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.
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.
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.
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.
Gesellschaft mit beschränkter Haftung (GmbH)
The shareholder's liability is limited to his capital contribution.
Board of directors, supervisory board, shareholders' meeting
Mandatory, if 2 of the following conditions are met:
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.