Germany company registration

DOING BUSINESS IN GERMANY IN 2022

Since 2003, Bejarano ADF Consultants Group PLC has been efficiently and effectively assisting our Clients with i) Germany business registration ii) business licensing iii) Germany business banking solutions iv) visa options and staff recruitment strategies and v) workspace rental solutions.

Compare different Germany entities	LLC	Fast business setup solution	Branch office	Rep office	Free zone
Also known as	GmbH	GmbH	Zweigniederlassung	Repräsentanz	Freizone Unternehmen
Best use of company?	All products and services	Close a customer deal now	Specific projects	Marketing and research	Manufacturing and export trading
How soon can you invoice Clients/sign sales contracts?	2 months	2 weeks	2 months	2 months	2 months
How soon can you hire staff?	2 months	2 weeks	2 months	2 months	2 months
How soon can you sign a lease agreement?	immediate	2 weeks	immediate	immediate	immediate
How long to supply company registration numbers?	1 month	2 weeks	1 month	1 month	1 month
How long to supply corporate bank account numbers?	3 months	4 weeks	3 months	3 months	3 months
How long to supply tax numbers?	2 months	4 weeks	2 months	2 months	2 months
Corporate tax rate on annual net profits?	30%	30%	30%	0%	Up to 0%
Limited liability entity?	Yes	Yes	No	No	Yes
Government grants available?	Yes	Yes	Yes	Yes	Yes
Resident legal representative required?	No	No	Yes	Yes	No
Minimum paid up share capital?	€25,000	€25,000	€1	None	€25,000
Corporate bank account location?	Commerzbank	Santander Bank	Deutsche bank	BNP Paribas	GLS Bank
Can secure trade finance?	Yes	Yes	No	No	Yes
VAT payable on sales to local customers	19%	19%	19%	N/A	Up to 0%
Average total engagement costs?	€14,090	€44,350	€14,830	€12,680	€15,680
Average total engagement period?	4 months	2 months	4 months	4 months	4 months

See full table

Accounting and tax considerations	LLC	Fast business setup solution	Branch office	Rep office	Free zone
Statutory corporate tax payable?	15%	15%	15%	0%	15%
Legally tax exempt if properly structured?	No	No	No	Yes	Yes
Must appoint an auditor?	No	No	No	No	No
Access to double taxation treaties?	Yes	Yes	Yes	No	Yes
Must file an annual tax return?	Yes	Yes	Yes	Yes	Yes
Must file annual financial statements?	Yes	Yes	Yes	Yes	Yes
Withholding tax on payments to shareholders?	15%	15%	15%	0%	15%
Company registration	LLC	Fast business setup solution	Branch office	Rep office	Free zone
Minimum number of directors?	1	1	None	None	1
Minimum number of shareholders?	1	1	None	None	1
Resident director/partner/manager required?	No	No	Yes	Yes	Yes
Shelf companies available?	Yes	Yes	No	No	Yes
Can easily convert to PLC?	Yes	Yes	Yes	No	Yes
Can have preference shareholders?	Yes	Yes	No	No	Yes
Business considerations	LLC	Fast business setup solution	Branch office	Rep office	Free zone
Can invoice local customers?	Yes	Yes	No	No	Yes
Limited liability entity?	Yes	Yes	No	No	Yes
Must sign office lease agreement during incorporation?	No	No	No	No	Yes
Can secure an import and export license?	Yes	Yes	Yes	No	Yes

Good entity for trademark registration?	Yes
Managing director need to travel to Germany?	No
Public register of shareholders and directors?	Yes
You need a local resident as bank signatory?	No
Monthly VAT reporting to the Government?	Yes
Other useful information
Can bid for for Government contracts?	Yes
Can be wholly foreign owned?	Yes
Maximum shareholding for foreigners?	100%
Sponsorship by a local citizen required?	No
Our Client needs to travel to Germany for business set up?	No
The entity will likely be regulated by?	Chamber of Commerce and Industry
Shareholders and directors documents to be translated/attested?	Yes
Government approval required for foreign owners?	Yes
Security deposit to be kept with government?	No
Temporary physical office solutions available?	Yes
Good entity for trademark registration?	Yes
What will be included in my customer sales invoice?	Click here
This country has signed free trade agreements?	Yes
This country is a member of WIPO/TRIPS?	Yes
This country is a member of the ICSID?	Yes
Average customs duties suffered?	2.70%
Average monthly office rental? (€ per sq m)	18.2
Each foreign director needs a personal income tax number?	No, unless living in Germany
Minimum statutory hourly salary?	€8.84
Maximum number of staff allowed?	None
Can secure residence visa for business owner?	Yes
Average monthly € salary for local skilled employees?	€3,190
€ deposit interest rate? (1-year average)	0.56%
Overseas remittance currency controls?	No
Banking considerations
Multi-currency bank accounts available?	Yes
Corporate visa debit cards available?	Yes
Quality of e-banking platform?	Excellent
Crowd funding available in this country?	Yes

Germany business setup summary

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Benefits and problems
Benefits of Germany company registration

Germany is the economic heart of the EU. This economic success is largely due to the ‘Mittlestand’ (SMEs), which form the backbone of the German economy. Some of the key factors behind the success of small and medium businesses in Germany are:

Government support
1. Low-interest business loans are available for SMEs at both federal (maximum value €10m) and state level (value between €50,000 and 10m);
2. To reduce pressure on businesses, the Government provides i) recruitment and training support and ii) wage subsidies to entrepreneurs who register a company in Germany;
3. Grants are provided by the states through the GRW Scheme to cover either a firm’s investment costs or two years of wage costs. Approximately 95% of firms receiving these grants are German LLCs;
4. IZ scheme provides monetary aid for investment in East Germany; this program can be combined with the GRW scheme to get cost coverage up to 50% for small firms and 40% for medium-sized enterprises;
5. For selected SMEs, the KfW Development Bank provides loans, private equity and mezzanine financing. In 2012, the total loaned and invested by the bank was €24.1 billion;
6. Government banks act as public guarantors to provide deficiency guarantees for up to 80% of loan amounts for expenses related to initial investments in Germany;
7. Incentive Programs like grants and interest-reduced loans are provided to cover R&D costs. These programs help young firms improve product quality and process;
8. Germany has signed doubled taxation agreements with over 90 different countries to minimize withholding tax on payments when doing business abroad.
Business friendly
1. Business registration in Germany only requires one director and one shareholder, who do not need to be residents or citizens;
2. There are no capital or exchange controls to discourage investment in Germany. Foreign firms can freely transfer funds from abroad and convert them into Euro;
3. Germany is the 11^th best in the world for the absence of corruption according to Transparency’s International’s 2018 ranking;
4. Imported goods may be stored in the German free ports of Cuxhaven, Bremerhaven, Deggendorf and Duisburg without incurring any duties;
5. Lastly, Germany is a metropolitan country which is highly accepting of foreign workers. People with religious convictions are offered protection under the law and won’t have to forsake their traditional roots;
6. Germany is highly advanced and sophisticated in terms of its transport infrastructure, such as its motorways and railways. Moreover, its state-of-the-art telecommunications system makes it a promising centre for all businesses related to or dependent on information technology and other allied sectors.
7. Germany has the world’s safest banks, providing comfort to business people during the 2020 global economic crisis;
8. Germany is one of the world’s least corrupt countries;
9. Germany ranks fourth in the world on US News’ list of the top countries to headquarter a company. The country offers a stable political and economic climate for expansion as well as a consumer market, skilled workforce, and strategic position in the European Union (EU) making it a smart choice for companies looking to expand their influence in Europe and across the globe;
10. With a population of 83.2million, Germany is the largest consumer market in Europe, both in terms of population and purchasing power. Despite the economic effects of the Covid 19 pandemic, in 2021 quarterly consumer spending in Germany increased from over 383 billion euros to 395 billion euros. Expanding your operations to Germany can give you direct access to this massive consumer base, helping you grow your business.
Problems with Germany company registration
1. Foreign entrepreneurs must submit the lease contract for office space to the German embassy to get visa approval;
2. Company registration in Germany is an expensive process; paid up capital of €25,000 must be deposited as part of German GmbH registration, although the new UG company is more friendly to entrepreneurs;
3. Hiring a non-EU citizen is a challenge, as businesses have to prove that an EU citizen could not adequately fill the role;
4. A Germany resident firm face a high tax burden averaging between 30% and 33%;
5. German employment law makes it difficult to dismiss poor-performing employees;
6. Every German company must pay 50% of each employee’s health insurance premiums;
7. The country follows strict environmental protection rules, which require that new products obtain certification and license approvals;
8. Germany has a complex series of incorporation procedures. This makes the country rank 125^th in the world for Ease of Starting a Business by the World Bank and International Finance Corporation (IFC) in 2020. Also, it is not easy to procure credit for your business in Germany;
9. German banks require our Client to travel for a one-hour interview. In addition, German banks are reticent to open corporate bank accounts when a Panama, Venezuelan or residents of tax heaven countries are involved in the corporate structure of the company;
10. The vast majority of German banks are reluctant to onboard non-resident companies;
11. Few German banks offer Internet banking in English;
12. High labour costs are a hindrance to doing business in Germany. The average hourly cost of labour in Germany is 35.6 euros, considerably higher than the EU average of 27.7 euros. Germany’s national minimum wage is currently 9.35 euros per hour and is set to increase to 10.45 euros by mid-2022;
13. High payroll taxes add to the cost of employing German workers. Employers pay into pension, health, unemployment, nursing care, and accident insurance. Overall, employers must contribute an additional 20.7% on top of employees’ salaries to go to social security.

Best uses for a Germany company
Preferred Euro Base
1. Germany is the EU’s most populous country and has a high per capita income (US$ 44,500). Consequently, a foreign-owned company in Germany will benefit from the massive consumer demand for foreign goods/services in the country;
2. Registering a business in Germany is the top choice for product distribution within EU because the country has the world’s highest rated infrastructure. High quality airports, roads, railways and ports facilitate easy transfer of goods to, from and within Germany;
3. Germany has EU’s most skilled labor with i) the largest labor force in Europe ii) a 99% literacy rate iii) a 99% computer literacy rate iv) 80% having formal job training v) the third highest weekly employee work hours in the EU and vi) the population with the most degrees in the EU;
4. Germany’s EU membership offers resident firms i) duty free trade of goods/services with other European countries ii) free movement of labor and capital within the EU iii) no withholding tax on payments made to other EU countries and iv) access to an integrated European consumer base of 500 million;
5. Starting a German company can be done without special licenses, except in a few highly specialized fields like insurance, medicine etc.;
6. The country hosts the world’s biggest trade shows including MEDICA and the Hannover Fair. Registering a German company will enable our Clients to tap into a market of 10 million attending customers annually;
7. “Made in Germany” is a globally renowned and trusted mark of origin; foreign entrepreneurs’ brands will benefit greatly from starting a manufacturing business in Germany.

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Company purpose?

Will the LLC be a trading company or a holding company?
Will the entity be a subsidiary of a foreign company?
The LLC will be tax resident? Having local customers and local staff and local suppliers?
The entity will receive investment income or professional services fees or sales from trading with multi-national customers?
Is double taxation treaty access important?
Do you need our help to legally minimize your international tax obligations?
Do you need our help to increase e-commerce sales (click link)?
Company structure?

Will the shareholders be individuals or corporate?

In what country do you require a corporate bank account? Refer to this web page (click link) for ideas

Do you need multi-currency corporate visa debit cards?

Do you need a resident director?

Nationality of shareholders and directors?
Expected annual sales and net profits?
Does the entity need a special regulatory license or import or export license?
Additional comments?
Tell us about your existing business?

Name of your existing company?
Your business web site address?
What products and services does your company supply?
How many years are you operating this business?
Is your Firm regulated by a Government agency?
In what country are the majority of your customers?

In what country are the majority of your suppliers?
Tell us about you?

Your name?
Your email address?
What country are you based in?

Specifically, what deliverables (click link) do you need?
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