Incorporate a Company in Germany

Germany's high corporate tax rates, complex tax legislation and high incorporation costs hamper international investors' plans to incorporate a company in Germany. However, this European economic powerhouse does offer a range of incentives and fiscal concessions to those who plan to incorporate a company in Germany. The following information will help you determine whether or not to incorporate a company in Germany.

Advantages to incorporate a company in Germany
1.	Only one director and shareholder is required to incorporate a company in Germany.
2.	Investors who incorporate a company in Germany benefit from the country's highly developed and regulated economy and an advanced legal and world-class banking infrastructure.
3.	The federal government offers a wide range of incentive programmes to investors planning to incorporate a company in Germany, including loans and grants, depending on the nature of the company and its intended location. Some areas of Germany offer capital investment grants of up to 50% to small and medium-sized enterprises. Local government incentives may also aid those who wish to incorporate a company in Germany as they offer beneficial tax rates that are not generally available in the major cities.
4.	Germany has signed Double Taxation Treaties with more than 75 countries around the world, providing relief from withholding tax on dividends, interest and royalties. These agreements follow the Organisation for Economic Cooperation and Development (OECD) model.
5.	There is an abundant supply of qualified staff in most regions of Germany to support clients who incorporate a company in Germany.
Disadvantages to incorporate a company in Germany
1.	A minimum capital of 25,000 Euros (US$31,900) is required to incorporate a company in Germany.
2.	Having incorporated a company in Germany, accounts are required to be maintained and annual financial statements are required to be submitted.
3.	Dividends distributed by a German company to a German-resident corporation, and capital gains from the sale of domestic or foreign shares in corporations, are taxed at the level of the shareholder only at 5% of the dividends or capital gains since this amount is generally treated as a nondeductible business expense.
4.	A German-resident company is liable to pay corporate tax of 25% on its worldwide income. Residency is defined as a company having either its seat (as specified in the Articles of Association) or central place of management in Germany.
5.	Investors who incorporate a company in Germany are subject to value added tax (VAT) of 16% on all chargeable goods and services delivered in Germany, including intra-Company transactions.
6.	A Germany-incorporated company is subject to trade tax, the rate of which varies according to the local authority in which the Company operates.

For more information on how to incorporate a company in Germany, email email@healyconsultants.com or telephone us at (+65) 6735 0120.

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