The Federal Republic of Germany (Germany) is an independent country in Central Europe consisting of 16 federal states. This is a country with a dynamically developing economy.
Germany ranks 2nd in the world in terms of the popularity of immigration (the 1st place ranked the United States). Germany is one of the founding states of the European Union, a member of NATO, G7, etc.
If you would like to open your own business in Europe, then registering a company in Germany will be a good idea.
Business advantages
Those, who are interested in setting up a German company, we recommend to take a closer look at the following benefits of conducting business in this jurisdiction:
- Stable economic and political system;
- Prestige of the state;
- Reliable banking system;
- No foreign exchange controls;
- Low inflation;
- Skilled workforce;
- The opportunity to receive grants and subsidies from the state;
- it is possible to use the nominee service;
- DTAA agreements with more than 70 states;
- investment attractiveness.
Registration requirements
Non-residents of Germany which are planning to register a company in Germany, can choose the following legal forms:
1. Aktiengesellschaft (AG) – Joint-Stock Company.
If you are interested in setting up an AG in Germany, then you should meet these requirements of the regulator:
- Aktiengesellschaft or AG must be specified in the name of the company;
- The chosen name should be approved by the Chamber of Commerce and Industry;
- Bearer shares are permitted;
- Shares can be traded with joint-stock if company is listed;
- The share capital is 50 thousands EUR (25% paid up during incorporation);
- Shareholders can be legal entities or individuals of any residency. The minimum number is 1;
- Management board (at least 1 member) and a supervisory board (the minimum number of board members is 3).
2. Gesellschaft mit beschrankter Haftung (GmbH) – LLC.
If you would like to set up a GmbH in Germany, then you should consider the following:
- GmbH must be specified in the name of the company;
- The chosen name should be approved by the Chamber of Commerce and Industry;
- The shareholders can be legal entities or individuals of any residency. The minimum number is 1. The shareholder has the right to hold the position of executive director. Shareholders have a direct influence on the company management by issuing binding instructions. Names of shareholders are submitted to the public register;
- The share capital in Germany is 1 EUR for a company with UG type and 25,000 EUR with GmbH type (a half should be paid in advance);
- Minimum 1 director;
- To set up a company in Germany, you should register an office within the country;
- The presence of secretary is optional;
- Company meetings can be held outside Germany;
- All legal entities are required to audit, and also prepare and file financial statements with the competent authorities of Germany.
Taxation
Those, who are intended to register a German company remotely, should know that this jurisdiction has fairly high tax rates, but if certain requirements are met, they can be significantly reduced:
- VAT is 19%, but for some activities, you can lower the rate to 7 or 0%;
- The corporate tax is 15%;
- The local commercial tax is a combiation of a standard 3.5% + municipal rate that depands on a location of a company. The total tax rate is between 12.6% - 20.3%;
- Germany has a pay roll tax and many social contributions for the employing companies.
Legal support
YB Case experts will provide you with a full range of advice and legal support services in the process of registering a German company and opening a corporate account in German bank.
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