Register your company in Germany

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When entering the German market, one of the most crucial decisions you will make is selecting the appropriate legal structure for your business. The structure you choose will affect your liability, capital requirements, and the way your company is governed according to German corporate law. Below is an outline of the process:

  1. Choose the Business Structure

Overview: The GmbH is one of the most popular forms of a limited liability company in Germany. It is suitable for small to medium-sized businesses.

Liability: Shareholders’ liability is limited to their capital contributions, protecting personal assets.

Capital Requirements: A minimum share capital of €25,000 is required, with at least half (€12,500) to be paid in upon formation.

Corporate Governance: Managed by one or more managing directors (Geschäftsführer). Shareholders exercise control through meetings and resolutions.

Overview: The AG is a public limited company suitable for larger enterprises, particularly those considering raising capital through the stock market.

Liability: Similar to the GmbH, liability is limited to the capital contributed by shareholders.

Capital Requirements: A minimum share capital of €50,000 is required.

Corporate Governance: Governed by a two-tier board system consisting of a Management Board (Vorstand) and a Supervisory Board (Aufsichtsrat). The Management Board runs the company, while the Supervisory Board oversees and appoints the management.

Overview: Also known as the “Mini-GmbH,” the UG is a simplified form of a GmbH designed for entrepreneurs with limited starting capital.

Liability: Shareholders’ liability is limited, similar to the GmbH and AG.

Capital Requirements: A minimum share capital of just €1 is required, making it more accessible for startups. However, 25% of the profits must be retained each year until the capital reaches €25,000, at which point it can be converted into a GmbH.

Corporate Governance: Managed by one or more directors, similar to the GmbH.

  1. Draft the Articles of Association
  • Content: The articles should include the company name, registered office, business purpose, share capital, and details of shareholders and managing directors.
  • Legal Requirement: These must be notarized by a German notary.
  1. Open a Bank Account
  • Deposit Share Capital: Open a business bank account in Germany and deposit the required share capital.
  • Obtain Proof: You will receive a certificate from the bank confirming the deposit, which is needed for registration.
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  1. Notarization of the Articles of Association
  • Notary Appointment: The shareholders must appear before a notary to sign the articles of association.
  • Register Managing Directors: The managing directors are appointed during this step and must accept their appointments.
  1. Register with the Commercial Register (Handelsregister)
  • Application: The notary will file the registration application with the local commercial register.
  • Required Documents: The application includes notarized articles of association, proof of capital deposit, and managing directors’ acceptance statements.
  • Registration Fee: Pay the registration fee, which varies depending on the company’s capital and the specific registry.
  1. Obtain a Tax Number and VAT ID
  • Tax Office (Finanzamt): Register with the local tax office to obtain a tax number (Steuernummer) and VAT ID (Umsatzsteuer-Identifikationsnummer).
  • Forms: You will need to complete and submit forms detailing your business activities, estimated turnover, and other financial information.
  1. Register with Trade Office (Gewerbeamt)
  • Business License: Most businesses must register with the local trade office to obtain a business license (Gewerbeschein).
  • Application: Submit an application along with the necessary documents, such as proof of registration from the commercial register and identification.
  1. Register with Professional Associations
  • Chambers of Commerce: Depending on your industry, you may need to register with the Chamber of Commerce and Industry (IHK) or the Chamber of Crafts (Handwerkskammer).
  • Professional Bodies: Certain professions may require additional registrations with specific professional bodies.
  1. Register for Social Security
  • Social Security Contributions: If you plan to hire employees, register your company with the relevant social security authorities to manage contributions for health insurance, pension, and unemployment insurance.
  1. Compliance with Ongoing Obligations
  • Accounting and Reporting: Set up proper accounting practices and ensure regular financial reporting.
  • Annual Filings: Submit annual financial statements to the commercial register.
  • Tax Filings: Ensure timely VAT, income tax, and corporate tax filings with the tax office.

Additional Considerations

  • Company Name: Ensure that your chosen company name is unique and complies with German naming conventions.
  • Legal Advice: Consulting with a legal or business advisor familiar with German law is highly recommended to navigate the complexities of the registration process.
  • Language: Most documents and communications will be in German, so having proficiency in the language or access to translation services is essential.

Selecting the right business structure in Germany depends on your business size, capital availability, and long-term goals. The GmbH is often a solid choice for most businesses due to its balance of flexibility and protection, while the AG suits larger corporations with ambitions of public trading. The UG is ideal for startups with minimal initial capital. Consulting with a legal or business advisor in Germany can help you make the best decision for your specific needs. Registering a company in Germany is a detailed process that requires careful planning and compliance with legal requirements. By following these steps and seeking professional guidance, you can successfully establish your business in the German market.