Company registration Germany
Germany offers an attractive market for new business owners, but the process of company registration in Germany and outside your jurisdiction can be daunting. We’re here to make the process easier for our clients. Let’s get your business in Germany started!
As the largest economy in the Eurozone and one of the largest in the world, Germany is a global powerhouse that offers lucrative opportunities to investors and business owners. Some of the most prominent industries in the country are automobiles, chemicals, and electronics. With an outstanding reputation and incredibly high standards, German products and services are lauded in the world market!
A bureaucratic country that follows a specific set of rules, Germany’s comprehensive social security and tax systems can become complicated to deal with on your own. Setting up your business and company registration Germany will be easier when you work with experienced professionals who’ll save you from unnecessary steps along the way.
Forms Of Companies In Germany
- GmbH “Gesellschaft mit beschränkter Haftung”—limited liability company
- AG “Aktiengesellschaft”—Joint Stock Company/Public Listed Company (PLC)
- UG “Unternehmergesellschaft”— a type of mini-GmbH, limited liability company
- Einzelunternehmen—sole trader
- OHG “Die Offene Handelsgesellschaft”—Commercial partnership
- GbR “Gesellschaft bürgerlichen Rechts”—Private partnership
- Branch of a foreign company
- KG “Kommanditgesellschaft”—Limited partnership
Setting up a limited company in Germany?
German limited liability companies—GmbH and UG—are the most incorporated amongst the various types of companies.
The main difference between these 2 forms is the minimum amount of share capital involved. While UG companies have a minimum 1 EUR share capital, GmbH companies have a 25,000 EUR share capital with a minimum of 12,500 EUR that needs to be paid. When setting up a UG company, we will recommend to pay at least 1000 EUR share capital due to easier bank account opening but also, your share capital is visible to your clients and suppliers in The Register. UG can automatically become GmbH once the share capital has reached 25,000 EUR. Process of setting up a company in Germany will be the same for GmbH and UG while only share capital will be different.
Have any queries about GmbH and/or UG companies? contact us today and we’ll help you make the right choice!
Fundamentals Of A Limited Liability Company in Germany
Corporate Tax in Germany
VAT in Germany
19% standard and 16% (Covid-19 VAT tax rate for 2020.)
Fundamentals of GmbH and UG
|Limited liability company||GmbH and UG|
|Minimum Share capital|
GmbH: 25000 EUR, min to pay 12500 EUR, UG: 1 EUR
|Registered office required||Yes|
|Physical office required||No|
|Min. number of Shareholders||1|
|Min. number of Directors||1|
|Local Director required||No|
|Bank signatory must travel||Yes|
|Timescale for company formation||30 days|
|Timescale for bank account opening||7 days|
|Timescale for obtaining VAT number||7 days|
|Statutory audit requirements||No|
|Shelf companies available||Yes|
The process of setting up a company in Germany - Where to start?
The first step in the process of company registration Germany is getting approval to set up a bank account where the share capital has to be paid. To be able to register a company in Germany, you need to obtain the share capital payment certificate from the bank. While this process is underway, we prepare your company documents and inform you on the process of setting up a company in Germany as we go.
The timescale will depend on which one of our options you choose (with visit or without, high street bank or online bank). Regardless of your selection, you’ll be required to certify and submit documentation in order to proceed to the next step of the process of registering company in Germany.
This required documentation will be differently certified, depending on the country of residence, and/or the country of origin of the parent company in case you’re registering a subsidiary.
Every director, shareholder, and member of the company structure will be required to submit the following prior to company registration Germany:
- A copy of their passport (certification will be needed in some cases)
- Proof of address (this can be in the form of a bank statement or original utility bill that isn’t more than 3 months old
Options for setting up a limited company in Germany?
CompyCo has three different options you can choose from when registering company in Germany. Depending on your priorities you can pick one that suits you best. These priorities may be about how promptly you want to set up or whether you want a remote or high-street bank account.
Each of the three options includes:
Company registration cost in Germany and options?
- Company registration Germany with a high-street bank. Opening the bank account will require the director of the company to visit Germany for 1 day. Company registration price in Germany for this option is EUR 4950 ex. VAT.
Among all the options, this one has the longest process of company registration in Germany and can take between 5 to 7 weeks after you provide us the original documents but you will have High Street bank account and its the cheapest.
- Remote Company registration Germany with an online bank account. Everything can be done remotely, and the company director doesn’t need to travel to Germany. Company registration cost for this option will amount to EUR 5650 ex. VAT.
Please note: this option is only available when the shareholders or directors are EU residents, it isn’t applicable on residents from other countries.
This option takes 3 to 4 weeks to process after you’ve delivered the original documents to us.
- You can purchase a shelf company in Germany. This is the quickest process of setting up a company in Germany and can be done fast if you opt for an online bank account. If you choose a high-street bank account, you’ll have to travel to Germany. Company registration cost for this option will be EUR 5400 ex. VAT. The entire process for this option will last up to 1 week if you chose online bank after we’ve received your original documents.
Each of the above packages includes all the costs (for max 2 individuals shareholders, max 2 directors) for required mandatory company registration cost in Germany. That is company registration, Registered office address, tax registration, Notary fees, Commercial Register express fees, drafting documents, help with Bank account opening, setting up meetings if needed, transport from airport to first destination. Company registration cost in Germany will be paid in full in advance. No surprises during the process.
Setting Up A Branch Office In Germany
Many foreign investors and business owners choose Germany’s lucrative market as the perfect place to set up a branch of their business. Registering a branch can take up to 2 months to complete.
There’s no need for the payment of share capital when registering a branch office in Germany since the foreign parent company is fully liable for the German branch. Due to this liability, the accountancy of the branch office will be extended to the parent company. As a result, higher costs may be incurred.
To set up a branch office, a Commercial Register and local trade office registration are necessary.
In order to complete the process, a Manager and German Registered office address have to be assigned to the branch office.
If you are not sure is Germany the right choice for your business plan, have a look at our post and contact us today to discuss other options. Based on your business activity and many other factors, we will propose options for you.
If you are interested to hear more about the benefits of setting up a company in Germany, read this post.
Bank Account Opening
Opening a bank account is one of the first steps for company registration Germany. The country has some of the world’s best international banking facilities, and CompyCo is connected with all of them.
CompyCo maintains a strong relationship with high-street and online banks in Germany. Our process is focused on catering to your needs while also offering our expert opinion based on years of experience. That’s why we work with you to determine where you should open your bank account considering the residency of shareholders and company directors, business activity, monthly transactions, and turnover.
Listed above are some of the factors that banks consider when deciding to take you on as a client. Depending on their selection criteria, we can find a bank that suits your business best.
Company registration price in Germany will be different based on your choice of bank, an online bank or high street bank. Also, the process of setting up a company in Germany will be longer if you choose to opt for high street bank.
For more information about International banking solutions that CompyCo can assist with, head over here.
After registering a company in Germany what you should have in mind...
Accounting & Taxation
Some of the accounting obligations to take into consideration are:
- Germany operates under a standard VAT rate of 19% and due to COVID-19 reduced rate of 16% for certain goods and services up to the end of 2020th. When it comes to effective corporate tax rate, which includes solidarity surcharge and trade tax is in a range of approx. 30-33%
- Once your company is registered for taxes, you’ll need to submit a monthly report.
- All German tax returns need to be filed by 31st May after the end of the company’s financial year.
- The requirements for tax filing and disclosure may vary depending on the type of company. Small firms should create a balance sheet, while medium-sized firms need a balance sheet, management report, and profit & loss statement.
- Any reports submitted by medium-sized firms need to be audited.
- Non-resident German companies are only taxed on the income derived from their Germany-based ventures.
- Everyone working in Germany has to pay progressive personal taxes depending on their annual income.
How to employ in Germany?
Germany is home to a large pool of highly-qualified, technically-trained individuals. If you’re looking to find out how to employ in Germany a German resident while your company is in another country, CompyCo can help you out.
We’ll assist you in registering a company in Germany or setting you up as a non-resident employer in case you are looking to hire someone in Germany with a legal entity. Employing as a Foreign employer is a common practice for businesses that want to hire talented individuals to work from home. If you are looking to hire an employee in Germany for a home-based job such as Web designers, and Digital Marketing Experts, Researchers, you can avoid some of the major costs associated with local companies if you hire someone in Germany with a legal entity which is foreign.
In some business activities, you won’t be able to hire employee in Germany to work from home. For these cases, we’ll take care of registering a company in Germany and we’ll set you up as a local employer or we can offer Employer of record services.
Whatever the case is, you can rely on CompyCo to make sure you’re set to hire someone in Germany who is only the best for your company. We’ll arrange HR services for your needs, provide monthly maintenance, and keep you updated on Germany’s changing requirements and regulations.
Want to find out more? Take a look at our HR services page to find out how we can help you!