If you are considering incorporating a company in Germany, you should be familiar with the most common company structures and the steps you need to take to register your company. Currently, the most commonly used corporate structures are
- GesellschaftmitbeschränkterHaftung (GmbH – Limited Liability Company)
The minimum share capital is €25,000, of which €12,500 must be deposited in the corporate bank account during the registration procedure. The director of the company must be a German citizen and at least one partner is required.
- Unternehmergesellschaft UG (mini-GmbH – Mini limited liability company)
This is the option that allows a low-cost incorporation, in that it maintains the structure similar to that of the GmbH, but only one euro of share capital needs to be contributed during incorporation. However, a withholding of a quarter of the profits will be made each year until the minimum share capital is reached.
- Aktiengesellschaft (AG – Public limited company)
The minimum share capital is € 50,000, divided into shares and fully paid up on incorporation. It must have at least one shareholder, and all documents relating to the incorporation of the company must be submitted and signed before a notary in order to be entered in the commercial register.
Once we know which corporate structure is the most suitable for our future company, we must:
- obtain the name of the company from the local chamber of industry and commerce
- notarise the association files
- set up a corporate bank account
- file all articles of association with the commercial register (this is usually done by the German notary)
- Notify the labour office about the business and the rules of establishment
- Register with the specific trade professional
- notifying the local labour office about the establishment of the company
- register employees for social insurance
- send the documentation to the tax office.
With regard to the last point, it is important to note that a new company does not have to register for VAT in Germany except if it trades in the sale of and business with deliveries. VAT registration must not take place more than one month after the issuance of the company registration certificate. If the income does not exceed EUR 16,650, VAT registration is not mandatory. Documents such as the registration certificate, information about the directors, the object of activity and the expected income must be submitted to obtain the VAT number.