Germany is a land of opportunities for entrepreneurs. It offers all the necessary conditions for running a business. Opening and managing a company is relatively straightforward, as small and medium-sized enterprises account for over 70% of jobs in the country.

Both residents and non-residents can be founders of a business. You do not need a German passport to start a company. However, you first need to decide which form of business to choose—AG, UG, or GmbH.

This material will discuss which legal entity in Germany is suitable for non-residents: AG, UG, or GmbH.

CONTENTS:

1. Types of Company Registration Forms in Germany
2. Rules for Doing Business in Germany
3. How to Open a Company in Germany

Types of Company Registration Forms in Germany

In Germany, non-residents can register companies in three forms:

• Stock Corporation (AG);
• Company with a minimum share capital of 1 euro (UG);
• Limited Liability Company (GmbH), similar to our LLC.

The most popular form is opening a GmbH in Germany. Its founders do not need to live in the country permanently or be residents or citizens. All documents are signed in the presence of a notary. During this process, the director or one of the founders must be present. This can be the same person. The legislation requires minimal paperwork, greatly simplifying the registration process. Notaries pay special attention to the founder’s marital status. If the founder is married, a notarized consent from the spouse is required. The authorized capital of the GmbH must be over €25,000. To open the company, half of this amount must be deposited at the time of document registration. The second half must be deposited within the first year of operation. These funds can be used for business development and are not paid into the treasury.

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For those who do not have this amount or half of it, there is another business form—UG. The registration requirements are significantly simplified compared to GmbH. The share capital can be as low as 1 euro. However, there are drawbacks. The founder cannot dispose of the profit freely. 25% of the declared income must be added to the share capital until it exceeds €25,000. Then, the company is re-registered as a GmbH. UG companies are often viewed skeptically in Germany. Their founders find it difficult to find partners and open a bank account. Such companies are considered insolvent in the eyes of officials, as their share capital may be as low as one euro.

The third option for non-residents in Germany is the AG. Here, the share capital is €50,000, a quarter of which must be deposited immediately upon registration. This is a business form for wealthy non-residents. The state allows the issuance of registered shares or bearer securities. Documents at registration must include a registry of documents, which must be maintained continuously. The company must have one shareholder and one board member, as well as three supervisory board representatives. The legislation does not impose residency requirements on these individuals. The chairman can also be a citizen of another country.

Read more: Company Registration in Hong Kong: A-Z Guide

This is a brief overview of what company to open in Germany for non-residents. Now, some tips on what to know when starting a business in this country.

Rules for Doing Business in Germany

Regardless of the chosen form of business, the founder must consider several rules. For example:

1. You must register a physical address. Companies registered at “mass” mailboxes or PO boxes are viewed with suspicion by government authorities. You need to rent or purchase a property.
2. You should employ a German staff member. Although the legislation does not explicitly require a German citizen, it is a common practice. This decision will simplify relations with tax authorities and banks.
3. Carefully plan your time. Opening a company takes up to 3 weeks, and it is preferable to be present at all stages. The process can be monitored remotely, but signatures or stamps may be required. Additionally, VAT registration can take up to one and a half months.
4. Note that Germany does not have a nominal service. Registration must occur only on real beneficiaries, and hired personnel must be genuine.
5. Strictly monitor tax reporting. Germany is strict in this regard. Legal entities must submit tax declarations monthly.

A company can start operating before being entered into the register. However, the personal liability of founders becomes unlimited. Once all documents are completed, possible debt payments are limited to the authorized capital or contributions.

How to Open a Company in Germany

Based on the above, it is clear that the best form of business activity in Germany is GmbH. You will not have to deposit a large share capital (which can also be divided into several parts upon deposit), gather a lot of documents, and deal with authorities.

However, opening a company in Germany often involves many difficulties, from choosing the form of activity to registering with various government organizations. To save time, money, and nerves, contact INVESTMAKLER. We offer ready-made companies in Germany. They are much cheaper than starting your own business and will start generating profit faster. Each company already has a bank account, is registered with tax authorities, and has a pristine business reputation with partners and clients.

Also read: Company in Singapore, Hong Kong, Great Britain or Switzerland: Ready-made companies in offshore and onshore jurisdictions, registration and account

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