If you are considering starting a business on the European continent, Germany should definitely be among your top choices.
Germany is considered the biggest economic powerhouse in the European Union. And due to government support and initiatives for Small and Medium Enterprises, there have been significant developments in the German mainland.
Germany‘s central location on the European continent helps provide a vast number of opportunities for company development across the continent.
The German passport is also one of the strongest in the world, making investors consider Company Registration in Germany.
Advantages of Company Registration in Germany
- Germany has the biggest economy in Europe.
- Business loans have a reasonably low-interest rate
- There is a high level of business clarity in Germany.
- Germany has an exceptionally low rate of corruption
- Availability of high-speed transportation for goods.
- Presence of world-class infrastructures.
- The German government extends a lot of assistance to business owners in terms of training and recruitment
- Germany is exempt from exchange controls for foreign investment.
- Favorable government policies in support of enterprises.
- Smaller corporations benefit from incentive schemes such as grants and low-interest loans.
- Ease of business funding.
- Absence of German law between locals and foreigners.
- Availability of a wonderful environment for start-up companies.
Types of Business Forms for Company Registration in Germany
Before incorporating a company in Germany, it is crucial to first consider the type of business structure used for company registration. The following are the types of business structures present in Germany:
Sole proprietor
As implied by the name, this structure always has one proprietor, also, there is no limit placed on the proprietor’s liability. The name of the company, the legal structure of the business, its location of the business, the court of registration, as well as the number under which the firm is documented in the Commercial Register, must be noted on all business correspondences and letterheads.
The Limited liability company (Gesellschaft mit beschränkter Haftung or GmbH)
The Gmbh is a legal entity in its own right. The mandatory capital of a GmbH must total a minimum of 25,000 euros at the time of the foundation of the company due to liability reasons.
The contributions of partners could be made in kind. In this situation, the elements used to make the contribution together with their calculated values must be stated in the partnership contract.
A GmbH may also be established by a single individual as a so-called Ein-Mann-GmbH. In the event that the nominal capital contribution for an Ein-Mann-GmbH is not paid in full, collateral is expected for the outstanding balance.
Partnership (Personengesellschaften)
Partnerships are formed by at least two legal entities – either two people or companies. Usually, both partners have unlimited personal liability for business debts, except in the circumstance of limited partnerships.
Joint-Stock company (Aktiengesellschaft or AG)
Like the Limited Libility company of Deutsche Aktiengesellschaft, a joint-stock company is also a legal entity in its own right. The minimum capital which is 50,000 euros includes either par value shares having a minimum value of 1 euro per share or no-par value shares.
An AG can be established by a single individual. And all individuals, including legal entities, can be members of an AG. It is to be both judicially and non-judicially represented by the management board, which may comprise one or more persons assigned by the supervisory board. The primary duty of the supervisory board is to supervise the business management of the manager or the management board.
Branch offices
Registered commercial companies may establish independent branch offices which qualify for registration in the Commercial Register. Independent branches of this type generally carry the same name as the head office and may or may not include an additional designation indicating that it is a branch.
Documents Required for a Company Registration in Germany
The following documents are mandated for company registration in Germany:
- Application for registration
- Articles of association
- A document indicating the management board structure
- A certificate indicating that the share capital was deposited
- Visas of Directors (in case of foreign residents only)
- Registered office address of the company
- Information on the Directors and Shareholders
More information could also be requested by the notary.
Process for Company Registration in Germany
Outlined below are the main steps for company formation in Germany:
- select a company structure: this can be the limited liability company, the joint stock company, the partnership, or the branch office.
- choose the company name: the name of the new legal entity must be different and can be checked for availability.
- execute the deed of formation: this is conducted before a notary in Germany, the founders must also prepare the Articles of Association.
- deposit the share capital: some business structures require a minimum share capital, which must be deposited in a bank account.
- register the company: the company formation ends with registering in the commercial register. The founders of the company must sign the application for registration in front of the notary public, and once the company is registered, the liability of the founders enters into effect.
- obtain license: according to the type of business activity to be conducted, the business may need certain licenses or permit from the German authority.
Taxation
Tax Returns must be filed at least once a year with the eligible tax authorities. All companies in Germany at taxed as corporate tax (Körperschaftsteuer) and Trade Tax (Gewerbesteuer) which is charged by the local cities on the company. Corporate Tax in Germany is charged at the rate of 15.825%.
Are you ready to enter the German market and register your company in Germany ? -Let’s go ahead and contact your Damalion expert now.
