Regulating the company object in Germany

As a startup consultant in Germany, one of the most common questions we encounter is about company formation in Germany. Among these questions, formulating the company’s object is crucial since it must serve your legal and economic goals in Germany well. In this article from Wise Business Group, we briefly discuss the points you should pay attention to when regulating the company object in the articles of association in Germany.

Tips for regulating the company object in Germany

When setting the company object (Gegenstand) of a GmbH (Limited Liability Company) in the articles of association, there are prominent points to consider to ensure legal compliance, transparency, and flexibility in the company’s operations. Below is a list of these tips:

1. Accuracy and transparency

Clear explanations: Describe your company objects clearly and understandably. The ambiguity can lead to legal or administrative problems.

Avoiding excessive details: While transparency is crucial, too much detail can limit the company’s future activities in Germany. Use general terms to maintain flexibility.

2. Alignment with business activities

Comprehensive scope: Include all current and anticipated activities. For example, if your company is involved in import/export, consulting, or manufacturing in Germany, clearly state these.

Forecasting future development: Consider potential future activities and include them to reduce the need to amend the articles of association later. You can even bring the both future mergers and acquisitions of the company into the subject of the articles of association.

Read more: Article of association for limited liability and partnership in Germany

3. Legal compliance

Permitted activities: Ensure that the listed activities comply with German law. Some industries (such as finance or healthcare) require additional licenses or qualifications.

Regulatory requirements: Check if you need specific terms for regulated industries (such as financial services or professional advice).

4. Tax considerations

The company object affects the company’s tax classification in Germany. Formulate the subject in a way that avoids unintended tax consequences.

Avoid activities that may lead to complex tax obligations without adequate preparation.

Contact our consultants for more information about significant tax considerations when regulating the company object in Germany. They will help you organize your company’s activities in the articles of association so that it does not lead to complicated tax consequences or obligations.

Tips to consider when regulating the company object in Germany

5. Broad vs. limited scope

Not using too general terms: For instance, “trading in various goods” provides flexibility to operate in different sectors, but in many cases, a very general reference will lead to the non-acceptance of the company object by the German court of registration. For example, exporting and importing all licensed items without reference to other industries or product groups is hardly accepted.

Specific Details: You should add details where necessary for clarity or compliance with industry regulations.

Read more on Wise Business Group: Establishing an import-export company in Germany

6. Industry Specific Details

Focus on core areas related to your desired industry in Germany, such as:

• Manufacturing or trading goods
• Providing specific services (such as IT consulting, construction, and logistics)
• Activities like research, import/export, or development

7. Inclusion of side activities

Determine whether your company will also carry out side activities in Germany. For example, we can mention the following:

• Administrative tasks
• Financial operations
• Investing in subsidiary companies or real estate

8. Flexibility for future reforms

Set up your company object in Germany in terms that allow for easy adaptation to new business opportunities without the need for frequent amendments.

9. Professional language

Use formal legal and business language so that it is understandable to legal authorities such as notaries or the commercial register (Handelsregister) in Germany.

10. Consulting with experts

Legal advisor: Seek the help of a lawyer when drafting your company object to ensure compliance with German corporate law.

Tax advisor: Consult a tax advisor to align your company objectives with your strategy and tax obligations in Germany.

Wise Business Group consultants can provide helpful guidance on regulatory compliance and tax when formulating your company objectives in Germany. Contact us to receive advice.

Example of regulating the company object in Germany

Here is an example of a well-structured activity topic:

“Import, export, trade, and distribution of building materials, household equipment, and industrial products; provision of consulting services in project management and construction; and other related activities.”

“The company is authorized to carry out all transactions and actions that seem necessary or useful to achieve the above corporate goals, including participating in other companies and establishing branches.”

This example is transparent, comprehensive, and designed with the possibility of expansion in the future. With these tips, you can create a strong and flexible subject supporting your company’s long-term success in Germany.

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A brief look at prominent points for regulating the company object in Germany

• Accuracy and transparency: State your company object clearly and understandably and use general terms to maintain flexibility.
• Alignment with business activities: Mention all of the company’s current and anticipated activities in your chosen topic.
• Legal compliance: Ensure that your company’s activities comply with German laws and obtain required licenses for specific industries.
• Tax considerations: Structure your company object in Germany free of unwanted tax consequences.
• Broad vs. limited scope: Avoid overly general terms and add essential details to the subject of your activity.
• Industry-Specific Details: Focus on specific industry areas such as manufacturing, services, and research.
• Inclusion of side activities: Specify additional company activities such as administrative duties or side investments.
• Flexibility for future reforms: Set your activity theme so that you can change it.
• Professional language: For clarity with legal authorities, use formal legal and business language.
• Consulting with experts: Consult an attorney or tax advisor for both legal and tax compliance.

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