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Company Formation Germany

Updated on Friday 20th December 2019

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When starting a business in a foreign country or when starting the procedure of offshore company formation, it is best to request legal representation on the registration formalities from specialists in the field. In the case of those opening a German company, Bridgewest provides the following services for company formation in Germany:
  • drawing up the articles of association that can be signed through power of attorney (German laws require powers of attorney for any public notary proceedings);
  • drawing up documents for company incorporation in Germany (specimen signatures, identification papers copies, application form required for company registration);
  • arranging public notary proceedings (all procedures for company incorporation are done in front of a German public notary);
  • providing a registered office in Germany on demand (the registered office serves as headquarters for the company in Germany and it will be made public);
  • setting up a bank account for the company in Germany - BridgeWest will help in setting up the share capital bank account, as well as a current bank account once the company is incorporated;
  • recommending a German accountant, as accounting services are needed for new businesses in Germany.

The most common types of companies in Germany

Those who want to open a company in Germany can register any of the legal entities prescribed by the commercial legislation. However, in practice, most of the local and foreign investors prefer to register a limited liability company or a joint stock company. The first type of legal entity is addressed to small and medium-sized companies, while the latter is selected for registration when starting a large company in Germany.  

German limited liability company (Gesellschaft mit beschränkter Haftung, GmbH)

The German limited liability company is the most common type of business because it can be set up by one person who can act as owner and shareholder at the same time. The minimum share capital of a German limited liability company is EUR 25,000. At least EUR 12,500 must be deposited in a bank account when registering the company with the Register of Commerce in Germany

The limited liability company is one of the most common business forms available at a global level, and they can be found as well in offshore jurisdictions, in the case of those interested in offshore company setup. In Germany, besides the basic limited liability company, investors can also register a limited liability entrepreneurial company, which represents a simplified version of the limited liability company. 

The difference between the two resides in the fact that the limited liability entrepreneurial company can be registered with a very low capital, of only EUR 1. Our team of specialists in company registration in Germany can provide an in-depth presentation on the advantages of this company type. 

What are the basic registration steps in Germany? 

As a general rule, regardless of the company type that is of interest for an investor, there are a set of steps that must be followed when opening a German company. Once the businessmen have decided on the legal entity of the company, the next step is to select a suitable trading name for the newly founded business. In this case, the company name can be verified with the Commercial Register. 

The Commercial Register will provide a certificate on the company’s trading name, if the selected one is available for registration. After this, the investors should select the company’s main business activities. The company name and the company’s business activities can also be verified with the German Chamber of Commerce and Industry, without paying any fee. 

The following step for the procedure for company formation in Germany is to prepare the company’s incorporation documents. In the case in which the investors have opted for a limited company, the founding documents are represented by the articles of association, documents that have to be drafted and notarized in front of a public notary in Germany, following the legislation available here. 

The articles of association of a German company can be completed following a standardized model or as a customized version. The notarized version of the articles of association will later be used when registering with the local institutions. Thus, besides the founding documents, investors should provide personal identity documents, the structure of the company’s shareholding and the documents required for opening a corporate bank account. 

The documents that can be requested from a local bank can vary based on the commercial bank where the account will be set up, but also on the jurisdiction where the account is registered; thus, the set of documents can differ when opening an offshore bank account than when opening a corporate bank account registered in Germany or in other European countries. 

German joint stock company (Aktiengesellschaft AG)

The German joint stock company is a public limited liability company that is allowed to list its shares on the stock exchange. The minimum share capital for a joint stock company in Germany is of EUR 50,000. The German joint stock company can be set up by one shareholder, but it requires a supervisory board made of at least three members and a management board made of at least one member.

Why invest in Germany? 

Germany is an attractive place for doing business. The country is one of the most important economies at a European level, but also at a global level. It has a strong economy with numerous thriving economic sectors and with stable trading relations with other partner countries. According to the Federal Statistics Office, Germany is characterized by the following: 
  • Germany has 2.5 million small and medium-sized companies operating on its market;
  • the jobs created by the small and medium-sized companies in Germany account for 61% of the total employment market;
  • 99.3% of the small and medium-sized companies in Germany have a yearly turnover of less than EUR 50 million;
  • the level of exports from Germany accounted for EUR 1,317 billion;
  • the level of imports accounted for EUR 1,089 billion, while the export surplus accounted for EUR 229 billion;
  • in 2018, Germany imported lithium-ion batteries with a value of EUR 2.4 billion;
  • this accounted for a total of 202 million units, which represents an important increase compared to 2012, when the country imported only 55 million.  

Taxation in Germany

The standard VAT rate in Germany is 19%, but there is also a reduced rate of 7% for certain goods and services. The corporate tax in Germany is set at 15%. The dividend tax in Germany is set at 25% for individuals, while legal entities benefit from a 40% exemption according to the Tax Act of 2009.

BridgeWest is also able to offer ready-made German companies and VAT registration. Please contact us for more information and prices regarding how to open a company in Germany. Our representatives can also provide professional assistance for offshore company set up and can also help investors in opening an offshore bank account.