Setting up a company in Germany costs €2500 + VAT.
What do you need to know before opening a company in Germany?
Setting up a business in Germany can seem like a big challenge due to language barriers, an unfamiliar legal framework and bureaucratic procedures. Therefore, we recommend entrusting your company incorporation to professionals who know all the procedures and details. Our company offers you a wide network of competent partners in Germany. That's why we offer reliable and professional company formation and accounting services, so you can concentrate on other things.
To set up a new company in Germany, you will of course need an identity document (passport or EU ID card), a shareholder's spouse's authorisation and other documents. Company founders must be at least 18 years old. On average, registering a new company in Germany takes around 4-6 weeks. A company is considered to be registered in Germany when it is given a registration number.
Why start a business in Germany?
Germany is one of the most influential countries in Europe and the world. It is a financially stable, rich, developed and friendly country where many seek to export or develop their businesses. If you do a lot of business with this country, it is advisable to set up a local company there, as it is seen as more trustworthy and business development is much easier.
If you decide to set up your business in Germany, you are choosing a country that offers a high quality of life. In addition, Germany’s culture, the diversity of its people and its family-friendliness make the country extremely attractive. More than 10 million people from other countries call Germany home.
The country has a strong track record of effectively translating research into real applications. This practical orientation has been a driver of job creation and a way to link German research for the benefit of society as a whole, from software to pharmaceutical products.
Currently, different types of business forms can be set up in Germany:
– The Estonian equivalents of the private limited company (OÜ) are GmbH and UG.
The first is a limited liability company, which is responsible only for its own assets. It requires a share capital of €25000. The company pays 15% income tax and up to 5.5% solidarity tax. There is also an annual business tax (around 12-13% of profits), the amount of which is set independently by each municipality. Dividends paid to shareholders are subject to a 25% capital tax. The basic VAT is 19% and the reduced VAT 7%.
– AG (public limited company).
This is the equivalent of an Estonian public limited company. The shares of such a company are offered to the public and sold on a public stock exchange. These are usually large companies/corporations. The minimum share capital of an AG is €50,000 and the initial contribution is €12,500. The shareholder’s liability is limited to his own investment in the company he has set up. A German public limited company may be founded by one shareholder, but must have a supervisory board and a management board of at least three members, which must also consist of at least three natural persons with unlimited legal capacity. A member of the management board is not allowed to simultaneously hold another managerial position in another company.
How is a company set up in Germany?
Registering a company in Germany is more convenient than ever – after choosing us, clients are offered services remotely, professionals send all documents. The registration itself usually takes 4-6 weeks.
The prospective entrepreneur will receive a questionnaire and a list of documents to fill in. We will liaise with the notary and, if necessary, ask you for further details.
The minimum capital contribution of a limited liability company is 25000€ (12500€ if only one natural person is founder/shareholder). The share capital contribution for a mini-GmbH is 1€, but it is recommended to put in 100-500€.
Setting up a company in Germany involves several types of taxes:
Income tax is 15%
In larger cities, the average commercial tax is 4,9% per year, while in a neighbouring village it can be around 2,9%.
The tax on dividends depends heavily on a number of factors, but on average dividends are taxed at a rate of 25% (26,375% plus solidarity surcharge).
Germany is one of Europe’s innovation leaders. Germany is one of the countries with the highest purchasing power in Europe and has a strong start-up culture.
Ways to register a business
There are two ways to set up a business in Germany: on arrival or remotely. If the incorporation takes place remotely, shareholders must authorise a representative in Germany (which we will specify). The power of attorney must be written not only in Lithuanian, but also translated into German. Both documents must be signed by the person giving the power of attorney and the translator and notarised (or certified by a German embassy).
LCPC aims to provide you and your business with high quality assistance. Setting up a company is one of the first steps in building your business, and we will help you along the way!
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