Germany

Company formation in brief

From the variety of organizational and legal forms of enterprises established in Germany, a potential foreign investor may be interested in such as:

• Aktiengesellschaft (AG) - open joint stock company
• Gesellschaft mit beschränkter Haftung (GmbH) - closed limited liability company
• Offene Handelsgesellschaft (OHG) - general partnership with unlimited liability
• Kommanditgesellschaft (KG) - limited liability partnership
• Zweigniederlassung - a branch of a foreign company

Aktiengesellschaft (AG)

A public limited company is incorporated with a minimum capital of € 50,000 and has the following features:

• all capital must be subscribed by the shareholders and half of the capital must be paid up in cash at the time of incorporation. If second half of the capital is paid by non-monetary assets, such property must be evaluated by an independent expert in Germany;
• a minimum number of shareholders who can be individuals and legal entities, residents and non-residents of Germany is 1, and the maximum is not limited.
• shareholders are limited in their liability for debts and obligations of the company and free to transfer their shares to third parties.
• the company can be managed both by one director (Geschäftsführer) and by the Board of Directors. Only physical persons (residents or non-residents of Germany) are entitled to be directors. One of the directors must be a resident of the European Union;
• the company is obliged to form a supervisory board to control the activities of directors;
• shareholders have rights to appoint and dismiss directors at any time, as well as to impose any restrictions on their rights;
• annual general meetings must be recorded by a notary.

Gesellschaft mit beschrankter Haftung (GmbH)

A private limited company is incorporated with a minimum capital of € 25,000 and has the following features:

• the capital must be signed by the participants and fully paid at the time of incorporation;
• the minimum number of participants who can be individuals and legal entities, residents and non-residents of Germany is 1, and the maximum is not limited;
• the company does not issue shares as such;
• the participants are free to transfer their shares to third parties with the appropriate notarization, but the company' Memorandum and Articles of Association may provide for a limitation and the need for an appropriate decision made by the general meeting;
• the company can be managed by both one director (Geschäftsführer) and the Board of Directors. Only physical persons (residents or non-residents of Germany) are entitled to be directors. One of the directors must be a resident of the European Union;
• if the company has more than 500 employees, the company is obliged to form a supervisory board;
• the company is allowed to carry out any legal activity, with the exception of banking, insurance, reinsurance and others related to the risk of an unlimited number of third parties.

Offene Handelsgesellschaft (OHG)

In an unlimited partnership all partners bear unlimited liability for debts and obligations of their business which is managed by partners, one of which must be a resident of the European Union.

Kommanditgesellschaft (KG)

In a limited partnership there is at least one general partner with unlimited liability (which, in turn, may be a limited liability company) and one or more partners with liability liability for debts and obligations of their business which is managed by partners, one of which must be a resident of the European Union..

Zweigniederlassung

A branch of a foreign company is an economically and geographically separate subdivision of a foreign legal entity in Germany. Like all other types of companies in Germany, a branch must be registered with the Commercial Register and the tax office of the region of Germany where it is supposed to have a legal address and branch office.

The branch is not an independent legal entity, however, its economic activity should be organized in such a way as to ensure its independent financial existence in the future. It is endowed with the property of the legal entity that founded it and acts on the basis of the provisions approved by the parent company. The parent company makes a decision on the appointment of the head of the branch, who acts under a power of attorney issued by the company.

The name of the branch must be the same as the name of the parent company. Additionally, you can use the words: "branch, Germany".

All types of registered companies in Germany are required to have a physical presence in Germany and a deployed office (where the German authorities could send information, regulations and other documents).

To conduct business in Germany, a company may need a license (gewerbeschein), which is issued exclusively in the name of a director or manager who is a resident of the European Union.

Bookkeeping is compulsory for all types of companies in Germany. All business documents must be kept at the company's office and be available for inspection at any time. Depending on whether the German tax office recognizes the business of a company as small, medium or large, the company may be required to undergo an audit before submitting its annual accounts.

If the company turns out to be bankrupt in Germany, the director or manager of the partnership is obliged within 3 weeks to register a corresponding statement in the local court. Failure to do so may lead to criminal prosecution of directors and company managers in Germany.

The taxation system in Germany has three levels - federal, municipal and personal.

German enterprises pay taxes on their worldwide income and include income of their branches in foreign countries.

Branches of foreign companies are subject to tax only on income derived from sources in Germany.

Partnerships pay only local tax (in the city where the partnership has a legal address). From a tax point of view, it does not matter whether the partnership generates income in Germany or abroad. The members of the partnership themselves pay taxes in proportion to their shares in the partnership, and if the partners are not residents of Germany, then they do not pay taxes in Germany, respectively.

Germany Double Taxation Agreements:

Albania, Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium, Bolivia, Bosnia and Herzegovina, Bulgaria, Canada, China, Costa Rica, Cote d'lvoire, Croatia, Cyprus, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Finland, France, Georgia, Ghana, Greece, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Jamaica, Japan, Jersey, Kazakhstan, Kenya, Korea, Kosovo, Kuwait, Kyrgyzstan, Latvia, Liberia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mauritius, Mexico, Moldova, Mongolia, Montenegro, Morocco, Namibia, Netherlands, New Zealand, Norway, Pakistan, Philippines, Philippines, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Syria, Taiwan, Tajikistan, Thailand, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, USA, Uruguay, Uzbekistan, Venezuela, Vietnam, Zambia, Zimbabwe.

99 classical offshore, onshore and midshore jurisdictions of Europe, America, Middle East, Asia, Africa and Oceania

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