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 legally comes into 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 the stock exchange. However they may be transferred through properly notarized documents. A GmbH must appoint at least one managing director (Geschäftsführer), who may also be a shareholder of the company. He is the only person entitled to represent the company.

Overview

LiabilityThe shareholder's liability is limited to his capital contribution.
Statutory capitalEuro 12,500.00
Corporate bodiesBoard 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.

Consultinghouse does not provide legal or tax advice in the process of setting up a new business in Germany. Consultinghouse is committed to supporting clients in sourcing a lawyer and/or a notarized solicitor where necessary to support extended business requirements.

Consultinghouse - Martin Wilke

Martin Wilke

Managing Director
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