Incoporation of a German GmbH
If you intend to engage in any commercial activity in Germany, it is wise to establish your own company. This, unless the business is trivial, can protect you from a lot of inconveniences and trouble with the authorities. Here are the most widespread forms.
Gesellschaft mit beschränkter Haftung (GmbH)
(Company with limited liability)
This is the most widespread company form. It's shareholders are not personally responsible for the company's debts.
One person is sufficient to set up a GmbH and to be its shareholder. The share capital must be at least Euro 25,000. A notarial agreement must be drawn up between the shareholders and the company being set up. The company comes legally in existence only when it is entered into the Register of Companies (Handelsregister). The name of the GmbH must derive either from the purpose of the enterprise or the names of the shareholders, and must contain the abbreviation "GmbH?.
Shares in a GmbH are not embodied in a certificate and cannot be quoted on stock exchanges. However they may be transferred through properly notarial documents. A GmbH must appoint al least one managing director (Geschäftsführer), who may also be shareholder of the company; he is the only person entitled to represent the company.
Overview
| Liability | The shareholder's liability is limited to his capital contribution. |
| Statutory capital | Euro 12,500.00 |
| Corporate bodies | Board of directors, supervisory board, shareholders' meeting |
| Financial Statements | Mandatory, if 2 of the following conditions are met: Number of employees > 50 Turnover > Euro 6,875,000.00 Balance sheet total > Euro 3,438,000.00 |
| Income taxation | EBIT - Trade tax on income of 12% - 21% = Tax basis for corporation income tax - Corporate income tax 26.375% = Earnings after income taxes Dividend withholding tax 20%, reduced to 0% - 15% by double tax treaties, can be 0% within EC. |
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