GERMAN COMPANY LAW

Companies are basically free to choose their preferred legal form in Germany. The law only provides for a choice of certain legal forms, for which specific prerequisites are stipulated. We have summarized the principal types of company, the distinction between them and the necessary steps to enter the company in the commercial register below.

Most common types of companies set up by foreign investors in Germany

Type of companyLegal liabilityRegistered capitalCommercial licenseFormalitiesComparable with US corporate form
Branch officeParent company assumes liabilityNoYesVery fewBranch Office
GmbHLiability limited to the company's assets25,000 EuroYesFewLimited Liability Company
AGLiability limited to the company's assets50,000 EuroYesYes manyJoint stock corporation

Necessary steps to enter the company in the commercial register

StepsWhat you
must do
Where you
must go
What you must always submitTips and explanations
1Commission a notary publicNotary publicBusiness plan (helpful, but not obligatory)- Payment of the registered and share capital into a bank account must be notarized 
- Proof that the company name is clear and distinctive 
- Preparation of the articles of incorporation, powers of representation, resolutions and relevant declarations
2Entry in the commercial registerDistrict Court, commercial register- Notarized articles of incorporation- Entry in the commercial register or partnership register at the local district court
- Photo-ID (passport)
3Join a Chamber of Commerce- Commercial registerApplication for registration- The application for registration is forwarded automatically to the Chamber of Commerce 
- The IHK will contact you directly once it has received a copy of the application from the commercial register
- Chamber of Commerce (IHK)
4Tax registrationTrade tax office AND  local IRS office
5Registration with the trade officeTrade officeIn the case of branch offices of foreign companies, the following documentation is needed: 
- Power of representation in German
- Notarized translation of the parent company's registration in its home country
- Rental contract for commercial premises
- Passport with residence permit, certificate of registration at a residential address

- Registration with the trade office is obligatory
- You can commence operations as soon as you have received filling notification of your trade registration

Guidelines for setting up a GmbH

StepsWhat you
must do
ContentWhereCosts
1Finalize the articles of incorporationArticles of incorporation containing information about the registered office
of the company, the company, the purpose of business, amount
of registered capital (min. 25,000 euros) and
shareholder structure (min. 100 euros per share)
Notary publicapprox.
450 euros
2Appoint the executive bodies- A GmbH requires two bodies: Shareholders' meeting and
Management Board 
- The managing director is personally liable up
until registration of the company (Step 4 b) (so-called Vor-GmbH).
Notary publicN/A
3Raise the share capital- The shareholders must raise minimum registered capital
- Or provide assets in kind (assets as property of the GmbH)
Notary publicMin.
25,000 euros
4 a Apply for entry in the commercial register- Once the company agreement has been notarized, the company
must be registered at the local district court. 
- Documents to be submitted: notarized articles of incorporation,
legally valid document concerning the appointment of the
managing director, list of founding parties
District court

approx.
80 euros

4 bEntry in the commercial register- The point in time at which the GmbH becomes a legal
entity (liability of share capital) 
- Publication in the Federal Gazette (Bundesanzeiger) and
a regional or national newspaper
District courtapprox.
300 euros
5Subsequently- Tax return (Corporate income tax, trade tax, sales tax...) 
- Publication of the annual balance sheet
- Specification of the organization of the company (company,
registered office, managing directors, district court)
- Tax accountant 
- Local IRS office
- Court of first instance via notary public
N/A
N/A
approx.
30 euros