Company Formation in Germany GmbH, UG etc
GmbH, UG or Mini-GmbH: Fast and reliable company formation service from experienced lawyers. Flat fees. No hidden costs.
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To start your company incorporation please select the appropriate company type below and fill out the form details.
Set up together with us your German UG – the so called “Mini-GmbH” - In just 4 steps – fast and easy! For nearly half the costs of a GmbH and at least 1 Euro as equity capital you already can incorporate this company with a limited liability.
Company incorporation UG & Co KG (entrepreneurial company with limited liability & Co. KG, UG (haftungsbeschränkt) & Co. KG)
Here you may instruct us to provide you with an address which runs under the address of our law firm. Your company will be reached at the prestigious address in Frankfurt, Germany, 60325, Kettenhofweg 1. Incoming mails will be forwarded. The fee will be charged on a monthly basis, terminable at any time with reference to each month’s end.
Types of Companies
Germany is one of the main economic hubs of Europe, and its cultural significance for being an ideal place to do business in allows for many international firms to setting up a business or subsidiaries in the country. However, incorporating a business in Germany can be a tricky affair because there are a lot of nuanced variances among various types of companies operating there.
Here is a simple breakdown of the two most common types of companies in Germany. However, advice from a professional party with respect to suitable business structure in the country is highly recommended if you are looking towards establishing a corporate entity in Germany.
Gesellschaft mit beschränkter Haftung (GmbH) (Limited liability company).
This is by far the most widespread company form. Under it shareholders are not personally responsible for the company's debts. Just one person is sufficient to set up a GmbH, for which the minimum share capital must be at least €25,000. A notarized agreement must be drawn up between shareholders, and the company's legal existence starts only when it is entered into the Commercial Register (Handelsregister). The name of the GmbH must be derived either from the purpose of the enterprise or the names of the shareholders, and must contain the addendum "mit beschränkter Haftung."
Shares in a GmbH are not embodied in a certificate and can't be quoted on stock exchanges. However they may be transferred through properly notarized documents. A GmbH must appoint one or more managing directors (Geschäftsführer), who may also be shareholders of the company and are the only persons entitled to represent the company.
A special type of the GmbH is an UG (haftungsbeschränkt) or Mini-GmbH. This is a GmbH with only 1 EUR of minimum share capital and it has to be incrporated with standard statutes. A UG is basically the same as a GmbH, but you only require equity of €1 to set one up, rather than €25,000 for a GmbH. But a full 25% of annual profit must be set aside as reserve assets, until such a time as the equity capital equals the requirement for forming a classic GmbH, i.e. €25,000. Thereafter, the companycan convert to a GmbH, although it is under no obligation to do so. Compared with a GmbH an UG is less creditworthy because of its significantly lower share capital.
Aktiengesellschaft (AG) (Joint stock company, corporation)
In order to set up one of these there must be at least five members. The minimum required share capital is €50,000, and these shares are the only ones that may be (but need not be) listed on the stock exchanges. Articles of association, authenticated by a court or notary, are initially required to set up an AG, and it only becomes a legal entity when it has been entered in the Commercial Register. The name of the AG is usually taken from the purpose of the enterprise and it must show the words "Aktiengesellschaft (AG)."
An AG must have a managing board (Vorstand), empowered to decide all matters relating to the operation of the business and appointed by and answerable to the supervisory board (Aufsichtsrat). The shareholders of an AG exercise their power to control its policies at regularly scheduled general meetings (Hauptversammlungen).
Offene Handelsgesellschaft (OHG) (General partnership)
In contrast to the GmbH and AG, the partners in an OHG have unlimited liability. Every partner in the company is legally obliged to participate actively in operating the business unless the partnership agreement (Gesellschaftsvertrag) provides otherwise. The OHG is an association that can sue or be sued in a court of law. The Commercial Code provides that decisions should be made unanimously for internal matters, but partnership agreements usually allow for decisions by a majority of votes.
Kommanditgesellschaft (KG) (Limited partnership)
This is basically a partnership but also provides for a limitation of liability by having two types of partners: 1) the general partner (Komplementär), who has an unlimited liability extending to his or her personal assets, and 2) the limited partner (Kommanditist) whose liability extends only to his or her nominal holdings in the firm.
GmbH & Co. KG (Limited partnership with a limited liability company as general partner)
This combines a limited liability company with a limited partnership by making the former the sole general partner of the latter. The limited partners are, as in the case of all KGs, only liable to the extent of their registered holdings.
In Germany, a foreign company can establish two kinds of branch offices, autonomous and dependent.
- An autonomous branch has a degree of independence from the parent company including management with executive powers, separate bank accounts, accounting records and assets. This autonomous branch is registered in the commercial register by the foreign company as well as in the local trade office.
- A dependent branch office is not deemed separate in any way from the parent company. The only requirement for a dependent branch is to register in the local trade office with certain documentation duly notarized, authenticated and translated to the German languages
Subsidiary Business Incorporation in Germany
A subsidiary sales office is a company, Limited Liability Company (LLC) or a corporation controlled by a parent company. Upon business incorporation in Germany, the parent company owns more than 50% of the shares of the subsidiary’s voting stock. But for the purposes of commercial regulations and taxation, the parent company and subsidiary are considered two different business entities. The subsidiary is subject to law, commercial and tax regulations depending on the region it is located in Germany.
Taxes and Premiums
Taxes of major concern include the municipal trade tax (Gewerbesteuer) and the value added tax (Mehrwertsteuer), plus the income tax, solidarity surcharge and church tax of your employees.
You also may be subject to the Corporate Tax (Körperschaftsteuer) if your business is incorporated.
The Gewerbesteuer is levied on business profits by the local authorities, and varies somewhat from community to community. It's usually around 18 percent.
The (Mehrwertsteuer or VAT) assesses a levy on each step in the production and delivery process. You will be expected to add it to whatever you charge for each item you sell to your customers and each service you perform for them, and send this money regularly to the tax office. The VAT is either 19% or 7%, depending on the item. Medical, bank and insurance services are generally exempt.
The "solidarity surcharge," amounting to 5.5% of a person's income tax, covers the costs of integrating the states of the former East Germany. The church tax, of 8% or 9%, need be paid only if the taxpayer opts to remain officially affiliated with one of Germany's established churches. You will be expected to deduct the income, solidarity and church taxes from the employees' pay and send it to the tax office.
You will be subject to the Körperschaftsteuer, now about 15% of earnings, only if you choose the AG or GmbH form of organization. There are some advantages to incorporation, notably a limitation of your liability for the business's debts. The Gewerbesteuer is considered one of your business expenses, and hence deductible from the Körperschaftsteuer.