Learn more: Costs for company registration - How is the Process - Required documents
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Branch, UG (Mini-GmbH) and GmbH formation, Shelf Company Purchase In Germany
Learn More About Company Registration in Germany and its Benefits
- Process for the company formation
- Required documents
- Branch, UG, GmbH ? Which is right for business in Germany?
- FAQ about the GmbH or UG / Mini-GmbH company registration process
- Differences between a branch and a company
- Lear more in our Knowledgebase for company registration etc.
Our attorneys will advise you on the formation of a GmbH or UG
The attorneys of our law firm who are specialized in commercial and corporate law are your experienced partners when it comes to setting up your company. Whether GmbH, UG (Mini-GmbH) or partnership, we advise and support you in close cooperation with tax advisors competently and reliably in German and international corporate law.
Ask us! We will gladly advise you.
Marco Rössel
Attorney-at-Law, certified specialist lawyer for commercial and corporate law, Partner
What Our Clients Say
Branch, UG, GmbH? Which is right for business in Germany for you?
Branch Registration
If you already have a foreign company you can register it as a branch in Germany. This will not be a separate legal entity but it will be treated and taxed lie a company in Germany. No bank account or managing director required. Completely remote registration possible.
We usually do not recommend this this solution because a company offers more flexibility. Read more about differences branch / company formation.
GmbH Registration
A GmbH is the most common company in Germany. it is renowned and shows professionalism. Share capital starts at 25.000 EUR. Bank account required. Completely remote registration and bank account opening possible.
This is what we usually recommend.
UG Registration
The UG is legally the same as a GmbH but has a lower share capital of just 1 EUR. Hence it is always be seen as the cheaper version. Bank account required. Completely remote registration and bank account opening possible.
Purchse of ready to operate GmbH
If you want to start fast you can purchase a ready-made GmbH. These companies have a bank account with 25.000 EUR deposit and are registered for taxes but they did not conduct any business. Please note that the managing director will have to personally authorize himself for the bank account.
What are the steps involved in the formation of a company?
In Germany, the formation of a legal entity consists of several steps. If you work with our law firm, the process will take approximately two to four weeks.
We will assist you with
- Verification of the company name at the local Chamber of Commerce and Industry (takes about 1-2 days)
- preparation of the articles of association (takes about 3-5 days)
- notarization of the memorandum and articles of association (approx. 1 week after placing the order)
- opening of a bank account (a few days, can be arranged in parallel with incorporation)
- registration in the local commercial register (confirmation of registration takes 2-3 weeks)
Once the company is incorporated, we will assist you in
- registering the company with the relevant trade association,
- registering the company with the Transparency Register,
- registering the company with the local employment office,
- registering the employees for health and social insurance, and
- submitting the relevant documents to the tax office.
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Which company types exist in Germany?
An important decision when doing business in Germany and opening a company in Germany is selecting the type of business entity. Our lawyer in Germany is here to help you make that choice, based on the available capital, the size of the future business and the business sector in which you wish to enter. The list below highlights the characteristics of five of the most popular types of German companies:
- The limited liability company GmbH or UG (aka Mini-GmbH): the GmbH is suitable for small or medium businesses and has a capital of 25,000 EUR. A mini-GmbH can also be incorporated and for this business form the capital will be 1 EUR. Due to a higher share capital we often suggest our clients to register a GmbH (instead of an UG) as the GmbH company form is more accepted as a business partner. But it is also possible to increase the share capital (of an UG) to 25.000,00 EUR and change the UG to a GmbH later.
- The joint-stock company AG: this is suitable to large companies and has a minimum share capital of 50,000 EUR.
- The civil law partnership, Gesellschaft bürgerlichen Rechts, GbR: This the easiest form if conducting business with one or more partners. It can be established with a non written mutual agreement and has not to be registered in a company register. All partners are fully liably with their private assets.
- The partnership (Kommanditgesellschaft KG, offene Handelsgesellschaft OHG: the general commercial partnership and the limited commercial partnership are business forms that offer general and/or limited liability to the partners.
- The branch: this is the registration of the foreign parent company, it is not a separate legal entity.
- The sole trader: the simplest business form and the one with the highest degree of liability, suited for one-man businesses. This is not a separate legal entity. It just describes the individual as a business person.
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General information about the GmbH or UG / Mini-GmbH company registration process
No presence required for notarization
It is not required that the shareholder(s) or the managing director(s) are present in Germany for the company formation. We would use notarized powers of attorney for the shareholders then. This PoA can be signed by the shareholders before a notary public abroad. Furthermore, the appointed managing director must sign a declaration. This declaration can also be signed before a notary public abroad.
Registered office requirements
The company will need a registered office in Germany. Usually, a virtual office is not sufficient for tax purposes. We can refer you to a provider like www.regus.com. Costs start from 200 EUR per month.
Bank account
A new bank account must be opened for the company. This can be made after the notarization of the company formation. Generally, it is required that the managing director personally opens the bank account. The exact procedure depends on the bank at which the business bank account is opened. We have also have options to remotely open the bank account.
Share capital
The share capital must be deposited in the newly opened companies bank account. Afterwards the application to register the company in the company register can be filed.
Residence permit, Visa
A residence permit or address is neither required for the shareholder nor the managing director. If you have questions regarding residence or work permits, please contact the German embassy in your country. We do not advise regarding immigration.
Time frame and further process
After we have received your instructions, we will contact you and prepare the formation documents. Depending on how fast the (notarized) documents (PoA from shareholders, managing director’s declaration) are sent back to us we can conduct the company formation within a few business days. Afterwards it may take between two and four weeks to get it registered.
Managing Director / Shareholders
At least one managing director and one shareholder must be appointed. Managing director and shareholder can be the same person. Their nationality or residential status is not relevant.
VAT, EORI, accounting and tax services
After the initial registration we can help to find an appropriate provider for administrative and accounting services upon request. For example, we have a partner firm who can register the company for general tax and VAT purposes, file tax declarations, manage account and annual financial statements. Costs depend on turnover, monthly transactions and required services like payroll etc..
Taxation of a GmbH or UG in Germany
The taxation of a GmbH (Gesellschaft mit beschränkter Haftung) or UG (Unternehmergesellschaft) in Germany involves several aspects, including corporate income tax (Körperschaftsteuer), trade tax (Gewerbesteuer), and value-added tax (Umsatzsteuer). Here's an overview of how these taxes typically apply:
- Corporate Income Tax (Körperschaftsteuer):
GmbHs and UGs are subject to corporate income tax on their taxable profits. As of my last update, the standard corporate income tax rate in Germany is 15%. However, there is also a solidarity surcharge (Solidaritätszuschlag) of 5.5% applied to the corporate income tax amount, resulting in an effective tax rate of approximately 15.825%. - Trade Tax (Gewerbesteuer):
In addition to corporate income tax, companies in Germany are also subject to trade tax, which is imposed by local municipalities. The trade tax rate can vary depending on the location of the company, as each municipality sets its own rate. On average, the trade tax rate is around 14-17%. However, only 3.8% of the taxable income is subject to trade tax due to a tax credit (Freibetrag) provided by law. - Value-Added Tax (Umsatzsteuer):
GmbHs and UGs are also required to charge and collect value-added tax (VAT) on the goods and services they provide, unless they qualify for exemptions or special VAT schemes. The standard VAT rate in Germany is 19%, with a reduced rate of 7% for certain goods and services. - Taxation of Distributions:
When profits are distributed to shareholders (dividends), they are generally subject to withholding tax (Abgeltungsteuer) at a rate of 25% plus solidarity surcharge and, if applicable, church tax (Kirchensteuer). However, certain exemptions or reduced rates may apply depending on the recipient's tax residency and other factors.
Total Tax Burden
Let's assume the following scenario for a GmbH or UG in Germany:
Taxable profit: €100,000
Corporate income tax (15%): €15,000
Solidarity surcharge (5.5% of €15,000): €825
Total corporate income tax burden: €15,825
Taxable profit (adjusted for tax credit): €100,000 - (€100,000 * 3.8%) = €96,200
Trade tax (15% of €96,200): €14,430
Total trade tax burden: €14,430
Total trade tax: €14,430
Total tax burden (sum of corporate income tax and trade tax):
€15,825 + €14,430
= €30,255
This calculation provides a simplified example of the total tax burden for a GmbH or UG in Germany based on the specified taxable profit and tax rates. Actual tax liabilities may vary depending on various factors, so it's advisable to consult with tax professionals or accountants for precise calculations tailored to your specific circumstances.
Which documents are required for the establishment of a limited liability company in Germany?
1. Individuals as shareholders
If individuals shall be shareholder of the company, only a passport copy of each shareholder is required.
2. Company as shareholder
Having a company as shareholder is a bit more elaborate as if only individuals are involved in the formation process.
If a foreign company shall be shareholder, we have to provide the German commercial register with an official proof that the foreign company exists and who is allowed to represent it. Basically, it is enough to provide them with an official excerpt of the foreign companies register reflecting all the required information. This excerpt has to be certified and further be legalized or apostilled (depending on the country).
Examples:UK Limited: a certified Certificate of Good Standing from the Registrar of the Companies House is required (stating that the company is in unbroken existence and who are the directors).
Singapore Pte. Ltd.: a certified excerpt from the ACRA is required
Australian Pte. Ltd.: a certified excerpt from the ASIC is required
USA LLC (registered in Delaware): a certified Certificate of Incumbency is required
However, there are countries where no detailed register extracts are available. In this case, a notary’s confirmation is also sufficient. The notary’s confirmation basically must have the following content:
- Name and address of the Company,
- Company No.
- When the company has been established
- That the company still exists
- Who is Director and, if several, the scope of representation
Please note that the notary’s confirmation also needs an apostille/ legalization.
Furthermore, it is required to certifiably translate all documents into German and that all mentioned documents has to be provided in original.
Business in Germany - Top reasons and how to start
Top reasons to start a business in Germany are a dynamic economy, a stable political and economic environment for your ideas, which are protected by the law. Germany is open-minded so that your cultural background will help you attract international customers.
Before you set up a business in Germany, you must complete a number of formalities: you need a work permit, if you are not an EU resident and you need to register for taxes. Most of the businesses do not require a permission or license. You should inform yourself if it is required or ask us, we can guide you.
Furthermore, you should evaluate if it is not better for you to setup a company which prtects you against personal liability, offers some flexibility regarding taxation. Ask us. We will gladly advise you.
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