Forming a GmbH in Germany is a popular choice for many foreign entrepreneurs because this company form has many advantages, such as limited liability and flexibility.
However, opening a GmbH requires entrepreneurs to comply with certain legal procedures and requirements.
In this article, we will cover all the necessary legal aspects and steps for opening a GmbH in Germany, including choosing a company name, place of registration, authorized capital, tax issues, and more.
Choosing a Company Name
The first step in opening a GmbH in Germany is choosing a company name. The name must be unique and not contradict the laws and regulations governing company names in Germany. This usually means that the name must not be similar to other companies and must meet certain criteria.
Also, it should be taken into account that the name of the company should reflect its activity and form of legal entity (GMB). This is important for company identification and legal clarity.
Choosing a place of registration
After choosing the name of the company, it is important to determine the place of its registration. There are different federal states (Bundesländer) in Germany, and each may have its own rules and requirements for company registration. Usually, entrepreneurs choose a place of registration in the country where they plan to carry out their activities.
In addition, there are financial and administrative requirements to consider, which may vary by region.
Authorized capital and contributions
The creation of a GmbH in Germany requires a certain minimum authorized capital. This amount is usually at least €25,000. This capital must be contributed at the time of company registration and can be used to pay various expenses related to the company’s activities.
However, it is important to consider that the cost of authorized capital may vary depending on the industry and region where the company is registered. Certain industries may require higher authorized capital in order to obtain a license to carry out certain activities.
Registration and Documentation
To register a GmbH in Germany, it is necessary to submit relevant documents to the registration body (Handelsregister).
These documents include:
- An application for company registration, in which basic data about the company are indicated, such as name, address, authorized capital, etc.
- The statute of the company ( Gesellschaftsvertrag ), defines the rules of operation of the company and the rights and obligations of the participants.
- Power of attorney for registration, if the registration is carried out by a lawyer or a notary public.
- Documents confirming the contribution of authorized capital.
After submitting the necessary documents and paying the relevant fees, the registration authority will enter the company in the trade register and assign it a unique identification number.
One of the key advantages of a GmbH is the simplified taxation system. A company is taxed on profits at the level of corporation tax (Körperschaftsteuer), as well as at the level of additional income tax (Solidaritätszuschlag) and value-added tax (Umsatzsteuer) if the company has a certain turnover.
Most companies in Germany are entitled to various tax benefits and exemptions that can help reduce the tax burden. Foreign entrepreneurs can also use double tax treaties between Germany and their home country to avoid double taxation.
Obligations and rights of members of the GmbH
Members of a GmbH can be natural persons or legal entities and have limited liability. This means that their personal assets are not subject to confiscation in case of bankruptcy of the company, they are liable to creditors only to the extent of their contribution to the authorized capital.
The members of the GmbH are also entitled to profit from the company’s activities and can participate in the management of the business according to the company’s articles of association. Most decisions in the company are made by the majority of votes of the participants.
Legal Obligations and Limitations
GmbH, like any other company in Germany, must comply with certain legal obligations and restrictions.
- Submission of financial statements with reporting to fiscal authorities.
- Compliance with employment and social insurance laws when hiring employees.
- Compliance with laws on environmental protection and occupational safety.
- Publication of financial statements and other mandatory documents on the Internet for public access.
Failure to comply with these legal obligations may result in fines, prosecution, or even liquidation of the company.
Management and Control
The management of a GmbH can be organized in various ways. Usually, the company is managed by a director or manager ( Geschäftsführer ), who has the authority to decide on day-to-day management issues. In the case of larger companies, a supervisory body (Aufsichtsrat) may be established to monitor the director’s decisions.
Control over the financial activities of a GmbH is usually carried out by auditors who check the financial statements of the company and ensure its compliance with laws and standards.
Establishing a GmbH in Germany is an important step for foreign entrepreneurs, which requires the study of legal aspects and appropriate planning. It is important to take into account all the nuances, starting from the choice of the company name and ending with the presentation of financial statements.
It should also be noted that the legal aspects of setting up and running a company in Germany can change over time, so it is important to keep track of the latest changes in legislation and relevant regulations.
It is necessary to carefully consult with professionals and lawyers who specialize in doing business in Germany to ensure the success of your company and compliance with all the laws and requirements of this country, are the lawyers of “Prikhodko and Partners”.
Our team of experienced legal professionals understands the ins and outs of German law and can help you meet all the requirements, prepare the necessary documentation, and simplify the business registration process. With our knowledge and dedication, we will try to maximize your chances of a successful company launch.
Contact us today and we will support you in realizing your business ambitions.