Trade and sign in the heart of Europe

Establishing a Company in Germany and Resident

Germany's national strategy is designed to create a safe and prosperous investment and business environment in order to attract foreign investors and establish sustainable business relationships. Since Germany is Turkey's most important trading partner, relations between the two countries have an exceptional position. Before setting up your company, you should address the issue of taxes in Germany. Before choosing a specific legal structure, you can seek advice from World Company Setup to learn about the financial implications of your decision. His advisory focus and core competencies lie in the areas of tax consulting, accounting, auditing and legal consulting. With its being the central country of the European Union and its stable investment environment, Germany is a center of attraction for entrepreneurs from all over the world who want to establish a company and expand their business networks.

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Registration of a company in Germany

Germany is one of the world’s leading investment and business locations. Some of the many key factors that contribute to uninterrupted economic growth and success in business are large industrial bases, skilled workforce and strong infrastructure. The country’s diverse business community, research and development environment, and advanced vocational education system facilitate innovation and growth.

Opening a Company in Germany

The first step in setting up a company in Germany is to choose the legal form. Most investors choose limited liability categories, usually GmnH or Mini GmbH. Through our office in Germany, you can register your company and we provide enforcement services to help you comply with regulatory requirements. Please note: In most cases, foreign investors will need to visit Germany as part of the incorporation process in Germany.

Categories of Companies in Germany

Every investor is allowed to set up a company in Germany through a company opening, partnership or branch. Although company registration procedures are simple, it is necessary to seek expert advice.

Before registering the company in Germany, it is very important to know the type of business structure that an entrepreneur can choose for company formation. Below are the types of business structures:

GmbH&Co.KG: GmbH&Co.KGs have many advantages, such as:

Although it is subject to business tax in Germany like every company, it is completely exempt from the 15 percent corporate tax. There is no notary requirement for the articles of association of the basic company and its future amendments (which are generally required in companies). It provides tax deductions on real estate sales.

The initial share capital of the company in Germany is between 25 and 50 thousand EUR, but discounts are possible if the conditions are met. Another issue that we strongly recommend to consider is that a company to be established in Germany as a subsidiary of the existing company(s) in Turkey can provide many advantages and conveniences, for example, in terms of establishment and capital expenses or residence/work permits in Germany itself.

Limited Liability Company (GmbH): A limited liability company can be established by at least one investor with a minimum capital of 25,000 Euros. However, the shares of the limited liability company cannot be transferred to the public and cannot be registered in the Stock Market.

German Joint Stock Company (AG): The German joint-stock company is suitable for large businesses. It requires having a minimum capital of 50,000 euros. A supervisory board consisting of at least three members will regularly check the performance of the company’s management. A statutory auditor must also be appointed to audit the company’s accounts.

German Limited Partnership: A German limited partnership is an arrangement between two or more people who decide to work together with mutual understanding. It requires at least two partners. On the basis of liability, there can be two types of partners. One of them is the general partner, who has unlimited liability up to their personal assets. Another type is the limited partner, whose liability covers only their nominal assets in the partnership company. General shareholders have decision-making authority,

Sole Proprietorship: In Germany, it can only be established with the person’s personal assets. However, the individual has unlimited liability when the sole trader faces bankruptcy. The profits of a sole trader are subject to individual income tax rates.

Branch: Branches are a popular way to enter the German market. Many foreign investors prefer to open branches. The branch company type is not a legal entity; Its liabilities and assets belong to the parent company. All legal and tax responsibilities of the branch belong to the parent company.

How Do We Work for Company Formation in Germany?

Collection of Your Information: We will need your personal data in the name of the future company, description of business activities, etc.

Signing of Documents: You need to prepare and officially sign all the necessary forms and documents.

Notarial Registration: The first step in the registration process is the signing of the notarial agreement and obtaining the status of a legal entity.

Registration in the Business Register: The most important part of the registration process is the registration of your company in the German Business Register and obtaining an official Company Number.

Obtaining a VAT Number: After registering in the Trade Registry, your company must be registered with the German Tax Office and its VAT number is obtained.

Opening a Bank Account: The final step in the registration process is to open a bank account for your company in one of the banks of your choice.

The procedures required for Germany Company Incorporation:
Deciding on the company’s field of activity
Preparation of the Company’s Articles of Association
Notarization of the Company’s Articles of Association
Company Bank Account Opening
Payment of Principal Capital (At least half)
Making an application to the Trade Registry through a notary public
The procedure for examining the commercial register
Registration in the commercial register of Gmbh and declaration of registration
Business Registration

Can I Open a Branch of My Company in Germany?

Germany M& Acquisitions / Medium Enterprise Processes
German businesses continue to be very attractive targets for international mergers and acquisitions, making foreign investors key players in the German M&A market. The acquisition of a German legal entity can be structured by a share transfer agreement, in which the shares of the target company are taken over by the investor, or by an asset agreement, in which the investor only takes over the designated assets directly from the target. Compared to other countries, buyers in German M&A transactions usually use an acquisition vehicle (SPV) for the transaction, often preferring the acquisition of a German company that has been registered but has not started its business operations.

Types of Taxes and Tax System in Germany

Tax rates in Germany are competitive and advantageous for both domestic and foreign entrepreneurs; The average tax contribution is around 30%. Companies bear the brunt of their worldwide profits. However, it is also worth noting that Germany has signed bilateral investment treaties (BITs) and double taxation avoidance treaties with nearly 90 countries. Typically, companies based in Germany are subject to two main tax classes:

VAT Value Added Tax [Umsatzsteuer]: VAT [Umsatzsteuer] is paid when you sell goods or services. The standard rate is 19%, and the reduced rate of 7% applies to professions in the field of arts and media, for example. You need to invoice VAT to your customers and indicate this separately on your invoices.

Input tax [Vorsteuer]: You pay (almost) input tax on all company-related purchases. You must ensure that this tax is also stated on the invoices you pay.

Trade Tax: You will need to pay trade tax to your municipality every three months. Once a year, you will need to prepare a business tax return from you or your tax advisor and submit it to the Tax Office.

Corporate Income Tax: Corporate income tax [Körperschaftsteuer] is only paid on the profits of companies [Kapitalgesellschaften] (GmbH , AG).

Tax Aspects for Investors in Germany

Companies established in Germany by investors of Turkish citizens are mostly capital companies. The most common type of company is a limited liability company called “GmbH = Gesellschaft mit beschränkter Haftung”. Depending on the activities of the company, a business registration with the local chamber of commerce of the municipal administration may also be required. Capital companies are obliged to prepare annual financial statements consisting of balance sheet and income-expense statement. In addition, the annual table must be published in the Federal Gazette (Bundesanzeiger).

In Germany, companies are subject to the following income tax rates:

Corporate income tax (15%) plus an additional solidarity tax of 5.5% of the corporate tax rate; Total Rate: 15.825%
Business tax: 14% (average value) The total tax burden of 30% is roughly an average value, it may be higher or lower in total depending on changing municipal business tax rates. In Germany, companies are subject to the following income tax rates:

Corporate income tax (15%) plus an additional solidarity tax of 5.5% of the corporate tax rate; Total Rate: 15.825%
Business tax: 14% (average value) The total tax burden of 30% is roughly an average value, it may be higher or lower in total depending on changing municipal business tax rates.

How long does it take to set up a company in Germany?

Although the period of establishment of a company depends on many factors, it generally varies according to the registration and tax numbers of a newly established company.

What are the Documents for Setting Up an Online Company in Germany?
  • Certificate of Residence
  • Color Passport Scan
  • Company Name Suggestion
  • Activity Codes
  • Power of Attorney for Company Establishment
  • Documents required to open a corporate bank account in Germany
Documents and steps to open a company bank account in Germany:

Trade Registry Registration

  • Incorporation Documents of the Company
  • Company Owner’s Identity Documents
  • Company’s Tax Number
  • Business Activity Information

How much does it cost to open a company in Germany?
The cost of setting up a company in Germany can vary depending on the type of business, the field of activity, the size of the business, and other factors. Here are some factors that affect the overall cost of starting a business in Germany:

Which Visa to Get to Start a Business in Germany?
Which type of visa is required to start a business in Germany may vary depending on your business plan, citizenship status, and the activities you have planned. When applying for a visa by establishing a company in Germany, you will need to submit your business plan, finances, business purpose, and other relevant documents.

What is Germany Virtual Office?
A virtual office in Germany is a type of service that provides a variety of services to businesses and entrepreneurs without having a physical office space. Virtual offices help businesses achieve a professional look without the need for a physical office by providing them with facilities such as a professional business address, postal services, phone answering, and meeting room use.

Can I establish a company and settle in Germany?
Yes, you have the possibility to settle in Germany by establishing a company. Germany offers a number of programs and policies that encourage foreign entrepreneurs and investors to come and do business in the country. However, this process requires following some specific steps and meeting the required requirements.

Law of Immigration by Investment to Germany
Its law deals with the possibilities for foreign nationals to gain the right to reside in Germany. For foreign investors, this issue is of importance that we can describe as the “Engine of Commercial Law”. In this context, the field of “Business Immigration Law” has become a fixture in terms of Turkish-German legal and commercial relations in recent years. Investors are keenly interested in two related issues:

1- Residence rights of self-employed company owners and their families

2- Residence and work permits of qualified and expert personnel and company personnel who can support the establishment of a branch in Germany.

Disclaimer: The materials provided here are for informational purposes only. No attorney-client relationship is created when you access or use the site or the materials. The information provided on this site does not constitute legal or professional advice. It should not be relied upon for such purposes or used as a substitute for the legal advice of an attorney licensed in your state.

Germany at a Glance

VAT in Germany is one of the lowest in the EU at 19%. The VAT refund procedure is easy and fast.

It provides the opportunity for visa-free travel in the EU with a residence permit. Permanent residence permit can be issued after 5 years.

A total of more than 2,000 grant schemes provided by EU, federal, state and municipal authorities for start-ups and small/medium-sized enterprises.

Germany has one of the highest rates of political and economic stability in the world, making it a safe country to invest in.

Advanced legal and judicial systems that ensure the rule of law and provide investors with protection mechanisms.

Effective mechanism for the fulfillment of contractual obligations of counterparties.

The justice system in general is moving towards more electronic, faster and cheaper trials.