Starting a business in Germany
In Germany, forming a company takes an average of ten days:
• Verify the company name with the local chamber of commerce
• Preparation of the requisite power of attorney to attend the incorporation notarial deed (for the remote formation of the company without a visit to the notary)
• Attendance at the notary’s office for the incorporation of a power of attorney
• Assistance with drafting the articles of incorporation
Why should you incorporate your business in Germany?
Germany is located at the heart of Europe and the European Union. It has more neighbours than any other country – with nine. Germany is the continent’s logistic hub, accounting for 20% of the European market share, thanks to its geographic location and outstanding infrastructure.
It is the largest market for international investors, with a population of 81 million people and a GDP (purchasing power parity) of $3.227 trillion as of 2013. Starting a business in Germany does not have to be a difficult or lengthy procedure, although it is often more complicated than in the Netherlands. Particularly because the German GMBH structure requires the creation of a bank account prior to incorporation. Notaries and tax organisations in Germany, in general, appear to lack experience working with overseas entrepreneurs, and the English language can be a barrier.
The UG is a ‘mini-GMBH’ that is often easier to incorporate, but it will typically not be allowed to open a bank account with a large bank due to its bad reputation. When dealing with German companies, your reputation may have an impact on your sales.
Filing requirements and compliance
The German tax law is founded on the Basic Law (Grundgesetz), and each German tax is governed by a statute, of which there are currently 30. The German tax system imposes direct income and net worth taxes.
Taxes come in a variety of forms:
- Corporation Tax
• Personal Income Tax
• Municipal trade tax on income
• Withholding taxes on dividends, rental, royalties, fees, interest and church tax
The current tax rates are as follows:
• Corporation Tax 15%
• Municipal Trade Tax 14% (average)
• Withholding Tax 25% on dividends and up to 25% on interest
• VAT 19%