Incorporation of a LLC (GmbH) in Germany
The limited liability company in Germany also known as Gesellschaft mit beschränkter Haftung, or simply GmbH, is one of the most commonly utilized business structures in Germany. It is extremely flexible structure as it combines numerous legal benefits, while having very few limitations. In Germany GmbH is subjected to corporate income tax (CIT), solidarity surcharge as well as trade tax.
GmbH can be established with a minimum of one shareholder, provided it has a share capital not less than 25 000 EUR. The share capital can be deposited in cash, property or contribution. As an exception, the capital shares of GmbH are not allowed neither to be alienated to the public nor registered at the public Stock Market. Company is being managed by the meeting of the company shareholders. Everyday decisions and operations are being taken care of by the company’s board of directors, which is appointed by the decision of the meeting of the shareholders.
GmbH incorporation procedure in Germany
All legal requirements and regulations regarding the incorporation of the GmbH are set by the Company Act.
Prior to initiating incorporation procedure it is highly suggested to apply for availability check in order to undergo the company name availability at the local department of chamber of industry and commerce, notarize the company’s constitutional documents as well as to open a bank account. At this preliminary stage share capital must be contributed to the bank account.
Usually, the following corporate documents are to be presented at the local Commercial Register department to initiate the company incorporation procedure:
- A company formation application;
- Notarized articles of association;
- A document indicating board of directors and its structure;
- A document proving that the share capital had been deposited.
All of the documents listed above are to be submitted in a digital form, according to German standards of filing digital documents and verification. Incorporation of a newly established enterprise is made based on a central electronic platform developed and operated by the Commercial Register of the Germany.
Trading license and VAT acquisition
The next logical step prior to starting business operations is applying for the trading license acquisition at the local Office of Business and Standards, which is then followed by the registration at the central bureau of statistics (providing all requested information regarding company operations, industry and financial data). After this, recently established GmbH should also submit and register at the local office of chamber of industry and commerce as well as at the local department of the labor office.
The labor office should hear the case and grant a company an eight-digit number, which must be reported at the social security department. After all of the previously steps are taken and done - GmbH must submit an application for the federal health insurance department. Also, legal notice should be sent to the Central Tax Administration notifying about the recently established company, all of the previously mentioned leading to the registration for the German CIT and VAT payer numbers.
After company formation procedure is finalized, the company finally is allowed to start its business operations. As the majority of the companies registered on the territory of Germany require local employees. Employers are widely offered a well-trained labor force. It is also possible to look for the employees at the numerous local recruitment agencies.
Corporate bank account opening in Germany
In case you are a non-resident of Germany, even in case you are a citizen of another EU member state, there still are certain verification and compliance procedures to open a corporate bank account in Germany. This means that your company is expected to meet certain legal requirements, such as having a local tax ID, residence and some other relevant things.
There are also extra compliance requirements, since it may be quite challenging to show credit history for a newly established company, international invoices can easily cause issues and raise questions, meaning that most of the banks will be unwilling to take the risks, which can lead up to refusal to open a business bank account.
Such practice complicates things quite a lot, as smaller merchants from other EU member states, small ecommerce retailers and all those businessmen dealing with online marketplace businesses usually have a hard time getting paid. For instance, if you are willing to have an Amazon marketplace-related business account in a German bank, most likely you will be required to have a business account with a local German IBAN number in order to receive funds, simply for security purposes, which can cause some trouble to obtain.
For many clients, the best practical solution would be to find an online business banking partner offering a business virtual bank account, for example, a B2B Pay. It can be particularly useful, if you are able to get a virtual multicurrency account, meaning you can receive funds and store money in several different currencies.