How to set up a company in Germany?

Setting up companies in Germany. Because of the close proximity to the German border, for many years our company has specialized in setting up companies in Germany. If you choose to set up a company with us, you will: Have easier access the EU market, because of operating as German company. Get a high tax allowance (currently €9 744.) Have no obligation to pay social and health insurance. Be able to access EU funds and the financial market easier. We sell registered shelf companies and offer to set up special purpose vehicles for specific undertakings and provide: Assistance of a Polish law firm in Polish, Virtual Office in the city center of Berlin with a prestigious address. Assistance with tax and accounting. VIP assistance of a bank, also in Polish. Legal consulting and a manager’s support at every stage of the business’ development. Before we set up a company, we complete a set of documents and prepare the company contract, as well as all the necessary forms for registration, on request both in German and Polish. We complete all the formalities connected with preparing a contract and registering a company, all done in one trip to Berlin. We provide a translator (free of charge) and set up an appointment at the bank and with a notary. We report the company to the tax office to receive a tax number and an EU VAT number. The most popular form of business activity in Germany is operating as a GmbH (Gesellschaft mit beschränkter Haftung) company, which is similar to an English LTD or American LLC. Our clients often choose other legal forms to start business with, e.g. a UG (Haftungsbeschränkt) company where there is a lower share capital. Although, some clients opt for more advanced legal forms, such as: AG companies or GmbH & Co.KG limited partnerships with a GmbH company as a general partner, in order to limit personal liability. You can find all the necessary information on our website, but if you are still lacking answers to your questions, feel free to contact us directly. Tel: +48 601634789

A company in Germany vs a VAT return?

Companies in Germany, mainly Gmbh and UG companies, are becoming a more and more popular alternative for companies in Poland. It happens due to a seemingly mundane reason, that might seem insignificant, even though it is not. Polish tax offices are starting to conduct ungrounded audits of Polish businesses applying for a VAT refund more often. The audits frequently start only a couple of days before the statutory deadline, before the day on which the office has to refund excess tax. When announcing an audit, the office makes a decision to delay the tax return until the next period. Such a decision significantly hurts the company’s liquidity We have observed the move of the young people from Poland to countries such as the UK, Ireland, Norway, the Netherlands, France and Germany. It causes the export of the known and liked goods and brands out from Poland and into these countries. The companies that do it, pay VAT on which they can get a refund later. Unfortunately, as a result Polish businessmen have to wait around for their tax refunds in their own country. To avoid such situations, Gmbh and UG companies are set up in Germany. By doing that, you can avoid paying VAT entirely, both when buying and selling goods. Setting up German companies is a great solution for such business. A shelf company in Germany.

A company in Germany vs a VAT reverse charge?

As of 1 October 2014, an amendment to the VAT act designed to fight extortion and tax fraud applies in Poland. It addresses especially trade abuse of sensitive goods, such as: fuel, gold, steel, computer hardware and electronics. This amendment introduces joint tax responsibility, which means that if the buyer buys one of the sensitive goods and the seller doesn’t pay tax, then the buyer will be obligated to pay said tax instead of the seller. Including a foreign entity in the reverse charge mechanism makes this regulation practically inapplicable to a German company and the business transaction with such goods will carry less risk of tax penalties. A significant advantage of having a company in Germany is the fact that we can invoice services done in Poland without including VAT, which is good for service prices and makes an offer able to compete on the market. With a German company, we can delay the tax payment deadline by selling merchandise between entities registered in at least two different tax destinations. A shelf company in Germany.

What is the responsibility of the shareholders of a GmbH company in Germany?

A German GmbH company is liable to its creditors to the extent not limited to the company’s entirety of assets. Technically, shareholders are not liable for the company’s obligations with their private assets, unless they’ve personally offered them as collateral for the company’s liabilities, for example by accession to debt or a loan guarantee. Shareholders can be held personally liable in the case of GmbH company law infringement, especially if they enrich by means of the GmbH company (hiding assets from creditors, closing operations without following procedure, withdrawing equity while infringing on GmbH company regulations.) It’s worth to remember that a GmbH company’s board members are personally liable in case of violating their own duties as conscientious business managers. They will also be held personally liable if they don’t file for bankruptcy if the GmbH company goes bankrupt. They will be made to make payments in favour of the company and to withdraw assets and money in favour of the GmbH company’s shareholders. If a German GmbH company becomes insolvent and over-indebted, then board members are obligated to file for bankruptcy without undue delay, but no later than after three weeks. If a GmbH company doesn’t have a board anymore, the obligation to file for bankruptcy is transferred to the company’s shareholders.

A German GmbH company as a general partner in a GmbH & Co limited partnership. KG

Similarly to the European legal system, in Germany it is possible to set up a limited partnership in which a GmbH company is a general partner. The benefit of such a solution is that the GmbH company pays taxes as a company, while the entire company made up of the two entities pays taxes as a limited partnership. Aside from that, the obligations to creditors are limited to the amount of the GmbH company’s share capital. This way, the company only pays tax for the activity it actually leads and all the profits and losses are divided between the partners and are subject to their individual income tax rates. This solution is designed to limit the obligations to creditors up to the amount of the GmbH company’s capital, as well as to ensure the lowest possible taxation of the natural persons who are company partners. A significant advantage is also the fact that the partners who are also board members representing the company do not have to take the company’s limitless obligations upon themselves. The GmbH & Co.KG company is then essentially a limited liability partnership.

A German GmbH company vs a UG company – which one should you choose?

When deciding to set up a company in Germany, we stand before a choice between a classic GmbH company, and a so called Unternehmengesellschaft company (UG in short, with the addition of haftungsbeschränkt.) A UG company is not a separate legal form, so much as a modified version of a GmbH company. In practice, it’s supposed to make setting up a company accessible, especially for entities who need a small share capital, mainly in the services sector. On top of that, the legislator limited the possibility of paying out annual profits in full. It’s required to build a reserve for the share capital, toward which 25 % of profits have to be put, up until when the minimum amount of €25 000 is raised. (The legislator did not specify any deadline before which said capital has be raised.) If the company raises its capital to €25 000, the restrictions put on it lose power, but the company still can be called UG haftungsbeschränkt. In the case of a GmbH company, the minimum share capital is €25 000. Shareholders can cover the share capital by means of an in-kind contribution (apportionment.) The amount of in-kind contributions cannot exceed half of the start-up share capital and at least €12 500 must be in cash. The shareholders can each time determine the amount of their shares on their own. Every share of the company must amount to at least €1 in order for the available shares to be easily split, merged, transferred (individually or grouped) to third parties. In a GmbH company, the legislator regulates the terms on which the company’s equity is replenished by the shareholders granting loans to the company and determining the moment when it becomes equity and exactly what is the obligation to creditors. In general, there’s a rule that a company can regulate its obligations to creditors without being limited to its assets. Shareholders aren’t usually liable with their private assets, unless they’ve guaranteed the company’s obligations with their personal assets or have broken company regulations by unfounded enrichment at the expense of the company.

What do you need to set up a GmbH company in Germany?

Our company specializes in setting up companies in Germany. They are GmbH companies (GmbH – Gesellschaft mit beschränkter Haftung is a German company equivalent to the British LTD and American LLC,) with a minimum share capital of €25 000. However, for registration purposes you only need to pay in half of the share capital, which amounts to €12 500. It is also required to get the company name accepted by the German Chamber of Industry and Commerce (IHK.) The next steps are to register the company with the HRB (Commercial Register,) open a bank account and decide on the company headquarters. Another necessary step is to register the object of activity for business activity registration done by the local administrative authority. The company contract of a German company has to include the minimum of content required under section 3 of the Limited Liability Companies Act, as well as be signed by all the partners and notarized. In the absence of one of the shareholders, it is possible for the document to be signed by a proxy with a notarized power of attorney. When still being set up, a GmbH company must appoint a person who will represent the German company outside of the company, namely the company manager (Geschäftsführer,) who will take the next steps toward company registration. Appointing such a person is possible when preparing the GmbH company contract, or later by the resolution of the partners. A German GmbH becomes a legal entity only when entered into the commercial register. Only the company manager (Geschäftsführer) is authorized to submit an application for a register entry. In the case of multiple boards, all of them need to submit such an application in order for the process to be successful, even though they are all authorized to individually represent the company. Their signatures on documents must be notarized, and then the notary sends digital copies of the documents to the commercial register. Similarly to other European countries, during the time between signing the company contract and getting it registered, the company’s board is liable for the obligations with their personal assets. For the newly set-up GmbH company to begin activity, it is necessary to register it with the tax office, for business activity registration and to open a bank account as well as to register it at the Chamber of Commerce.

German companies – what are they like?

There are many questions surrounding German companies, so we’ll try to describe them one by one. We will not go over any businesses led by natural persons, but companies only. A UG company (beschränkterhaftung) is an equivalent of a GmbH company, with the difference that the start-up capital of €25 000 is not required in a UG company. However, it needs to be replenished in the following years by writing off 25% of the company’s profits. After accumulating the desired capital, an application can be filed to convert the UG company into a GmbH company. The company needs to be set up by means of a notarized document. The opinion of the appropriate Chamber of Commerce is required as well. A company can have one or more partners. The board, which can consist of one person or of many people, is liable for all the obligations. When dealing with company matters, GmbH company regulations are applied. GmbH company (Gesellschaft mit beschränkter Haftung) limited liability company. This German company is a legal entity and all of the matters connected with it are handled by a board, which can consist of one person or of many people. The minimum share capital is the amount of €25 000, which has to be paid before registration, and each of the shares of company founders need to be higher than €100. As in other European countries, a German GmbH needs to be entered into a court register. Such companies are set up to do business on a larger scale, but also to limit the employees’ personal liability. The governing entities in a German company, similarly to Polish companies, are the shareholders’ meeting, the supervisory board and the management board. The German AG company (Aktiengesellschaft) is equivalent to the European joint stock company, the aim of which is to concentrate capital in order to collaborate bigger economic undertakings. The AG joint stock company is a legal entity, is liable for obligations only to the extent of the company’s assets and operates under the Companies’ Act (Aktiengesellschaftsgesetz.) Setting up AG companies is well-regulated in the currently abiding German law. The start-up capital of an AG company is €50 000 or more and is formed by taking stocks by the company founders in return for the monetary assets. A company is registered after accumulating the share capital, submitting a founding report, appointing a supervisory board and receiving a positive opinion of the appropriate chamber of commerce. After court registration, a German AG company is granted a status of a legal entity and can issue shares. The governing entities of a German AG company are the general meeting of shareholders, the supervisory board and the management board. Shareholders are not liable for the company’s obligations. There is any risk involved only to the extent of the stock capital they’ve brought in and they get profits as dividends.

What are the benefits of having a company in Germany?

A business in Germany, as a German company, is undoubtedly a good solution for those who want to work directly on the German market. By conducting business activity there we can count on a lot of reliefs when compared to having a company outside of the EU. A company in Germany is a guarantee of an easier access to commissions on the German market. There are also benefits connected to taxes, as the tax allowance there is significantly higher than in other eastern European countries, namely €8 472 as of 2016. Aside from that, we can count on a lot of reliefs when recruiting employees and the access to EU funds is much easier. We benefit from free training for our employees, including free German lessons. It is much easier to settle company car payments there and to account for its VAT.

Setting up a company in Germany – Where to start?

Setting up a company in Germany for a natural person conducting business activity is not difficult and is done on similar terms as in other European countries. We report the desire to conduct specific business activity in an appropriate office and we begin to file for social security. Next, we get registered in a tax office and we can begin business activity. Setting up a German UG company or a GmbH company (similar to British LTD or American LLC) requires a notarized contract and that the name of the company is confirmed by the IHK (the German Chamber of Industry and Commerce.) Next, it is required to be entered into the appropriate court register. After registering a German company with the court register, we register the company with the local business registration (Gewerbe) in the extent to which we are planning on conducting activity. Then, we notify the tax office and after that final step we can begin business activity. Our company has all the services you need to set up your company in Germany. We schedule appointments with a German notary in order to prepare a company contract. We oversee the entire registration process, including company name verification, to see if the name has not already been entered into the German court register. We help with opening a bank account as well as signing a contract with an accounting firm and a Virtual Office. In general, we can help our clients during the company’s activity and everything can be done in Russian. If a client doesn’t have experience in managing a company in Germany, we can also delegate our employees to the board of the your German company.

How quickly can you begin activity after buying a shelf company in Germany?

Buying shares in a German shelf company very often means making some changes to the company’s board. These changes are made to the documents by a notary when appointing a new board, and then they are sent to the court register in order to be put into the HRB register. Practically, after that the new board can represent the company outside it and successfully assume liabilities. Unfortunately many German banks follow different procedure than the one stated in the abiding regulations, because they need current certified entry copies from the HRB to make persons from the new board authorized to use the bank account and so they claim that the notarized documents confirming the changes are not sufficient.