Imagine you would like to start a new business or expand your existing business in Germany. you have different options to proceed with. You may 1- trade directly from your home country 2- use a German partner as an agent or distributor, 3- set up a branch office in Germany or 4- establish a separate legal entity for your business activities in Germany. For all the above mentioned activities, Wise Business Coaching and Consultancy have perfect solutions for you.
Option #4 makes much more sense when you would like to separate the risks of your business in Germany from your own business in your home country. As already discussed in previous articles, there are different types of legal entities but it was also mentioned that the most common type is a German GmbH (equivalent to Private Limited Company in UK or Limited Liability Corporation in US). The reason for the popularity of GmbH is that this form of organization has better standing with banks, suppliers and customers than a foreign company form.
However, despite the fact that GmbH is the most recommended type of independent business entity in Germany, many business owners would not prefer to create such overhead costs in the beginning of their business by hiring a large number of employees or setting up real offices in Germany until they become sure that their business has gained a foothold in the German market. On the other hand, setting up a GmbH firm still has its own advantages as you introduce yourself as a credible German business entity in the German territory to different German authorities and financial institutions and more importantly you have a German address and probably German speaking contact persons with whom you can create trust with your potential business clients or partners.
One solution with which you can lower the costs of a GmbH as much as possible while enjoying its advantages is to use a trustee (Treuhänder) to set up a GmbH and even hold the shares in trust if the actual shareholder does not prefer to be associated with the company yet. Such an agreement is perfectly legal under German law as long as the real ownership is being monitored by the tax authorities. Although the trustee is introduced as the business owner to the outside world, he is internally limited to follow the instructions of the trustor.
In order to meet all legal and tax requirement, the owner should either appoint an experienced temporary executive as (co-) director or assign this activities to a German corporate lawyer. For both cases, our company have perfect solutions for clients. Also, If the business activities shall be conducted from outside of Germany, it may be a good idea to employ the services of a German escrow agent to mitigate the risks of international business transactions.