Germany remains an incredibly attractive market for entrepreneurs and businesses of all sizes. As the largest economy in Europe, Germany is a fantastic place for doing business. The country has a large, diversified economy that is supported by well-developed infrastructure and a highly-skilled workforce. However, to successfully do business in Germany, it’s important to be able to successfully incorporate a German business. Of all the different company types available, a Gesellschaft mit beschränkter Haftung (“GmbH”) remains the most popular among entrepreneurs and SMEs.
GmbH is a limited liability company in Germany and is the company type most commonly used due to the flexibility it offers. A GmbH can be incorporated by at least one shareholder, with a minimum share capital of EUR 25,000.
While a virtual office can be sufficient for a GmbH for incorporation purposes, it is common that a GmbH utilize a physical office address, especially if it is their intention to maintain local operations.
It is important to note that a business plan is required in the Germany company formation process. Assessors will analyze the business plan to determine the reasonableness of the company and its proposed plans.
A GmbH must file annual accounts with the German Federal Gazette. In addition, medium to large GmbH are required to file annual financial statements, in accordance with German Commercial Law and must adhere to their local profits tax and VAT obligations.
To incorporate a GmbH, it takes approximately 4-6 weeks to complete the process upon the German government’s receipt of all documentation. However, this process may be extended to the extent that German assessors are not satisfied with the quality of information provided.
No! While it is beneficial to be in Germany for several of the company incorporation steps, such as opening a bank account or notarizing your incorporation documents, it is possible to do so while abroad. To complete the Germany company formation process in this way, one must engage a professional service provider to act on their behalf.
To make sure this process is completed smoothly, special attention should be put onto deciding the object of the company (Unternehmensgegenstand). This will detail what the company will engage in, the scope of their services and their business model. Assessors will closely scrutinize this aspect of a business as a GmbH is expected to act in accordance with what is stated in the object of the company.
