Germany Introduction
There
are a number of different business structures
in Germany, with the most common outlined below.
All businesses must register with the local
trade office (Gewerbeamt) and be entered into
the commercial register (Handelsregister), except
for private partnerships, freelancers and individual
trade persons.
A
business must register with the local tax office
within one month of start-up when a tax identification
number will be issued.
Although
there is no general requirement for licensing,
certain types of industries have to be licensed
with special licences required for banking,
insurance and hospitals.
BACK
TO TOP
Germany Limited Liability Company (GmbH)
The
Limited Liability Company (Gesellschaft mit
beschränkter Haftung) is the most common
business structure. The share capital must be
at least EUR25,000; half of this may be in contributions
in kind but at least EUR12,500 must be in a
bank account. One person can set up a Limited
Liability Company and be its shareholder. Shareholders
are liable up to the level of their invested
capital. Once entered into the trade register,
the Limited Liability Company becomes a legal
entity and its name must refer to either the
nature of the business or the name of one or
more shareholders, followed by the letters GmbH.
Shares of a GmbH are not traded on the stock
exchange and are not certificated. Their ownership
may be transferred through notarial documents.
BACK
TO TOP
Germany Mini GmbH
A Mini GmbH can be set up with a start-up capital
of EUR1. This new type of GmbH came into existence
late in 2008 and enables individuals or groups
of individuals to start their own limited liability
company. A Mini GmbH has to be identified as
such and must set aside at least one quarter
of its annual profits until a share value of
EUR25,000 is reached. At this point the business
becomes a regular GmbH and is entered into the
trade register.
BACK
TO TOP
Germany Joint Stock Company (AG)
A
start up capital of EUR50,000 is required for
setting up a Joint Stock Company (Aktiengesellschaft).
An individual may set up a Joint Stock Company
and may list the company shares on the stock
exchange. The founding shareholder(s) must appoint
a first auditor and a supervisory board and
the appointments must be notarised. The supervisory
board in turn appoints the first management
board. The shareholders’ liability is
limited to their capital contribution. Notary
certification is required for articles of association
and the company becomes a legal entity once
it is registered into the Register of Companies.
Germany Limited Partnership (KG)
The
minimum start-up capital for a Limited Partnership
(Kommanditgesellschaft) is EUR50,000. Start-up
capital is split into shares and divided according
to capital contributed. The contract between
the partners must be notarised and the business
entered into the trade register. Strict guidelines
are laid out in the Companies Act (Aktiengesetz)
as to the wording of the contract. There are
two different types of partners: a general partner,
who is wholly liable; and limited partners,
who are liable up to the value of their holdings
in the company. The general partner is the representative
of the company.
BACK
TO TOP
Germany Limited Partnership with a Limited Liability
Company as General Partner (GmbH & Co KG)
This
is a separate form of the Limited Partnership
where the general partner is not an individual
but a Limited Liability Company, thereby minimising
the financial risk to the individual. It is
advisable to have a written partnership agreement
between the general partner and the limited
partners. Usually the shareholders of the Limited
Liability Company are identical to those of
the limited partners of the Limited Partnership.
BACK
TO TOP
Germany General Partnership (oHG)
No
start-up capital is required to establish a
General Partnership (Offene Handelsgesellschaft).
Each partner is liable without limit. A General
Partnership may be created by individuals or
a coming together of two separate businesses
pursuing the same interest. It must be entered
into the trade register and the name must be
suffixed by oHG for clarification of liability.
The General Partnership must have a board of
directors and a supervisory body, and must hold
regular shareholders’ meetings. All partners
are required to play an active part in the partnership
unless otherwise specified in the partnership
contract.
BACK
TO TOP
Germany Civil Law Partnership (GbR)
A
minimum of two partners is required to establish
a Civil Law Partnership. All partners have unlimited
liability for debts incurred by the company.
A written partnership agreement is not required
by law but is recommended. A Civil Law Partnership
must register with the local trade office if
it is to carry out a small trade business. If
annual turnover exceeds EUR250,000 or there
are profits of more than EUR25,000, it is classified
as a commercial business and must be entered
into the commercial register and thereby automatically
becomes a General Commercial Partnership (oHG).
BACK
TO TOP
Germany Subsidiary
A
Subsidiary (Tochtergesellschaft) is a company
that is located separately from its parent company.
It has its own management, assets and accounting
systems. A subsidiary must be entered into the
Register of Companies.
BACK
TO TOP
Germany Branches
A
Branch (Zweigniederlassung) is closely linked
to the head office and does not have its own
assets or accounting systems. The head office
runs its administration. A Branch does not have
to be entered into the register of companies.
BACK
TO TOP
Lowtax Network Portal
Front Page
Tax Jurisdictions
Featured Content
