Register a Company in Germany

Germany is ranked 22 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings for 2022. You can Register a Company in germany.

In the business world, it is well known that Germany has a strong economy and worldwide trading reputation. Germany supports and trains all businesses for all types of activity. Germany's central European location promotes corporate development and networking.

A sole proprietorship is a type of business where one person owns the company and usually invests all the capital. The sole proprietor personally enjoys all the rights and bears all the responsibilities of the sole proprietorship.

A partnership is an entity that is entered into with a minimum of two persons, companies, or organisations. Based on the type of partnership incorporated, the partners shall bear either unlimited liability or liabilities limited to the extent of their capital contributions in the partnership.

The KG is a form of partnership with an element of limited liability. In this form of business, the partnership has a minimum of two partners, with there being limited partners with limited liability (Kommanditist) and general partners with unlimited liability (Komplementär).
Legal entities, regardless of whether they are established under German or foreign law may also be partners in a KG. No minimum capital required. Filing for incorporation requires an office in Germany.

The OHG is a corporate form, the purpose of which is aimed at operation of trading business or a joint company, in which all the partners are liable towards the creditors without limitation. It is particularly suited for small and medium-sized companies.
Same as KG, Legal entities, regardless of whether they are established under German or foreign law, may also be partners in a KG. It also does not have any minimum capital requirement.

A limited liability company or GmbH is Germany’s most common business entity. It requires only one shareholder who can be the Director of the Company. In addition to natural persons, shareholders can be other companies too. Foreigners or foreign companies may become shareholders.
The minimum capital required to open a Limited Liability Company is €25,000. The shares of these companies are not publicly transferable. A company needs to be recorded in Germany’s Business Register to be incorporated.

An entrepreneurial company with limited liability is a German form of a private limited company, usually established as an alternative to a German corporation or GmbH (limited liability) entity.
The UG (limited liability) is an alternative to foreign legal forms with little capital stock where startup founders must comply with unfamiliar legal rules. As compared to GmbH a UG can be incorporated with just one €1. In addition to natural persons, shareholders can be other companies too.
Foreigners or foreign companies may become shareholders.

In order to start a German joint stock company, one needs a capital of 50,000 euros and must be registered in the Register of Companies. A joint stock company requires one shareholder of any nationality. The company should affix the abbreviation “AG” with its name and appoint its first auditor.
Most suited for large corporations.
Founders of an AG can be natural and legal entities, also foreign ones, as well as partnerships. Law prescribes three executive organs: Board of Directors, Supervisory Board and General Meeting.

The branch and the subsidiary are two means by which a foreign company can establish its presence in Germany.

The German branch office is an establishment that will be connected to the parent company and it does not have assets or accounting system of its own. A branch office in Germany is allowed to conduct the same type of activities as its head office and it cannot engage in other, different activities.

There are two types of branch office available in Germany:

It is dependent on the parent company at an internal level; however, it is independent in engaging in its business activities in the German city in which it is set up. It has its own capital, bank account in Germany and will have separate accounting records. The foreign head office remains liable for the debts and obligations despite the level of self-sufficiency this type of branch has.

It is one that does not have any autonomy from the head office and it is only used to maintain contacts and not to engage in the business in which the foreign company is involved. The types of activities it performs are support and implementation.

The controlled foreign companies regulations (CFC rules) apply as itfollows:
The German corporate income tax is levied at a flat tax rate of 15%, butan additional 5.5 % solidarity surcharge tax applies.
German subsidiaries of foreign companies are subject to 25% withholding tax on dividends. However, if a double taxation agreement is enforced between Germany and another country, the dividend tax may be reimbursed.
Corporate entities in Germany are subject to the municipal trade tax if they generate business incomes. Foreign companies that have a permanent establishment in Germany are also subject to the municipal trade tax that ranges between 7% and 17.2% depending where the permanent establishment is located.
Any dividend incomes or capital gains repatriated to another corporation; the foreign company will benefit from tax exemptions for trade tax purposes. The exemption is applied by excluding the dividend income or capital gains from the trade income, thus reducing the tax burden to approximately 1.5%. In order to qualify for the exemption of dividends from the trade tax, the foreign company must hold at least 15% of the shares in the German permanent establishment.
VAT applies on the supply of certain goods and services, according to a certain threshold.