Company Formation in Germany 

Benefiting from a strong economy, Germany has become a base for attracting foreign investors and entrepreneurs. Therefore, many entrepreneurs from all over the European Union or even outside of this Union want to start their business in this country. In this article from Wise Business Group, we will examine the conditions for company formation in Germany, especially for foreign founders.

Company formation in Germany 

Company formation in Germany involves several steps and requirements. It doesn’t matter if you are a non-resident of Germany or a non-EU national. In any case, you must comply with these requirements and go through the relevant steps.

A large part of Germany’s reputation is due to its strong and stable economy, which makes it an attractive destination for entrepreneurs and investors. In the following, we will mention the essential requirements and steps for company formation in Germany. Also, we will explain the different conditions of company registration for people who are not residents of Germany or EU citizens.

Requirements for Company Formation in Germany

To be able to establish your company in Germany successfully, you need to fulfill some requirements as follows:

Business Concept

Before you start the process of officially registering your company in Germany, you must clearly define your business concept. A business concept includes determining your business activities, target market, and business model. Conducting market analysis and research is crucial at this stage, as it will help you ensure that there is a demand for your products or services in Germany.

Legal Structure

You must choose the appropriate legal structure for your business. The most common legal forms for companies in Germany are:

• Gesellschaft mit beschränkter Haftung (GmbH): This company is similar to a limited liability company (LLC) in the United States and is a popular choice for small and medium-sized businesses in Germany.
• Aktiengesellschaft (AG): This corporation is equivalent to a public limited company (PLC) and is often used for larger businesses intending to go public.
• Einzelunternehmen (Sole Proprietorship): This legal form suits small businesses with only one owner.
• Gesellschaft bürgerlichen Rechts (GbR) or Civil law partnership: This legal form is a partnership suitable for multiple owners in Germany.

Trade Name

Choose a unique name for your company in Germany that is also legally acceptable. Checking the availability of the desired name at the local trade register (Handelsregister) in Germany is necessary. In addition, our team can assist you in choosing a suitable legal form and unique name for your business in Germany.

Registered Office

Having a registered office or business address in Germany is mandatory. This address will be used for official correspondence.

Share Capital

If setting up a GmbH, you must provide a minimum share capital of €25,000. You should deposit this share capital into a German bank account before starting the company registration process in Germany. Each of the legal forms can have different capital requirements.

Articles of Association

Draft the articles of association (Gesellschaftsvertrag) for your company in Germany and then notarize them. Such a document can outline the structure, purpose, and operating rules of your business in Germany.

Steps for Company Formation in Germany

In general, the following steps are crucial for the establishment and registration of a company in Germany:

1. Choosing a legal form: As a founder, you should select a legal form for your company in Germany that best suits your business needs.
2. Preparing a business plan: You should prepare a comprehensive business plan that includes financial projections, market analysis, and your business concept.
3. Notarization of documents: You must notarize some documents in a notary office in Germany, like the company’s articles of association.
4. Business registration: You must submit the necessary business registration documents to the local trade register (Handelsregister) or commercial register (Genossenschaftsregister for cooperatives and Vereinsregister for associations). You will receive a registration certificate after successfully registering your business in Germany. 
5. Registration in the tax office: You must register your business at the local tax office (Finanzamt) to obtain a tax number and, if necessary, register for value-added tax (VAT).
6. Considering the employer’s obligations: If you plan to hire employees in your company, you must register with the social security authorities in Germany and obtain the employer’s liability insurance.
7. Obtaining business licenses: Depending on your business activities, you may need particular licenses or approvals. Check with local authorities for required permits and to ensure compliance with relevant laws.
8. Opening a bank account: To manage your financial transactions, you should open a business bank account in Germany.
9. Paying attention to insurance: If you are self-employed, you should pay attention to different insurance options, including liability and health insurance.

Company formation requirements for Non-Residents in Germany

Now, the question is, is it possible to register a company for people who are not residents of Germany?

People who are not residents of Germany can register and set up their company in Germany. They are generally required to comply with the requirements and procedures as residents. However, they should pay attention to more items as follows:

Appointment of an authorized representative in Germany

Non-resident founders may be required to appoint an authorized representative (Inlandsvertreter) for their company in Germany. This person must be a resident of Germany and take responsibility for legal and tax matters on behalf of the company.

Visa and residence permit in Germany

People who do not live in Germany and are citizens of countries outside the EU may need a visa or residence permit to live and work there. Obtaining these permits for their authorized representative is probably necessary, as well.

Bank account in Germany

Non-residents probably face stricter requirements when opening a business bank account in Germany. We advise them to consult banks specializing in providing services to non-resident clients.

Company Formation Requirements for Non-EU Nationals in Germany

Non-EU citizens may face more challenges when establishing and registering a company in Germany. Some possible challenges are:

Obtaining a visa and residence permit in Germany

Non-EU nationals must obtain the appropriate visa and residence permit in Germany to live and work legally. Obtaining such licenses may have specific requirements like providing a solid business plan or proving financial stability.

Our experts at WBG can accompany you in preparing a convincing business plan approved by the immigration office in Germany. Contact us to explain the requirements and golden tips for writing a professional business plan in Germany.

Requirements related to the legal form of the company in Germany

Some legal company forms in Germany, such as GmbH, can come with stricter requirements like higher minimum share capital for non-EU nationals.

Appointment of an authorized representative in Germany

Non-EU citizens must appoint an authorized representative for their company in Germany who is both a German resident and an EU citizen. This is because having EU citizenship is necessary for managers or managing partners in some legal forms in Germany.

Obtaining a work permit in Germany

Non-EU nationals are required to obtain a work permit for themselves and any non-EU employees they hire in Germany.

German Language Proficiency

Proficiency in the German language is not a strict requirement to establish and register a company in Germany. However, it can be beneficial when dealing with legal documents, authorities, and clients in Germany.

Checking the requirements and regulations of company formation in Germany

It is better to consult legal and business experts to check the complex requirements and regulations of establishing and registering a company in Germany. In particular, you should consult with experts if you are a non-EU national or a non-resident. You can also seek help from organizations such as chambers of commerce, business development agencies, or legal advisors specializing in international business. Our group can accompany you in a company’s establishing and registering process in Germany.

Another thing you should pay attention to is to constantly update your information regarding any changes in German business laws and regulations. In this case, you can ensure that all your company’s activities comply with the relevant laws.

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Company formation in Germany at a glance

To establish and register a company in Germany, you must meet various requirements:

• Specifying the business concept 
• Determining the legal structure of the company
• Selecting a unique trade name
• Having a registered office in Germany
• Deposit of share capital
• Compilation of the company’s articles of association

Then, you have to go through different steps such as choosing the appropriate legal form, preparing a business plan, notarizing documents, registering a business, registering for taxes, obtaining permits, opening a business bank account, and obtaining various insurances in Germany.

Non-residents in Germany may need to appoint an authorized representative, obtain a visa or residence permit, and open a business bank account at banks that provide services to non-resident clients.

The situation is more complicated for non-EU nationals. They must meet particular requirements for obtaining a visa, residence, and work permit, choosing a legal form, and appointing an authorized representative. Fluency in German is also beneficial for them.

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