Choosing the legal form of the company
If the client is a resident or citizen of Germany, our company offers the opportunity to register a "Society" legal form. If the client is not a resident nor a citizen of Germany, he may register Gesellschaft mit beschränkter Haftung or Aktiengesellschaft.
Gesellschaft mit beschränkter Haftung
The registration of this form of business in Germany is regulated by the Gesetz betreffend die Gesellschaften mit beschränkter Haftung. This is a special law, where the basic document is the foundation agreement. The client is entitled to personally choose his own company name, but the presence of the abbreviation GmbH in the name is mandatory. The minimum amount of the share capital here is 25,000 EUR. In case a company in Germany has two or more founders, it is possible to contribute half of the declared amount. The rest will be transferred during the first year of operation. An offshore company in Germany requires one manager, which may be a German national or a non-resident.
Aktiengesellschaft
The German equivalent of a joint stock company is registered under the Aktiengesetz regulation. The law regulates not only the establishment of a business, but also its further activities. The name must comply with the charter of the German Chamber of Commerce and Industry and contain the acronym AG. The minimum initial capital of such a business is 50,000 EUR, a quarter of the amount must be paid upon registration of the company. It is important for the establishment to have one or more shareholders, one administrator and three members of the supervisory board.
Among the general conditions for the registration of both types of legal forms of business is the need for the founders to move to Germany, so they are issued with business visas and subsequently with residence permits.

In order to incorporate a company in Germany you need to provide information about the directors and founders of the company. This information includes personal data: full name, date of birth, place of birth, official place of residence as well as passport series and numbers.
If the company is incorporated in Germany by a legal entity, the statutory documents of the existing business will need to be prepared.
A business in Germany requires a mandatory contribution of the share capital, and information on the amount of the contribution and the level of distribution of financial shares between the founders must be provided prior to submitting an application. An additional document is required to prove that the capital payment has been made successfully.
The Chamber of Commerce and Industry may reject a company name if it does not comply with the rules. In view of this factor, several variants of the name of an offshore company in Germany should be prepared.
An address certificate from the place where the head office is to be established.
When registering a company in Germany, it is necessary to specify the type of activities of the company.
The period of registration of business in Germany does not exceed 8 weeks from the date of application and submission of documents. The period of documentation review depends on the region of application as well as the legal form of the company. Law&Trust lawyers will help you to organize your business in Germany correctly, and then provide legal and accounting support at your request.
Applications are received both in the office and remotely. We provide consultations free of charge for regular and new clients. Offshore companies cannot be established in Germany, the registration of an offshore company in Germany is prohibited by law.

Germany is a country that usually needs no introductions. Undoubtedly, its name is associated worldwide with the economic and political stability of the republic, with its high status in international relations.
More than 80 million people live in the country, showing annual growth. More than 90% of the population are Germans.
Berlin (capital) and Bonn are the most politically and economically important cities in Germany. 16 states comprise the Federal Republic of Germany. Germany's neighbors are the Czech Republic and Denmark, Poland and Belgium.
The borders with Germany are also shared by Luxembourg and the Netherlands, Switzerland, Austria and France. The waters of the North Sea and Baltic Sea wash the northern lands of Germany. The main sources of fresh water are the Rhine, Oder, Danube and their numerous inflows.
The nature of Germany is amazing; you can enjoy here endless forests, white peaks, picturesque lakes and beautiful landscapes. Tourists from all over the world are attracted by the ancient architecture of German cities.
Germany's international status is evidenced by its membership in NATO, UN, EU, and G8; it is also a party to the Schengen Agreement.
The official language is literary German. Various dialects are used on borders with other states.
The image of a reliable economy and successful government is a good reason to register a company in Germany.

Your company will be viewed as a reliable business partner;
The owner of a German company uses the German trademark accordingly;
Equipment, machinery, other goods as the authorized capital are imported duty-free into the CIS;
Contributions of a German company to enterprises in the CIS are protected as investments. It is possible to open accounts, have credit cards of German banks, use cheque books;
In Germany, VAT is refunded;
A real opportunity for a company founder and his family to apply for a residence permit in Germany, eventually obtaining German citizenship;
The owner of a company in Germany can open a branch in any of the EU countries;
Business visas to Germany can be obtained many times;
There is preferential insurance for companies;
It is possible to receive subsidies, grants in Germany;
Access to credit by German banks.
Most foreigners prefer the Limited Liability Company (GmbH) in Germany. This form of company is perfect for people who already have a business and want to develop it, using all the advantages of German law.

Registering a company is not very expensive. Just € 25,000 is enough to start a company. This amount can be used at the owner's discretion (for example, to invest in business development);
If the company has two or more founders, half of the share capital is paid immediately. The whole year is given to the company to contribute the rest of the amount;
Once the foundation documents have been notarized, the company may begin its work;
The founders of a GmbH company registered in the commercial register are liable for the amount of the share capital limited by the amount.

A Memorandum of Association is the basic founding document;
Practically unlimited choice of company name. It is obligatory to obtain permission from the Chamber of Commerce and Industry. The key abbreviation "GmbH" must be specified in the name;
The minimum number of founders is not fixed. They can be both foreign and German natural/legal persons;
It is allowed to establish a company with one director (may be non-resident, but some states have different requirements).
The main function of a German LLC (GmbH) is to provide opportunities to do business with partners from the West and East, for whom companies registered in the CIS may not look reliable enough. A GmbH in Germany is a simplified, flexible and economical form of business which excludes personal responsibility of the participants.
The German GmbH is a trading company and a legal entity, irrespective of the type of business.
Given the low threshold for a minimum share capital of GmbH in Germany, it is somewhat risky for counterparties. At the same time, however, the members of the German LLC demonstrate greater involvement in business than the shareholders. It is primarily a question of making decisions about establishing a company, issuing cash loans and alienating shares.
It is clear that the GmbH companies in Germany has established itself in the context of international business over the last decades.

The current German law requires the LLC to draw up a balance sheet and a calculation of losses and profits for each business year. The financial statements are submitted in German.
A LLC in Germany pays the following taxes:
The corporate income tax is 25%.
The payment of profits to German participants involves the payment of 20% tax on capital gains per participant. The payment is made to the tax office.
A solidarity surcharge of 5.5% on corporate tax as well as capital income tax.
If a participant from outside the jurisdiction receives income, the withholding tax is paid (instead of capital income tax).
The communal tax (for a certain type of activity).
The sales tax on services rendered and supplies. The rate is 16%.
Decided to register a company in Germany? Then feel free to contact us. Registration of companies and offshores is one of the leading areas of our activities.
A legal and profitable international business is no longer a dream. Incorporating a company in Germany will help you bring all plans to life!

Germany, officially the Federal Republic of Germany, is a State in Western Europe. It shares borders with Denmark in the north, Poland and the Czech Republic in the east, Austria and Switzerland in the south, France, Luxembourg, Belgium and the Netherlands in the west.
Germany has a total surface area of 357,021 sq. km and a population of 80,716,000 (2014). In terms of ethnic composition, 92% are Germans, 2.69% are post-Soviet immigrants, 2.14% are Turks and 3.17% are other migrants.
The capital of Germany is Berlin.
The official language is German.
The national currency is the euro (EUR). 1 USD is equivalent to 0.73 EUR.
The climate of Germany is moderate continental, the average temperature in July is +16/+22 degrees, while the average temperature in January is 0 degrees.
The time zone is UTC+01:00.
The literacy level is 99%.
Telephone code - +49.

The territory of modern Germany was part of the Empire of Charlemagne. However, the Empire did not last long, as Charlemagne's heirs divided it among themselves, resulting in the formation of three kingdoms: West Frankish, now France; East Frankish, which eventually became Germany; and the Middle Kingdom, from which Italy, Provence and Lorraine were later separated. The founding date of the German state is considered to be 962, at which time King Otto I of East Frankfurland became the Emperor of the Holy Roman Empire. In 1806, largely thanks to Napoleon, the Holy Roman Empire ceased to exist. As a result of the Congress of Vienna, the German Union was formed, headed by Austria. In 1866, the war between Austria and Prussia broke out, and the latter was defeated. In 1870, the German Empire was established and Otto von Bismarck was appointed Chancellor. Upon defeat in World War I, Germany became a republic. After the devastating World War II, Germany was divided into two parts: the western Federal Republic of Germany and the eastern German Democratic Republic. Germany became a member of all key international and European organizations. After the collapse of the USSR on October 3, 1990, the German reunification took place.

State system
Germany is a parliamentary republic.
The head of State is the federal president who is more representative and appoints a federal chancellor.
The executive power belongs to the Federal Government, which is headed by the Federal Chancellor.
The legislative power is represented by the German Bundestag (parliament) and the Bundesrat (body representing the provinces). These two bodies are authorized to amend the constitution by a two-thirds majority in each body.
The judiciary power is comprised by the Federal Constitutional Court, which oversees constitutionality, the Federal Court in Karlsruhe, the Federal Administrative Court in Leipzig, the Federal Labor Court, the Federal Public Court and the Federal Financial Court in Munich.

Germany has a social market economy with a highly skilled labor force, large capital, low levels of corruption and high levels of innovation. Germany has the largest and most powerful economy in Europe, is ranked 4th in the world by GDP per capita (nominal), 5th in PPP and is the largest contributor to the EU budget in 2011. The service sector accounts for 71% of GDP, the industry for 28% and the agriculture for 1%.
The official unemployment rate in Germany was 6.8% in April 2014. However, this figure includes people in part-time employment who are in search of permanent employment. The unofficial unemployment rate in 2013 was 5.3%.
Germany is in favor of closer economic and political integration in Europe. Its commercial policy is determined by agreements between the EU members and the EU legislation. Germany introduced the euro as its main currency on January 1, 2002.
Around 2/3 of the world's leading trade is conducted in Germany.
Out of the 500 largest public companies (Fortune Global 500), 37 are based in Germany (as of 2010).

Germany, officially the Federal Republic of Germany, is a State in Western Europe. It shares borders with Denmark in the north, Poland and the Czech Republic in the east, Austria and Switzerland in the south, France, Luxembourg, Belgium and the Netherlands in the west.
Germany has a total surface area of 357,021 sq. km and a population of 80,716,000 (2014). In terms of ethnic composition, 92% are Germans, 2.69% are post-Soviet immigrants, 2.14% are Turks and 3.17% are other migrants.
The capital of Germany is Berlin.
The official language is German.
The national currency is the euro (EUR). 1 USD is equivalent to 0.73 EUR.
The climate of Germany is moderate continental, the average temperature in July is +16/+22 degrees, while the average temperature in January is 0 degrees.
The time zone is UTC+01:00.
The literacy level is 99%.
Telephone code - +49.

The territory of modern Germany was part of the Empire of Charlemagne. However, the Empire did not last long, as Charlemagne's heirs divided it among themselves, resulting in the formation of three kingdoms: West Frankish, now France; East Frankish, which eventually became Germany; and the Middle Kingdom, from which Italy, Provence and Lorraine were later separated. The founding date of the German state is considered to be 962, at which time King Otto I of East Frankfurland became the Emperor of the Holy Roman Empire. In 1806, largely thanks to Napoleon, the Holy Roman Empire ceased to exist. As a result of the Congress of Vienna, the German Union was formed, headed by Austria. In 1866, the war between Austria and Prussia broke out, and the latter was defeated. In 1870, the German Empire was established and Otto von Bismarck was appointed Chancellor. Upon defeat in World War I, Germany became a republic. After the devastating World War II, Germany was divided into two parts: the western Federal Republic of Germany and the eastern German Democratic Republic. Germany became a member of all key international and European organizations. After the collapse of the USSR on October 3, 1990, the German reunification took place.

Germany has a civil law system based on the Roman law with some variations of German law.

The German legislation provides for the possibility of incorporating the following legal forms:

• Limited Liability Company (GmbH)
• Joint-Stock Company (AG)
• European Joint-Stock Company (S.E.)
• Entrepreneurial Company (UG Haftungsbeschränkt)
• Private Partnership (Gbr)
• Commercial Partnership (OHG)
• Limited Partnership (KG)
• Limited Liability Partnership (GmbH & Co. KG)
• Limited Partnership On Shares (KGAA)
• Registered Association (E.V.)
• Sole Proprietorship (Einzelunternehmer)
• Private Foundation (Stiftung)

The most popular and widespread form is the Limited Liability Company (GmbH). The GmbH are regulated by the Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung - GmbHG).

A german limited liability company acts through one or more managing directors (Geschäftsführer) as its legal representatives. The managing directors may, but are not obliged to, be shareholders of the company. Any capable natural person may be appointed as a managing director. Non-residents of Germany may also be appointed as managing directors, but the authorities sometimes require foreign directors to be able to come to Germany freely at any time.
The appointment of a director is made by a resolution passed by a simple majority of the competent authority, usually a shareholder meeting. The Managing Director may be dismissed at any time (also by resolution of a simple majority of shareholders). The appointment and dismissal of managing directors takes effect as soon as a resolution is passed (or on the date specified in the resolution). Such a resolution is entered in the commercial register, so the information about the directors is publicly available.

Companies registered in Germany are not obliged to appoint a company secretary. However, the secretary is recommended. There are no residency requirements, but the secretary must correspond in German.

There are no requirements for a minimum or maximum number of shareholders. An LLC with one shareholder may be established. The shareholders can be residents and non-residents, individuals and legal entities as well as partnerships or civil law societies.
The information on shareholders is kept in a public register.
The Annual Meeting of Shareholders is the supreme authority of a limited liability company. The shareholders have rights and obligations under the foundation agreement of the company and German law. Generally, these include appointing and dismissing managing directors, formal approval of managing directors, adoption of annual financial statements and distribution of profits as well as management control. Some rights and obligations remain with the shareholders' meeting, including amending the foundation agreement, requiring additional contributions, capital measures, dissolving the company, certain measures leading to the formation of the corporation and restructuring measures.

In Germany, the Transparency Register (https://www.transparenzregister.de) was launched on 27 December 2017, to which companies are obliged to submit data on their beneficial owners. The Register is accessible to various inspection authorities and persons (there is no exhaustive list; it includes public authorities, persons with a legally proven interest).

The minimum amount of charter capital of a German limited liability company is 25,000 euros.
The share capital can be provided by the shareholders in the form of contributions of various amounts. The minimum contribution amount is 1 euro. Contributions can be paid in cash or in kind. A minimum of ¼ of each contribution must be paid. A declaration of company formation can only be submitted to the Trade Register if the total amount of the paid-in capital is half the minimum amount of the share capital, i.e. 12,500 euros.
In practice, the capital is paid in cash by opening a bank account for the company, which is freely available to the company. In order to be registered with the Commercial Register, the Managing Director must confirm that the contribution is at his disposal.
If the share capital of the company is increased or decreased, notarization and registration in the Commercial Register are required.

The limited liability companies are under the obligation to pay corporate income tax, capital gains tax, trade tax, solidarity surcharge and turnover tax.

Residents pay income tax on their worldwide income, while non-residents pay income tax on their earnings from German sources.
An individual is considered a resident if he or she is permanently resident in Germany or has been living in Germany for more than 6 months.
The taxable income is the sum of the earnings from employment, trade or business, agriculture or forestry, capital, rent or other revenues. The private investment income, including capital gains, is subject to a final withholding tax of 25% (26.375% together with the solidarity surcharge).
The sale of real estate and private property rights (non-commercial property) is taxed if the taxpayer has owned the property for less than 10 years. The sale of other property is taxed if the taxpayer has owned it for less than one year.
The taxable income is subject to a progressive rate of up to 45%. A solidarity surcharge of 5.5% (the maximum rate is ultimately 47.5%) and a church tax of 9% (8% in Bavaria and Baden-Württemberg) are levied on income tax.
The tax year for individuals corresponds to the calendar year. A declaration must be filed before May 31. If an individual receives income in addition to his/her income from employment, the taxes must be paid quarterly.

Resident companies are subject to income tax on worldwide income, while non-residents pay income tax only on the revenue earned in Germany. Branches are taxed in the same way as subsidiaries.
Taxable income includes company profit, which consists of commercial/trade income, passive income and capital gains. Ordinary business expenses can be deducted when calculating taxable income.
The income tax rate is 15%. The municipal trade tax varies between 14% and 17%. The effective income tax rate (including solidarity surcharge and trade tax) ranges from 23% to 33%.

In Germany, a solidarity tax surcharge of 5.5% is imposed on personal income tax and corporate income tax.

Capital gains from the sale of a German or foreign subsidiary are exempt from 95% of the tax.

Dividends received by a German company (from resident and foreign companies) are exempt from 95% of the tax (this exemption is not applicable if the shares are owned by banks and financial service organizations for commercial purposes). Minimum shareholding requirements can be applied.

Losses can be spread over one year and deferred for an indefinite period of time. The minimum taxation is applied: losses can be compensated from profits of up to 1 million euros without limitation, but only 60% of profits exceeding 1 million euros can be counted as losses compensation. A direct or indirect change in ownership of more than 25%/50% to one shareholder results in a partial/full loss of all deferrals. The deferrals are not lost if an individual or company owns, directly or indirectly, 100% of the shares in the transfer and acquisition of the company.

A tax year consists of 12 months or a period for which reports are prepared, if the latter is shorter. The period of tax reporting should not exceed 12 months.

Dividends: taxed at a rate of 25% (26.375% together with the solidarity tax surcharge), with a possible 40% compensation for non-resident companies, then the rate is 15.825%, except when the rate is reduced by tax agreement. Dividends covered by the EU Parent and Subsidiary Directive are exempt from withholding tax.
Interest: Interest is generally exempt from withholding tax, except for interest on deposits with German banks/financial institutions (25%) and other mixed instruments.
Royalties: royalties paid to a non-resident company or an individual are taxed at the rate of 15% (15.825% together with the solidarity tax surcharge), unless the rate is reduced under a double taxation agreement or under the EU Interest and Royalties Directive.
Technical maintenance fee: no
Tax on transfer of branch funds: no

The VAT is charged on the sale of goods and provision of services.
The standard VAT rate is 19%. The reduced rate is 7% for some types of transactions. Some transactions are exempt from the VAT.

Usually all German entrepreneurs are required to register for VAT. The threshold for registration is a turnover of EUR 17,500 in the previous calendar year and an estimated turnover of EUR 50,000 in the current calendar year.
Non-residents who make taxable deliveries of goods and services in Germany are also liable to register for VAT.

The tax year coincides with the calendar year. An entrepreneur must submit an electronic preliminary declaration of VAT quarterly by the 10th day of the next month and pay the tax. If the input tax exceeds VAT, compensation is paid. If the tax for the previous calendar year was more than 7,500 euros, declarations must be submitted monthly.

There is no stamp duty in Germany.

Transfer pricing: commercial transactions between related parties should be consistent with transactions agreed upon by independent third parties on an equitable basis, with the main principle being commercial care exercised by the business manager. Taxpayers should document all facts and evidence to support their claims. Special transfer pricing rules apply to cross-border transfers of functions within a corporation. The "potential profit" that is considered to be transferred based on the discounted cash flows of the subsidiary before and after restructuring is subject to exit tax.
Thin capitalization: the taxpayer can immediately deduct the interest expense up to 30% from the annual profit before interest and loss carry-forward for tax purposes, increased by tax depreciation (EBITDA - earnings before taxes, interest, etc.). A carry-over of EBITDA occurs if the taxpayer's interest expense is less than 30% EBITDA for tax purposes. The difference between 30% of EBITDA and net interest expense (surplus of EBITDA) can be postponed and used in the next five years, when net interest expense exceeds 30% of current EBITDA. This restriction does not apply if the annual interest expense is less than EUR 3 million and the taxpayer is not part of a group of companies or can demonstrate that the ratio of his own capital to the total assets of the German borrower is at least equal to the ratio of his own capital to the total assets of the global group (2 percentage points allowed). The excess percentage can be postponed for an indefinite period of time (the rules on owner change apply). The cancelled interest expense is not subject to withholding tax.
Controlled foreign companies: The passive income of subsidiaries in tax havens and low-tax jurisdictions is attributed to a German shareholder who owns directly or indirectly more than 50% of the subsidiary (a lower ownership percentage applies if a low-tax controlled foreign company generates passive investment income). Passive income includes income from renting real estate, income from licensing or income from borrowing capital. Jurisdiction is considered a low tax jurisdiction if the income of a subsidiary is taxed at an effective rate of less than 25%. Loans and reimbursements at the shareholder level are taken into account when an effective tax rate of less than 25% is determined. At the application of the taxpayer it is possible to issue a loan for the tax paid on the attributable income.
Requirements for disclosure: the taxpayer must disclose all facts related to taxation, especially with regard to transactions with foreign parties.

Germany has entered into the following mechanisms to exchange tax information with 116 jurisdictions:
- 96 DTC: Albania, Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium, Bolivia, Bosnia and Herzegovina, Bulgaria, Denmark, Egypt, Georgia, Ghana, Greece, Hungary, United Kingdom, Venezuela, Vietnam, Zambia, Zimbabwe, Canada, China, Costa Rica, Côte d'Ivoire, Cyprus, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Kazakhstan, Kenya, Kuwait, Kyrgyzstan, Latvia, Liberia, Liechtenstein, Lithuania, Luxembourg, Mauritius, Spain, Macedonia, Malaysia, Malta, Mexico, Mongolia, Morocco, Moldova, Namibia, Netherlands, New Zealand, Norway, Oman, Pakistan, Poland, Portugal, Republic of Korea, Romania, Russian Federation, Serbia, Singapore, Slovakia, Slovenia, Syria, United Arab Emirates, United States of America, Tajikistan, Thailand, Taipei, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, Uruguay, Uzbekistan, Philippines, Czech Republic, Ecuador, Estonia, Finland, France, Jamaica, Japan, Sri Lanka, South Africa, Sweden, Switzerland, Sri Lanka
- 22 TIEA: Anguilla, Andorra, Antigua and Barbuda, Bahamas, Bermuda, Guernsey, British Virgin Islands, Cayman Islands, Cook Islands, Dominica, Gibraltar, Grenada, Jersey, Liechtenstein, Monaco, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, San Marino, Turks and Caicos Islands.

There are no restrictions on the import or export of capital in Germany, although there is a requirement to submit a declaration for transfer of more than 10,000 euros to the customs authorities.

The duration of a financial year is defined in the shareholder agreement, with the financial year not exceeding 12 months. The first fiscal year may be shorter (shortened fiscal year).
As a trading company, a GmbH is obliged to keep accounting records. The accounting records must include a balance sheet (annual balance sheet) and a profit and loss account. In addition, the annual financial statements must contain explanatory notes. These must be in German.
The annual financial statements must comply with accounting standards and present a true picture of the company's assets, finances and profits.
§§ 325 to 329 of the German Commercial Code contain strict rules on the disclosure of annual financial statements for capital companies. The guidelines also apply to trading companies (general partnerships) and limited partnerships in which the company is not a personally liable partner.

The audit of the annual financial statements is mandatory for large and medium-sized GmbH.
Auditors are responsible for the audit of the financial statements, while certified accountants are responsible for the annual returns and directors' reports of medium-sized companies.
Auditors have wide rights to information and familiarization with accounting records, cash, set of securities and goods, etc. Auditors are obliged to keep their information confidential. Based on the results, the auditor makes an objective written report, and if there are no objections, issues a certificate.

The German GmbH are obliged to prepare and submit an annual return of the company.
The annual return is publicly available.

A tax year consists of 12 months or a period for which reports are prepared, if shorter. The period of tax reporting should not exceed 12 months.
Tax returns must be submitted before May 31 of the following year; the period can be extended to December 31 if a tax consultant is involved. Preliminary quarterly corporate income tax payments should be made in March, June, September and December.
Fines (up to 10% of the tax amount but not more than 25,000 Euros) are imposed for late submission of the tax return. For late payment of taxes, the penalty is 1% of the tax amount to be paid, rounded down to reduction, per month. The results of a tax audit usually do not lead to fines. Taxes accrued as a result of the audit are subject to 0.5% interest per month (6% per year). The interest accrual starts 15 months after the calendar year in which the tax accrual comes into effect. Fines are also charged if the taxpayer does not comply with the requirements of transfer pricing documentation. If the taxpayer fails to submit the documentation or submits inaccurate documentation, an additional 5-10% of any transfer pricing adjustment (minimum 5,000 EUR) will be charged. The additional payment for late submission of documentation is a minimum of EUR 100 per day and a maximum of EUR 1 million.