Germany is a quite stable country where many entrepreneurs dream of starting a company. The most common type of German legal entity is called GmbH, which is similar to our LLC. To open one, the owner needs only to provide a package of specific documents to government authorities and contribute a share capital of 25,000 euros. When registering, you can actually hold only half of the amount.
In this article, we will discuss whether it is worth registering a company in Germany, how to open your business, and what problems you might face during the registration process.
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To register a legal entity in Germany, you need to prepare a whole package of documents. The main ones will be the data of the founders and the general director. The registration procedure takes place with a notary public, whose services cost about 600 euros. They issue a form where all required information is entered.
If there are several founders, but only one is present when signing documents, a power of attorney must be issued. This is done on the territory of the country. Also, another important nuance is the marital status of the founders. If they are married, their spouses must be present when signing the documents.
Every company must have a legal address in Germany, a charter describing the business activities, a list of founders with their shares, and a notarized document of company formation. Then the businessman must submit the document package to the municipal office and the business registration office. The fee will be about 300 euros. At the end of the procedure, the company is registered for accounting and a bank account is opened.
It seems simple. In reality, non-residents may face the following problems.
When starting a business in Germany, you might face many problems that are almost impossible to solve on your own. The legislation describing GmbH states: “The founder and general director can be any person, regardless of their residency.” The main thing is that they should not be restricted from certain professional activities. There are also points about offenses related to money laundering and conflicts with tax authorities.
It seems there are no obstacles related to citizenship, as confirmed by case law. However, entrepreneurs still face three problems. You will not be able to:
In Germany, it is common practice for banks to make their own decisions about working with certain clients. Bank employees can open or refuse to open an account at their discretion. They might not even provide a reason for the refusal.
Some try to circumvent German legislation by opening corporate accounts through online banking. There are also many branches of Arab or Turkish institutions in the country, where our compatriots often go. However, this is not a solution, as every bank in Germany, regardless of the location of its main office, is subject to Federal Laws. Thus, you might still be refused.
Interested in: Buy a ready-made or start a business: Germany and Austria
Our managers have analyzed the specifics of German financial institutions and can recommend only two of them:
This attitude can be explained by the fact that our business is often viewed as criminal in Germany: many founders try to evade taxes or launder money.
The local business registration office is called Gewerbeamt. It is necessary to register the company here. However, if you are a non-resident, it is impossible to register it at your place of residence. According to German law, if business activities are carried out outside the country where the company is registered, the founder faces a fine of up to 1,000 euros.
The financial office where every company must be registered is called Finanzamt. Certain documents are signed with the notary public and submitted along with a lengthy completed questionnaire. If the founder is not registered in Germany, they will have to fill out an additional questionnaire with questions such as:
Sometimes, an official from the office may even visit the company without prior notice. If a foreign address is provided, registration can drag on indefinitely.
There are several solutions to this issue. For example, you can obtain German residency. This procedure is not very complicated. You can buy or rent an apartment or arrange for your registration with acquaintances. Usually, the passport office does not require additional documents or extracts. But if you do not plan to live in the country, there is a risk of a fine up to 50,000 euros.
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Another solution is to hire German staff and rent an office. If there are employees on staff and a rental agreement, there will be no problems with the financial office, which is crucial. The financial costs will be relatively low. However, you will still not be able to open a bank account, and you will need to pay salaries to employees and office rent every month.
The last and most effective solution is to buy a ready-made business in Germany. Our specialists can help you with this. They will gladly consult on any questions and select either an operating business that suits all your parameters or a business whose founders are no longer active for some reason. Each company we offer will have a good reputation in the market, possess a bank account, and all tax numbers. Thanks to open registers in Germany, you will be able to verify the transparency and honesty of the company. Call us today, and we will answer all your questions.