Company Incorporation in Germany - An Overview

If someone wants to start a company in the European continent than Germany ought to be the number one choice. Location of Germany is centric in the European continent which helps in providing a vast opportunity for networking and business development across the continent. 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.

A competent and skilled workforce, high standards of education, an efficient banking and finance system, solid infrastructure, highly qualified labor power, low-level of corruption and high level of scientific and technological innovation make German, one of the most prosperous countries in the European continent.

To start a business in Germany, Company registration is mandatory. The different types of business entities in Germany are:

Sole Proprietorship

A sole proprietorship in Germany is very easy to incorporate however, it puts the unlimited liability on the owner and profits are subject to individual income tax rates.

Partnership (Includes Limited Liability Partnership)

A partnership is an arrangement in which two or people come together to work on mutual understanding...It requires minimum of 2 partners.

Company

It’s a fairly simple task for foreigners to set up a branch of the company in Germany. It requires registration with local trade office and commercial registration. The parent company of concerned branch in Germany looks after the legal and tax-related matters.


Why set up a business in Germany- Benefits

  • The interest rate on business loans is very low.
  • The government of Germany provides a lot of support to the business owners for training and recruitment.
  • Government banks work as public guarantors.
  • Incentives programs like grants and interest-reduced loans are extremely helpful for new smaller startups.

Corruption rates are also very low in Germany.


What is the process of registering a company in Germany?

Private Limited Liability Company (GMBH)

The first step for registration of a company is to draft the Article of Association (AOA) and compile other required documents which include a specimen of signatures, passport, special forms from the company registration office, opening a bank account, hiring a local accountant, etc. All the documents should be duly notarized by the public notary officer in Germany.

The minimum share capital for the incorporation of a Private Limited Company in Germany is 25000EUR. Transfer of shares to the public or registration at the stock market is not allowed for GMBH.

Even mini GMBH(UG) company can start with a minimum share capital of one euro. Once the company earns the profit of 25000 EUR it will automatically become a GMBH company at no additional cost.

Joint Stock Company (AG)

To incorporate a joint stock company in Germany one would need certain documents such as the draft of the Article of Association (AOA) and other documents such as specimen of signatures, passport copies, company registration form, a local bank account, hiring a local accountant, etc. The documents once complete should be notarized by public notary officer in Germany.

A minimum share capital of 50000 EUR is required to start a Joint Stock Company. Shares of the company can be freely registered at the stock market and the partners will have limited liability. The management board will check the management of the company regularly by a supervisory board which is formed by at least three members. A statutory auditor will audit the accounts of the AG.


Steps for Company Registration in Germany

  • Verification of company name - The first is to apply for verification of the company name at the Local Chamber of Industry and Commerce.
  • Draft of the Articles of Association - Once the company name is approved you need to prepare a draft of the Articles of Association of the company and get it notarized by the public notary officer in Germany.
  • After this, it is necessary to open a local bank account in Germany.
  • The application for registration, notarized 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.
  • Next step is to apply for a trade license from the local office of Business Standards at the Chamber of Industry and Commerce and the Labour Office. Labour office issues an eight-digit operating number which must be reported as social security.
  • Company then needs to apply to the concerned tax department for registration of corporate taxes.
  • After all the above mentioned processes are completed, the company can officially start business operations in Germany.

Why Vakilsearch?


4 Business Days

At Vakilsearch, we can deliver all your documentation requirements in just four working days. And if you're not totally satisfied, we'll take another couple of days to work on the modifications you need. All at the lowest price, both online and offline.

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We make your interaction with government as smooth as is possible by doing all the paperwork for you. We will also give you absolute clarity on the process to set realistic expectations.

160 Strong Team

Our team of experienced business advisors are a phone call away, should you have any queries about the process. But we'll try to ensure that your doubts are cleared before they even arise.

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