Germany company registration

DOING BUSINESS IN GERMANY IN 2017

Since 2003, Healy Consultants Group PLC has been efficiently and effectively assisting our Clients with i) Germany business registration ii) business licensing iii) Germany business banking solutions iv) visa options and staff recruitment strategies and v) workspace rental solutions.

SummaryLLCFast business setup solutionBranch officeRep officeFree zone
Also known asGmbHGmbHZweigniederlassungRepräsentanzFreizone Unternehmen
Best use of company?All products and servicesClose a customer deal nowSpecific projectsMarketing and researchManufacturing and export trading
How soon can you invoice Clients/sign sales contracts?2 months1 week2 months2 months2 months
How soon can you hire staff?2 months1 week2 months2 months2 months
How soon can you sign a lease agreement?immediate1 weekimmediateimmediateimmediate
How long to supply company registration numbers?1 month1 week1 month1 month1 month
How long to supply corporate bank account numbers?3 months2 weeks3 months3 months3 months
How long to supply tax numbers?2 months2 weeks2 months2 months2 months
Corporate tax rate on annual net profits?30%30%30%0%Up to 0%
Limited liability entity?YesYesNoNoYes
Government grants available?YesYesYesYesYes
Resident legal representative required?NoNoYesYesNo
Minimum paid up share capital?€25,000€25,000€1None€25,000
Corporate bank account location?CommerzbankSantander BankDeutsche bankBNP ParibasGLS Bank
Can secure trade finance?YesYesNoNoYes
VAT payable on sales to local customers19%19%19%N/AUp to 0%
Average total engagement costs?€10,990€39,800€12,680€12,680€15,680
Average total engagement period?4 months2 months4 months4 months4 months

See full table

Accounting and tax considerationsLLCFast business setup solutionBranch officeRep officeFree zone
Statutory corporate tax payable?15%15%15%0%15%
Legally tax exempt if properly structured?NoNoNoYesYes
Must appoint an auditor?YesYesNoNoYes
Access to double taxation treaties?YesYesYesNoYes
Must file an annual tax return?YesYesYesYesYes
Must file annual financial statements?YesYesYesYesYes
Withholding tax on payments to shareholders?15%15%15%0%15%
Company registrationLLCFast business setup solutionBranch officeRep officeFree zone
Minimum number of directors?11NoneNone1
Minimum number of shareholders?11NoneNone1
Resident director/partner/manager required?NoNoYesYesYes
Shelf companies available?YesYesNoNoYes
Can easily convert to PLC?YesYesYesNoYes
Can have preference shareholders?YesYesNoNoYes
Business considerationsLLCFast business setup solutionBranch officeRep officeFree zone
Can invoice local customers?YesYesNoNoYes
Limited liability entity?YesYesNoNoYes
Must sign office lease agreement during incorporation?NoNoNoNoYes
Can secure an import and export license?YesYesYesNoYes

Good entity for trademark registration?Yes
Managing director need to travel to Germany?No
Public register of shareholders and directors?Yes
You need a local resident as bank signatory?No
Monthly VAT reporting to the Government?Yes
Other useful information
Can bid for for Government contracts?Yes
Can be wholly foreign owned?Yes
Maximum shareholding for foreigners?100%
Sponsorship by a local citizen required?No
Our Client needs to travel to Germany for business set up?No
The entity will likely be regulated by?Chamber of Commerce and Industry
Shareholders and directors documents to be translated/attested?Yes
Government approval required for foreign owners?Yes
Security deposit to be kept with government?No
Temporary physical office solutions available?Yes
Good entity for trademark registration?Yes
What will be included in my customer sales invoice?Click here
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?Yes
Average customs duties suffered?2.70%
Average monthly office rental? (€ per sq m)18.2
Each foreign director needs a personal income tax number?No, unless living in Germany
Minimum statutory hourly salary?€8.84
Maximum number of staff allowed?None
Can secure residence visa for business owner?Yes
Average monthly € salary for local skilled employees?€3,190
€ deposit interest rate? (1-year average)0.56%
Overseas remittance currency controls?No
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Excellent
Crowd funding available in this country?Yes

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Benefits and problems of registering a company in Germany

Press the link headings below to read detailed, relevant, up to date information.

  • Benefits and problems

    Benefits of Germany company registration

    Germany is the economic heart of the EU. This economic success is largely due to the ‘Mittlestand’ (SMEs), which form the backbone of the German economy. Some of the key factors behind the success of small and medium businesses in Germany are:

    Government support

      Germany business registration challenges

    1. Low-interest business loans are available for SMEs at both federal (maximum value €10m) and state level (value between €50,000 and 10m);
    2. To reduce pressure on businesses, the Government provides i) recruitment and training support and ii) wage subsidies to entrepreneurs who register a company in Germany;
    3. Grants are provided by the states through the GRW Scheme to cover either a firm’s investment costs or two years of wage costs. Approximately 95% of firms receiving these grants are German LLCs;
    4. IZ scheme provides monetary aid for investment in East Germany; this program can be combined with the GRW scheme to get cost coverage up to 50% for small firms and 40% for medium-sized enterprises;
    5. For selected SMEs, the KfW Development Bank provides loans, private equity and mezzanine financing. In 2012, the total loaned and invested by the bank was €24.1 billion;
    6. Government banks act as public guarantors to provide deficiency guarantees for up to 80% of loan amounts for expenses related to initial investments in Germany;
    7. Incentive Programs like grants and interest-reduced loans are provided to cover R&D costs. These programs help young firms improve product quality and process;
    8. Germany has signed doubled taxation agreements with over 90 different countries to minimize withholding tax on payments when doing business abroad.

    Business friendly

    1. Business registration in Germany only requires one director and one shareholder, who do not need to be residents or citizens;
    2. There are no capital or exchange controls to discourage investment in Germany. Foreign firms can freely transfer funds from abroad and convert them into Euro;
    3. Germany is the 10th best in the world for the absence of corruption according to Transparency’s International’s 2015 ranking;
    4. Imported goods may be stored in the German free ports of Cuxhaven, Bremerhaven, Deggendorf and Duisburg without incurring any duties;
    5. Lastly, Germany is a metropolitan country which is highly accepting of foreign workers. People with religious convictions are offered protection under the law and won’t have to forsake their traditional roots.

    Problems with Germany company registration

    1. Foreign entrepreneurs must submit the lease contract for office space to the German embassy to get visa approval;
    2. Company registration in Germany is an expensive process; paid up capital of €25,000 must be deposited as part of German GmbH registration, although the new UG company is more friendly to entrepreneurs;
    3. Hiring a non-EU citizen is a challenge, as businesses have to prove that an EU citizen could not adequately fill the role;
    4. A Germany resident firm face a high tax burden averaging between 30% and 33%;
    5. German employment law makes it difficult to dismiss poor-performing employees;
    6. Every German company must pay 50% of each employee’s health insurance premiums;
    7. The country follows strict environmental protection rules, which require that new products obtain certification and license approvals.
  • Best uses for a Germany company

    Preferred Euro Base

    1. Germany is the EU’s most populous country and has a high per capita income (US$ 44,500). Consequently, a foreign-owned company in Germany will benefit from the massive consumer demand for foreign goods/services in the country;
    2. Registering a business in Germany is the top choice for product distribution within EU because the country has the world’s highest rated infrastructure. High quality airports, roads, railways and ports facilitate easy transfer of goods to, from and within Germany;
    3. Germany has EU’s most skilled labor with i) the largest labor force in Europe ii) a 99% literacy rate iii) a 99% computer literacy rate iv) 80% having formal job training v) the third highest weekly employee work hours in the EU and vi) the population with the most degrees in the EU;
    4. Germany’s EU membership offers resident firms i) duty free trade of goods/services with other European countries ii) free movement of labor and capital within the EU iii) no withholding tax on payments made to other EU countries and iv) access to an integrated European consumer base of 500 million;
    5. Starting a German company can be done without special licenses, except in a few highly specialized fields like insurance, medicine etc.;
    6. The country hosts the world’s biggest trade shows including MEDICA and the Hannover Fair. Registering a German company will enable our Clients to tap into a market of 10 million attending customers annually;
    7. “Made in Germany” is a globally renowned and trusted mark of origin; foreign entrepreneurs’ brands will benefit greatly from starting a manufacturing business in Germany.

Frequently asked questions

Contact us

For additional information on our company registration services in Germany, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Karen Lee, directly:
client relationship officer - Karen