The German Limited
The incorporation process of a German GmbH
Your gateway to Europe
If you intend to engage in any commercial activity in Germany, it is highly recommended to establish your legal entity company. The GmbH is the most common form of all new companies incorporated in Germany and can be compared to the French Sàrl, the Spanish SL or the well-known Private Limited in the UK. Most foreign investors incorporate a GmbH in order to have a representative office in Europe which allows them to start and grow their sales operations in both Germany and the rest of Europe.
The German GmbH is successfully established by having the Deed of Formation documents as well as the Articles of Association signed by the director in front of an official German notary. The GmbH can also be represented by further natural persons. Those representatives are required to hold power of attorney, which has to be notarized by the German notary as well.
Incorporation
To complete the German incorporation process, the new German Limited must be registered with the local Chamber of Commerce. For final registration the managing director has to sign the application in front of a German notary. The notary certifies the signatures, informs the managing directors about their duties and finally files the application.
Upon registration in the commercial register, the GmbH becomes a legal entity and gains full legal capacity. Furthermore a newly-incorporated GmbH must also be registered at the local trade office. The GmbH can already start its business without this last registration, however, the limitation of liability of the shareholders will only become effective when the registration is filed.
Foreign Business Owners
Nationals from non-EU countries (third countries) who wish to travel to Germany to start a business require a special purpose residence permit (AE) which must be applied for the German foreign representation in their home country.
Foreign Management
Nationals from third countries need a valid and recognized national passport and a residence permit in the form of a residence permit for the purpose of self-employed activity. It is issued by the immigration authority for a period of at least three years.
Foreign Representatives
Nationals from non-EU countries who wish to enter Germany as a representative of a foreign company are required to obtain a valid special purpose residence permit (AE) for a maximum of 12 months from the competent immigration authorities.
Corporate Bank Account
An active company in Germany must also obtain a German bank account. In order to open a German bank account, you must have a valid passport and a confirmation that Germany is your current place of residence from the local Public Office.
The German Limited
The German Limited (GmbH) is the most widespread company form. It's shareholders are not personally responsible for the company's debts.
One person is required to set up a GmbH and to be its shareholder. A notarial agreement must be set in place between the shareholders and the new German Limited. Shares in a GmbH are not embodied in a certificate and cannot be quoted on the stock exchange. However they may be transferred through properly notarized documents.
The name of the GmbH must derive either from the purpose of the enterprise or the names of the shareholders, and must contain the abbreviation "GmbH". The company comes legally implemented and active when it is entered into the Register of Companies (Handelsregister).
A GmbH must appoint at least one managing director (Geschäftsführer), who may also be a shareholder of the company. The managing director is the only person entitled to represent the company.
Investment
To form a German Limited (GmbH), a minimum share capital of EUR 25,000 is required. The share capital is to be paid to a German corporate bank account. A German corporate bank account for your new German Limited will be opened as part of the successful incorporation process.
The German Limited at a Glance
Name | Gesellschaft mit beschränkter Haftung (GmbH) |
|---|---|
Liability | The shareholder's liability is limited to his capital contribution. |
Statutory capital | Euro 25.000 |
Corporate bodies | Board of directors, supervisory board, shareholders' meeting |
Financial Statements | Mandatory, if 2 of the following conditions are met: |
Company taxation | EBIT - Trade tax on profit of 12% - 13% Dividend withholding tax 25%, reduced to 0% - 15% by double tax treaties, can be 0% within EC. |
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