business activities in Germany once all of the preceding formalities have been completed.

Conclusion

At Vakilsearch, we take care of all the paperwork so that your interactions with the government proceed as smoothly as possible. We’ll also provide complete transparency into the process so you can set realistic expectations.  If you have any questions about the procedure, our team of experienced business consultants is just a phone call away. However, we will make every effort to clarify any doubts you may have before they arise.

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