Set up company in Germany
GmbH (Gesellschaft mit beschränkter Haftung)
When foreign investors and entrepreneurs choose to set up company in Germany, they usually go with the equivalent of a limited liability company. This is the most popular and common business entity in Germany. Regardless whether you are conducting onshore or offshore business, you are legally able to register a GmbH as it caters to any business sectors. According to Germany Companies Registry, the minimum requirements for a GmbH are:
- 1 director of any nationality
- 1 shareholder of any nationality
- Minimum paid up capital of €25,000
- Legal registered office address
UG is a mini GmbH which is suitable for entrepreneurs who are looking to put less capital at risk. There is no minimum paid up share capital for this business entity. However, 25% of the company’s profit must be contributed to its reserves until the reserves sum up to a total of €25,000. Thereafter, the company will be converted to a standard GmbH. The benefit of setting up a UG is that businesses will face lower risk and initial cost.
Simply put, UG has the same characteristics as GmbH, without the initial paid up capital. If your business has more than 3 shareholders, you will not be allowed to register a UG. Instead, you will be required to register a GmbH.
A branch office is an extension of the parent company and can only conduct business activities in Germany similar to that of the parent company. The parent company is the 100% shareholder and is fully liable for the debts incurred by the Germany branch office. In addition, the German branch office is considered part of the foreign company and will be subject to the German taxation system applicable to them.
A representative office is only allowed to conduct market research and marketing for the parent company. It is not allowed to sign contracts, sales agreement and earn income in Germany.
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