Limited Liability Entrepreneurial Company
Thanks to a law reform enacted in 2008 founding a corporation in Germany, or shifting a sole proprietorship to a corporation, is now simpler and less expensive. An Unternehmergesellschaft (UG), commonly known as a “mini-GmbH”, can be established with capital of only one euro, or any other amount up to the €25,000 needed for a regular corporation (Gesellschaft mit beschränkter Haftung, GmbH). International investors are finding the low investment an advantage in their plan to develop and grow a business in Germany and Greater Europe.
Registration conditions
Company registration has requirements that can be seen below.
Timeline
There are no restrictions on the name given to a mini GmbH, provided that the name: clearly distinguishes the GmbH from other businesses in the same location, is not misleading, and contains a reference to its limited liability. The name must be approved by the Chamber of Industry and Commerce, and must end with “GmbH”.
Shareholders
The minimum of number of shareholder is one in a GmbH company. The shareholder(s) may be of any citizenship and may or may not be a business entity.
Share Capital
The share capital should be to at least 1 euro. Only cash contributions are allowed, contributions in kind are prohibited. Also, the minimum share capital have to be paid in full prior to the application for entry in the commercial register.
Directors
A GmbH is controlled and legally represented by its conduct directors. There should be at least one managing director (who does not have to be a shareholder or a German resident), however the director has to be an individual. Business entities are not admissible as managing directors. The shareholders may exercise a direct effect the management of the GmbH, by issuing binding requests or directions to the managing directors .
Legal address
All GmbH businesses must have their statutory registered office in Germany. The administrative registered office however can be located outside of Germany.
Timeline
Incorporating a new company usually takes two to three weeks. The Company may trade once a bank account is opened and the share capital is paid.
Tax
All profits deriving from German business entities irrespective of form, are subject to a corporate income tax of 15% and solidarity surcharge, at a rate of 5.5% of the corporate income tax that is levied by the federal government, and also to the trade tax which is required by municipalities.
Other forms of taxation that a German legal entity may be subject to are the value added tax, and the tax on wages. In Germany the limited liability company may be subject to payroll taxes as an employer. German accounting rules apply to legal entities with business activities in Germany, and are subject to the German Commercial Code (Handelsgesetzbuch – HGB) – a code law system. Assets and income shall not be overstated and liabilities and charges must not be understated. A turnover tax ranging from 7-19 % may be applied and Trade tax varies according to municipality. Solidarity surcharge is also applicable.
Audit and financial returns
Legal regulations regarding accounting and audit in the Federal Republic of Germany, comply with the legislation of the European Community. All legal business entities are obliged to prepare annual financial statements and file these with the German Federal Gazette. Full financial statements covering a balance sheet, an income statement, and explanatory notes to the financial statements. Medium and large sized corporations and LLPs are also obliged to prepare and file a management report. Small and medium-sized companies/LLPs have a choice to file abbreviated financial statements with the Federal Gazette.
Consultation about company registration
The specialists of our law company have many years of experience and the necessary knowledge to register a company in Germany quickly and easily. Our lawyers, accountants, and business consultants will help you with the process of registering a company in Germany and with the further conduct of your business.
Accountancy
Companies in Germany are required to maintain accounting records and prepare annual financial statements that include balance, report about incomes and material losses, explanation of reporting.
Taxes
Click the button below to get more detailed information about taxes in Germany.
Bank account
If you decide to open a company in Germany, you have to create a Corporate Account. This type of account needs for the main business of the company, for internal expenses, payment for services, and providing net income for private entrepreneurs.
Other types of companies
If you feel like Limited Liability Entrepreneurial Company does not fit your needs, click the button below and you will see other legal forms like Public Limited Company, Branch Office, Holding Company and more.
Register Limited Liability Entrepreneurial Company
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