Company Registration in Germany

Opening a Company in Germany

 

Germany is one of the most attractive countries in Europe for foreign investments. Its central location, easy access to other EU markets and its good infrastructure and highly qualified workforce recommend it for investments in several business fields. One sector that stands out, in particular, is research and development but investment opportunities abound, especially in cities like Berlin.

Company formation in Germany consists of several basic steps that refer to the preparation of the company’s documents and its effective registration with the German authorities. Among the initial steps for starting a company in Germany, we can mention the drafting of the articles of association and all other required documents, such as specimen signatures, passport copies and the special forms from the company registration office. All the procedures that involve an official signature must be performed in front of a public notary in Germany. Company formation in Germany also refers to finding a registered office, opening a bank account and hiring a local accountant for the company.

 

  • Types of companies in Germany

 

  1. German GMBH

GmbH-Private Limited Liability Company can be incorporated in Germany by at least one investor with a minimum share capital of 25,000 EUR. The company capital can be constituted by cash or kind (in this case, the value of the assets must be shown specifically in the articles of association). As a particularity, the shares of the German GMBH cannot be transferred to the public nor registered at the Stock Market. The management of the GMBH is assured by the general meeting of the shareholders. The daily decisions are taken by the company’s director which is appointed by the general meeting of the shareholders.

  1. AG-German Joint Stock Company

This is suited to large businesses because of the possibility to increase the initial capital through the registration of the shares to the Stock Market. The German AG requires a share capital of minimum 50,000 EUR. The liability of its members is limited by their contribution to the capital, just like in the case of the joint stock companies. The management is assured by the management board which is checked periodically by a supervisory board which is formed by at least three members. The accounts of this business type are assured by a statutory auditor.

 

  1.  German Limited Partnership        

Formed by two types of partners. The silent partners who must bring a contribution to the entity’s capital and has limited liability to the extent of that contribution and the general partners who don’t necessarily make a contribution to the entity’s capital but who have unlimited liability for the entity’s debts and who can claim profits. The decisional powers of the German limited partnership are owned by the general partners and the silent partners cannot participate in taking the management decisions.

                                

  1.  Sole Trader  

Formed by a single individual with his own personal assets and no protection from liability in case the entity is facing bankruptcy.

 

  1.  Branch         

Branches are also popular methods of entering the German market and many foreign investors choose it as the first step in their business path. The German branch is not considered a legal entity, therefore its assets and liabilities belong to the parent company. Please feel free to contact our company formation specialists in Germany for more details regarding the advantages of these types of structures.

 

  • The company incorporation procedure in Germany

 

All rules and regulation regarding the formation of German companies are included in the Company Act.

Preliminary procedures of company incorporation in Germany imply the verification of the name uniqueness at the local chamber of industry and commerce, notarize the company’s articles of association and the opening of a bank account where the minimum share capital or the initial capital of a partnership must be deposited.

  • The following documents must be delivered to the German Commercial Register in order to start the registration process:
  1. an application for registration
  2. the notarized articles of association
  3. a document showing the management board structure
  4. a certificate showing that the share capital was deposited

All the above must be submitted in an electronic form. The registration of the newly formed company is made on a central electronic platform by the Commercial Register.

The next step in company incorporation in Germany is applying for receiving the trading license from the local Office of Business and Standards followed by the registration at the statistical office (which will send a questionnaire that must be filled with the company's business data) and at the chamber of industry and commerce and the labor office. The labor office is issuing an eight-digit operating number which must be reported at the social security. The entity must then apply for the federal health insurance office. A notification must be sent to the Tax Office regarding the newly formed business entity, this leading to the registration for the corporate taxes and VAT.

After company registration in Germany, the business can begin its commercial activity. The majority of the companies started in Germany need employees. Employers are offered a well-trained workforce. They can ask for help on job websites and recruitment agencies. In this way, work providers can find the best suited personnel for the jobs offered.