Set Up a Company in Germany

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

Advantages to Set Up a Company in Germany
1.	Only one director and shareholder is required to set up a company in Germany.
2.	Investors who set up a company in Germany benefit from the country's highly developed and regulated economy as well as an advanced legal and world-class banking infrastructure.
3.	The federal government offers a wide range of incentive programmes to investors planning to set up a company in Germany, including loans and grants, depending on the nature of the company and its intended location. Some areas of Germany also offer capital investment grants of up to 50% to small and medium-sized enterprises. Local government incentives may also aid those who wish to set up a company in Germany as they offer beneficial tax rates that are not generally available in the major cities.
4.	There is an abundant supply of qualified staff in most regions of Germany to support clients who set up a company in Germany.
5.	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.
Disadvantages to Set Up a Company in Germany
1.	A minimum capital of 25,000 Euros (US$31,900) is required to set up a company in Germany.
2.	Having set up a company in Germany, accounts are required to be maintained and annual financial statements are required to be submitted.
3.	Investors who set up 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.
4.	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.
5.	A Germany-incorporated company is subject to trade tax, the rate of which varies according to the local authority in which the Company operates.
6.	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.

Contact Us

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

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