Germany – Ready Made Shelf Companies – Company Formation

Germany

Germany is one of the richest and most populous countries in the European continent. Located between Poland and France, with Baltic Sea in the north and Alps in the south, the country is a backbone of the European Union’s economy and a strong player on the global political scene.
Berlin, the largest city and capital of Germany, has more than 3,700,000 inhabitants. The country is a member of the Eurozone and in 1999 replaced Deutsche Mark with the common European currency, euro. The most commonly used business structure by far is limited liability company (Gesellschaft mit beschränkter Haftung or GmbH) with minimum share capital of 25,000 EUR. A single shareholder is enough to establish this type of entity, but they need to pay up at least a quarter of the initial capital. In-kind contributions are subject to verification. Company shareholders need to draw up Articles of Association and appoint a director who will manage company affairs. German companies are registered in Commercial Register (Handelsregister). German company law provisions are stipulated in Commercial Code (Handelsgesetzbuch). All business entities are required to prepare annual financial statements that need to be approved by a Shareholders’ Meeting. In case of medium and large entities, the statements need to be accompanied by a management report and are subject to audit. Corporate tax rate for German enterprises is 15%. 5.5% surcharge (“solidarity tax”) on income tax, capital gains tax and corporate tax applies. All companies are also subject to (local) trade tax calculated on income exceeding 10,000 EUR. Different trade tax rates are effective depending on the municipality where your business is registered. Loss carry-backs are permitted up to the amount of 1,000,000 EUR. 25% dividend tax applies, with the exception of the EU parent-subsidiary directive. Germany is the world’s fifth largest economy and the largest economy of Europe. The biggest drive of the GDP is the service sector. The country is also one of the biggest global exporters of good and services. Important industry sectors are vehicles, electronics and pharmaceuticals. Many of the world-known trade fairs take place in the country, such as those held in Hannover, Cologne and Frankfurt. Germany is a federal republic with a bicameral Parliament. The most important legal act is The Basic Law for the Federal Republic of Germany. The head of the German government is the Chancellor, while the head of state is the Federal President. The Chancellor is elected by the Bundestag, while the candidate is proposed by the Federal President. Many German banks are known internationally. The largest ones in terms of market share are Deutsche Bank, Commerzbank, DZ Bank and KFW Bankgruppe (state-owned development bank). Savings banks (Sparkasse) are also present, as well as some co-operative banks, such as Volksbanken Raiffeisenbanken.