If you are a foreign investor and wish to consider German company formation, you have a broad spectrum of options. You could take a cautious view and start with a one-person sales office based within a serviced office (we can help you with this). If it doesn’t work out, you can easily withdraw without having invested very much capital.
Or you could have the courage of your convictions, and set up business in Germany in a manner that makes it clear that you really mean business. Our German company formation service makes it easy for you to establish whatever kind of company you want, from a Sole Trader through to a Partnership or Corporation.
Company Formation FAQs
What are the main types of German company formation?
There are four main forms of German Company Registration:
- Limited Liability Corporation (GmbH)
- Stock Corporation (AG)
- Partnerships
- Sole Proprietor
What are the main features of a Limited Liability Corporation (GmbH)?
- A GmbH is the most common form of company in Germany
- The minimum share capital is €25,000
- It has a simple structure designed for private companies only
- The minimum number of shareholders is one
What are the main features of a Stock Corporation (AG)?
- An AG is the standard corporate form for major public companies
- The minimum share capital for an AG is €50,000
- The minimum number of shareholders is one
- It is subject to heavy regulation as a listed company
What are the main features of a Partnership?
- Available either as a General (oHG) or Limited (KG) Partnership
- Foreign investors tend to prefer limited-liability KG Partnerships
- Minimum of two partners, one of which can be a GmbH company
- Widely used in for small and family-owned businesses
What are the main features of a Sole Proprietor company?
- The simplest and least-regulated form of business entity
- Registration required with the commercial register and local trade office
- Sole Trader has unlimited liability for all liabilities and debts
- Profits are subject to German Income Tax at individual rates
If I have a company in another country, can I set up a Branch in Germany?
You certainly can. This is a popular move for foreign companies that aren’t quite certain about their long-term commitment but are keen to set up business in Germany. All you need to do if you want to establish a Branch is to register with the commercial register and the local trade office.
Bear in mind however – the parent company retains full responsibility for the Branch on all legal and tax matters. Look at our tax planning section to see how our panel of tax specialists can help you navigate your way through Germany’s complex fiscal laws.
How easy is it to recruit staff?
Germany is famed for the excellence of its technical training and apprenticeships are the norm in most industrial sectors. There is no shortage of qualified staff in most areas, particularly in the east of the country and in the Ruhr where unemployment is high.
Most companies advertise jobs at the local government-run employment exchange but for specialist staff and senior management, you would be better advised to use an executive search agency. Please contact us for information about our recruitment service.
What is the regulatory environment like?
Businesses are heavily regulated, this is particularly true in the case of listed AG companies, but all companies large and small have to comply with detailed requirements laid out by the authorities.
Government bodies oversee the activities of financial institutions such as banks and insurance offices, while most other industries are grouped around associations that regulate what their members can and cannot do.
It is important to tread carefully in this territory – contact us to see how our local advisers can help with your German incorporation.
Does German company registration offer financial incentives — and what about the banking facilities?
The federal government offers a wide range of incentive programmes, including loans and grants, depending on the nature of the company and its intended location. Some areas offer capital investment grants of up to 50% to SMEs.
It is also worth noting that local government incentives may be offered in the form of beneficial tax rates but these are not generally available in the major cities.
Germany has world-class international banking facilities and the first step to setting up business in Germany should be to open a local bank account – we can arrange this for you.