Company Registration in Germany
Companies required to register in Germany
Are you planning to register a business in Germany? There are various ways to do so. Our company registration attorneys will gladly advise you on all questions related to setting up a business in Germany. We will guide you through the complete registration process of your company.
Which legal form to select?
Entrepreneurs intending to establish a company in Germany will sooner or later want to know under which legal form they should operate their business. The decision depends on many factors, such as:
- the line of business
- tax considerations
- the available capital and capital requirements
- the liability incurred by the company
- the number of partners and whether they participate in business management or only function as investors
- the company's future development
If several parties join forces to establish and register a new company to pursue a common entrepreneurial objective, the rights and duties of all parties should be recorded in writing. This is particularly necessary if the company shall operate in the form of a corporation, for example a German limited liability company (GmbH). The contractual freedom given in wide areas of German corporate law allows to take your company's nature, your individual situation and that of the other parties involved into account, by appropriately designing the company agreement.
Partnerships and incorporated companies
German law distinguishes between partnerships and incorporated companies. The main feature of a partnership is that the individual partners manage business themselves, while the focus of incorporated companies lies on the financial participation. Furthermore, in incorporated companies there is a stonger differentiation between shareholders and management.
Registering a company with the commercial register in Germany is a prerequisite for its coming into existence as a legal entity. The most important incorporated companies are:
- Aktiengesellschaft (AG) [joint stock company] as the basic type,
- Gesellschaft mit beschränkter Haftung (GmbH) [limited liability company],
- and Kommanditgesellschaft auf Aktien (KGaA) [partnership limited by shares], which has a tendency towards partnership.
In addition to capitalist elements, the Genossenschaft [cooperative] has characteristics of an association in particular. The cooperative also comes into existence as such only with registration in the commercial register. The Gesellschaft bürgerlichen Rechts (GbR) [partnership under the Civil Code] and the organizationally more distinct offene Handelsgesellschaft (OHG) [general partnership] are regarded as models for the partnership. The Kommanditgesellschaft (KG) [limited partnership] is a partnership with capitalist elements.
Additionally, the partners may combine characteristics of both basic types. Also, hybrid forms can be formed, such as the Publikums-KG [capital investment company] and the GmbH & Co.KG [limited partnership with a limited liability company as general partner].
Liability
Partnerships and incorporated companies differ, among other things, in the liability for obligations of the company.
- In partnerships, at least one natural person is liable to the company's creditors with all of his private assets.
- In incorporated companies, however, the liability is in principle limited to the corporate assets. Only in exceptional cases, measures are taken against the individual shareholder. The prerequisite for the limitation of the liability to the corporate assets, however, is the registration of the company with the commercial register.
Capital resources
Liability may also depend on your individual arrangements: The raising of a specific capital amount, which serves as collateral for the creditors, is stipulated by law for establishing an incorporated company. The capital stock of a joint stock company is at least EUR 50,000, the nominal capital of a limited liability company must be at least EUR 25,000, while an entrepreneurial company (with limited liability) can already be established with a nominal capital of only EUR 1. The raising of nominal capital or capital stock is the condition for company registration.
In a limited partnership, it is only stipulated that the limited partners have to make contributions; their amounts are not set by law. Partnerships do not have to provide separate corporate assets in order to establish the company.
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Taxes
Please be aware, that German tax law differentiates between the two basic forms. Income of a partnership is only taxed at the level of the individual partner. The partnership itself is not subject to taxes, i.e. no corporate tax is incurred. This does not apply to property taxes, trade taxes and value-added taxes, which must also be paid by partnerships.
Income of incorporated companies is taxed via the corporation tax at company level and, where distributed, via the income tax at shareholder level. The double burden is in part moderated in that a certain amount of dividends is tax-exempt.
Are you facing the question, which legal form is suitable for establishing your company? We will gladly assist you in finding the legal form consistent with your business plans and will also advise you on the individual steps to be taken when starting your company registration in Germany.
Your legal advisors for company registration in Germany
Are you planning to establish a business or register a company in Germany? Our experts for company registration are happy to assist.
We are looking forward to answering your questions on how to register a company in Germany and selecting the legal form most appropriate for your case. Please contact us via e-mail (info@winheller.com) or by phone (+49 69 76 75 77 85 34).
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