{"id":55796,"date":"2018-03-19T14:20:18","date_gmt":"2018-03-19T13:20:18","guid":{"rendered":"https:\/\/www.nzp.de\/?p=55796"},"modified":"2026-08-13T14:26:49","modified_gmt":"2026-08-13T12:26:49","slug":"establishing-a-company-in-germany-what-should-you-pay-attention-to","status":"publish","type":"post","link":"https:\/\/www.nzp.de\/en\/establishing-a-company-in-germany-what-should-you-pay-attention-to\/","title":{"rendered":"Establishing a Company in Germany: What Should You Pay Attention To?"},"content":{"rendered":"

Introduction<\/strong><\/h3>\n

Germany is the heart and core of the European economy. Companies of any type and size can flourish here and gain access to the European market, thanks not only to Germany\u2019s excellent geographic location at the centre of Europe, but also to its legal system, which enables businesses to develop into strong and stable enterprises with a long-term outlook.<\/p>\n

Why is Germany the best choice when looking for a registered office for your new company? Below, we set out the main questions you should consider.<\/p>\n

If you require further information on the issues discussed in this article, NZP NAGY LEGAL<\/em> will be pleased to assist you both with practical guidance on how to establish your company quickly and efficiently and with answers to any questions you may have.<\/p>\n

Mittelstand<\/strong><\/em>: How large is your company?<\/strong><\/h3>\n

Regardless of whether your business plans are small or ambitious in scale, every business starts somewhere. Germany\u2019s internal business landscape is distinctive when compared with other jurisdictions. Its particular strength lies not simply in the number of small, medium-sized and large enterprises, but in the gross value added generated by so-called SMEs<\/em>, meaning small and medium-sized enterprises. Under the German definition, these are companies with fewer than 500 employees or annual turnover below EUR 50 million. These businesses account for a substantial share of Germany\u2019s economic performance and may therefore be highly relevant to your own business plans. The German state supports Mittelst\u00e4ndler<\/em> at many stages: by reducing administrative burdens, facilitating access to a broad range of resources, easing access to public-sector financing, coordinating skilled labour, enabling participation in start-up support programmes and more. The greatest advantage of an SME, however, is the wide variety of goals it may pursue. Whether your business involves producing goods in smaller or larger quantities or providing services, your company can benefit from a business environment that has proved fertile for enterprise since the Middle Ages.<\/p>\n

The right fit matters<\/strong><\/h3>\n

What is the optimal size and structure for your company? Although a wide range of options is available, the importance of choosing the right form of company formation should not be underestimated. This decision may have a significant long-term impact on whether your company grows and, if so, how quickly. It is therefore strongly advisable to make this decision only on the basis of thorough and reliable information. NZP NAGY LEGAL<\/em> has a solid advisory practice and is ready to guide you all the way to the top.<\/p>\n

Germany offers numerous options regarding company formation, company size and registered office. The first question you should answer is whether you should establish a commercial company. When starting a business, these are by far the most common corporate forms. The most successful example is the Gesellschaft mit beschr\u00e4nkter Haftung<\/em> (GmbH), the German equivalent of a limited liability company. Its requirements are relatively straightforward: one founder; initial share capital of EUR 25,000, of which only EUR 12,500 must be paid in immediately, while the founder remains liable for the remaining amount; registration in the German commercial register, the Handelsregister<\/em>, through which the company comes into legal existence; and the appointment of at least one managing director, the Gesch\u00e4ftsf\u00fchrer<\/em>. The GmbH is a highly flexible and versatile corporate form that can suit a wide range of business needs and plans. It is the most common corporate form in Germany. Since 1 November 2008, Germany has also offered a particularly attractive form of company formation: the Unternehmergesellschaft<\/em> (UG). This is a form of commercial company designed to facilitate start-ups. The requirements are the same as for a GmbH, with one major exception: only EUR 1 in initial share capital is required. This is accompanied by an additional rule: in each financial year, 25% of the annual profit must be allocated to reserves with the aim of enabling the company eventually to be converted into a limited liability company.<\/p>\n

Another widely used commercial company form is the Aktiengesellschaft<\/em> (AG), the stock corporation. As expected, the formation requirements are stricter: at least five founders are required, and the number of shareholders may not fall below five during the life of the company; the minimum share capital is EUR 50,000; all official acts of the company are public; legal personality exists only once the company has been entered in the commercial register; and the company is managed by a management board whose activities are supervised in all respects by a supervisory board. This corporate model was first introduced by German law and is becoming increasingly popular both inside and outside Europe, owing to the growing regulatory demand for transparent corporate governance.<\/p>\n

Further company forms that may be registered in Germany include the following:<\/p>\n

    \n
  • KGaA \u2013 Kommanditgesellschaft auf Aktien<\/em> (partnership limited by shares), a commercial company<\/li>\n<\/ul>\n

    The following are non-corporate partnership forms:<\/p>\n

      \n
    • OHG \u2013 Offene Handelsgesellschaft<\/em> (general partnership), the basic form of business based on personal liability. By its nature, it requires at least two founding partners.<\/li>\n
    • KG \u2013 Kommanditgesellschaft<\/em> (limited partnership), the basic partnership form limiting the liability of certain partners (Kommanditist<\/em>). At least one partner remains personally liable (Komplement\u00e4r<\/em>) and is the only partner with statutory power of representation.<\/li>\n
    • GmbH & Co. KG or OHG, a special company structure in which the partners are companies or legal entities, established by applying the rules of a KG or OHG in combination with a limited liability company structure.<\/li>\n<\/ul>\n

      As the network grows\u2026<\/strong><\/h3>\n

      As your company begins to grow in Germany, you may wish to expand it. Here too, there are several options, offering different degrees of independence.<\/p>\n

      A subsidiary, or Tochtergesellschaft<\/em>, is literally the \u201cchild\u201d of a company. Although it has its own assets, management, accounting and balance sheet, it is not entirely independent in terms of corporate strategy. A subsidiary acquires legal personality only after prior registration in the commercial register.<\/p>\n

      A branch office, or Zweigniederlassung<\/em>, is at least almost fully independent from the head office. It is often used to strengthen a company\u2019s presence in a particular market area and does not necessarily require entry in the commercial register.<\/p>\n

      What does all this mean from a tax perspective?<\/strong><\/h3>\n

      One of the most important questions for entrepreneurs and company managers is, of course, how much tax must be paid and, above all, how that amount can be reduced. The following is a brief overview of the key rules to keep in mind.<\/p>\n

      Federal, state and local authorities levy various taxes, but do not be misled into thinking that this will necessarily impose an excessive burden on you. The German tax system is one of the most efficient and, when structured properly, can be highly advantageous.<\/p>\n

      The type and legal form of the company have a significant impact on tax obligations. An AG, UG or GmbH, for example, must pay corporate income tax (K\u00f6rperschaftsteuer<\/em>), amounting to 15% of distributed and retained profits.<\/p>\n

      VAT, in German Mehrwertsteuer<\/em>, is charged at 19% or 7% of the value of the goods sold or services provided, depending on the nature of your business. The reduced 7% rate applies only to a narrow category of goods and services. VAT also applies to goods imported from outside the European Union, whereas the opposite treatment applies to goods exported to such countries, with the tax generally being refunded.<\/p>\n

      The solidarity surcharge has continued to be levied since 1995, although it has since been reduced to 5.5% of the relevant tax amount. Its purpose was to help balance the economic differences between the former East and West Germany.<\/p>\n

      Trade tax, or Gewerbesteuer<\/em>, is a local tax whose rate depends on the city or municipality in which you establish your business. It is calculated on the basis of the company\u2019s business income and is often the most significant tax burden of all.<\/p>\n

      Other important taxes include property tax and real estate transfer tax, known as Grundsteuer<\/em> and Grunderwerbsteuer<\/em>. While the former is a local tax that varies depending on the type of property, the latter is a tax triggered by the acquisition of real estate.<\/p>\n

      All of this may appear demanding, especially for new businesses at the start-up stage. However, German tax law offers numerous methods for easing these burdens. For example, trade tax is generally deductible for corporate income tax purposes because it is treated as a business expense. Similar structuring considerations also apply to flat-rate taxation on dividends and participations.<\/p>\n

      Where you locate your registered office is particularly wichtig<\/em><\/strong><\/h3>\n

      The above is only a brief overview of what you can expect when establishing a company in Germany. To avoid unpleasant surprises and to find the structure best suited to your business plans, it is strongly advisable to obtain local business and tax advice.<\/p>\n

      As the tax section of this article shows, location is extremely important \u2014 or, as one would say in Germany, wichtig<\/em>. Finding the right balance between the operational centre of your business and a city with favourable tax conditions is essential not only for stable growth, but also for gaining an advantage over competitors.<\/p>\n

      Come to the Nuremberg\u2013F\u00fcrth metropolitan area!<\/strong><\/h3>\n

      Located in the heart of northern Bavaria, more precisely in Middle Franconia, the Nuremberg\u2013F\u00fcrth metropolitan area is one of Europe\u2019s most developed economic regions and is also home to the headquarters of NZP NAGY LEGAL<\/em>. Bavaria is already regarded as a particularly prosperous federal state, but this region brings together many decisive advantages. The surrounding market repeatedly demonstrates its strength: it is an economic centre generating approximately EUR 27 billion and consisting of more than 14,000 businesses, with particularly dynamic activity in the energy, innovation and healthcare sectors. The large number of universities in the region makes it an excellent research and development incubator, where innovation and your business ideas can grow successfully and gain market traction. Throughout its history, the N\u00fcrnberg Messe<\/em> has served as the venue for numerous important corporate and business agreements, and this trend is likely to continue as Nuremberg\u2013F\u00fcrth grows. NZP NAGY LEGAL<\/em> played a central role in one of the most recent such transactions, involving leading Indian companies from the automotive and innovation sectors.<\/p>\n

      Taxes in this region are statistically and numerically more favourable than in most major German cities. Trade tax is lower, and thanks to state and federal tax policy, as well as major development and investment programmes in Germany and the European Union, research and development expenses can also be integrated into an efficient overall structure.<\/p>\n

      Even setting aside the picturesque beauty of Nuremberg\u2019s medieval old town \u2014 one of the region\u2019s most important cities for the past thousand years \u2014 what objection could there be to starting your new business here, in the heart of Germany, while looking out over the ancient walls of the Altstadt<\/em> or the peacefully winding Pegnitz? Our office is located right in the city centre. We would be pleased to welcome you and assist you in establishing your new and promising company.<\/p>\n","protected":false},"excerpt":{"rendered":"

      Introduction Germany is the heart and core of the European economy. Companies of any type and size can flourish here and gain access to the European market, thanks not only to Germany\u2019s excellent geographic location at the centre of Europe, but also to its legal system, which enables businesses to develop into strong and stable […]<\/p>\n","protected":false},"author":29,"featured_media":55798,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[15],"tags":[],"class_list":["post-55796","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t