Buy or register a Company in Germany.
Germany provides the opportunity to register a company for local citizens, citizens who have a residence permit in the European Union, and foreign citizens. With prudent reputation and a stable economy, it is one of the most attractive countries for setting up a European company. GMBH – Gesellschaft mit beschrankter Haftung (Limited Liability Company) is the most popular legal form of the company in Germany.
Company Registration in Germany – Prices
- Preparation of constituent documents
- Company registration, including payment of fees
- Notary services
- Notary fees
- Opening of a temporary account in Germany
- Opening of a permanent account in Germany
- VAT number *
The minimum authorized share capital of the German GMBH is 25 000 EUR. The payment of authorized capital can be made either immediately, or in parts: the first payment of 12 500 EUR at the time of registration, the second payment of 12 500 EUR within a year after the company’s registration. The authorized capital can be used for business needs, for example, purchase of goods, office rent, accountant services, etc.
The liability of each member is limited to the amount, if any, paid on their shares. That is, the responsibility of the founders does not apply to their personal property.
Corporate income tax is calculated at the end of the year according to the accrual basis accounting method. This is recorded in the annual financial statement. When dividends are paid to an enterprise with full corporation tax liability, the business is largely exempted from paying tax on these revenues.
A German company pays the corporate income tax, regardless of where the company’s profits are received, on the territory of Germany or abroad. The corporate income tax rate is 15%. In addition, a trade tax of 14% and a solidarity surcharge of 5.5% are added on top of the corporate income tax. Ultimately, the total annual taxes paid by a company is about 30%.
The standard VAT rate in Germany is 19%. Exceptions are transactions with food, flowers, medicines, etc., where the VAT rate is 7%. The company, with a VAT payer status, applies 19% VAT for transactions in Germany. For transactions in the EU, outside Germany, the VAT rate is 0%, provided that the partner of your German company is a legal person from the EU and has a VAT number. When dealing with countries outside the EU, VAT is often not applied.
Tax on dividends
Profits which are distributed to private stock-holders are liable to a final withholding tax of 26.375%. However, the application of a permanent residence permit may lead to a lower withholding tax.
- Germany has a reputation for prestigious jurisdiction
- No residence requirements for directors and shareholders of the company
- Authorized capital can be contributed in two stages
- Possible setting up of a ranch or a representative office abroad
- The reverse charging VAT mechanism when working with partners from the European Union.
- Obtaining a residence permit in Germany for a founder and his/her family
How to register company in Germany?
- Preparing of an Agreement for the Establishment of a Limited Liability Company. It must include information about the founders of the company, authorized capital, shares distribution among the founders, company’s legal address.
- Signing the Memorandum of Association in the presence of a notary in Germany. The notary prepares documents for the payment of authorized capital into the company’s account.
- Opening a temporary account in Germany to pay authorized capital.
- Registration in the public commercial register and, local trade office, tax inspection to obtain a VAT number.
- Restructuring of a temporary account into a permanent account.
The arrival of the Director and the founder is necessary to open a temporary bank account in Germany, sign the Memorandum of Association and contribute an authorized capital.
The entire registration procedure for GMBH in Germany takes from four to eight weeks.
Important to remember!
To open a corporate bank account, the following requirements apply to the Director of a German company:
- The Director must be a citizen of the European Union, or
- Have a residence permit in Germany, or
- Have permanent residence permit in any of the countries of the European Union