Expansion to Germany and choice of legal form
You consider an expansion to Germany but you are not sure how to proceed in doing so?
Germany is one of the major European economic centres and an expansion can really pay off. However, it should be well-considered and carefully prepared.
One of the most important questions is the appropriate legal form for your business. It plays a role not only for the formalities and legal requirements to be complied with but also, for example, for the company’s taxation.
In this article you learn more about the different options and the procedures to be followed.
We set up your enterprise. You focus on business
Expansion to Germany
Andre Kraus, lawyer and founder of the KRAUS GHENDLER RUVINSKIJ law firm, is your contact in matters of company formation, trade mark law, reputation protection and corporate law.
Online formation or in-person appointment
You can found directly online, book a free initial consultation online or send us a message
Free initial consultation
We offer a comprehensive initial consultation free of charge. Here we can discuss questions you may have about expanding Germany and advise you on the most important basic issues in formation, such as the right legal form or the costs and procedure involved.
Setting up your business
We start setting up your Permanent Establishment, Branch Office or Subsidiary. We will support you, from providing legal advice on forming a company, drafting tailored articles of association, arranging notary appointments and entering your company in the commercial register, to drawing up your application for tax and business registration.
If you want to get started quickly and easily or if you only plan temporary business activities in Germany a Permanent Establishment is a good choice.
A Permanent Establishment is nothing more than a dependent branch of an already existing company. It acts on behalf of the head office, does not have its own company name and it does not need its own share capital. It is not subject to German law but to that of the country in which the head office is located.
How can you set up a Permanent Establishment?
To set up a Permanent Establishment, sometimes also referred to as a representative office, a business registration with the Trade Licensing Office is necessary. However, an entry in the commercial register is not mandatory. A Permanent Establishment can be set up with little red tape and at low costs.
What is a Permanent Establishment not suitable for?
If you want to run your business independently, flexibly and with your own company name, a Permanent Establishment is not the optimal form of enterprise. You always have to adhere to the business decisions of the main company and you therefore have no opportunity to develop the market for yourself.
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For independent and long-term business activity in Germany the establishment of a branch office is a better alternative.
A branch office is a legally and economically dependent part of a company that is locally separate from the company’s registered office. It has got its own competences but it is assigned to a main company’s headquarters and is subject to the law of the head office.
A branch office can participate independently in business transactions without outwardly recognizably relying on the cooperation of the head office. It has competences for certain operational functions. It can for instance have its own procurement, production, business assets or distribution. However, essential operational functions are organized centrally by the head office.
How can you set up a Branch Office?
The name of the branch office is identical with the name of the head office. Additions (“Branch office Germany”) are possible. A business registration with the Trade Licensing Office and an entry in the commercial register are indispensable. A minimum share capital is not required.
What is a Branch Office not suitable for?
On the whole the bureaucratic effort and the costs for opening a Branch office are significantly higher than for opening a Permanent Establishment. It is therefore possible that the foundation is not worthwhile for a business activity in Germany that is only temporary.
Establishing a German subsidiary company is the most elaborate and costly way of company expansion. In some cases, however, it can be worthwhile.
A German subsidiary is a company owned or controlled by another company abroad, the parent company. It is legally independent, has got its own legal personality and can trade and conclude contracts under its own company name. Formation and business registration are governed by German law, the subsidiary has got a German legal form.
How can you set up a subsidiary?
The formation process depends on the legal form you choose for your subsidiary. Under German company law you can choose in particular between partnerships and corporations/ capital companies. To set up a capital company you have to pay in a minimum share capital, in case of a GmbH 25.000 Euros as a rule. Furthermore a commercial register entry and a business registration are obligatory.
The subsidiary’s German legal form makes it easier for you to do business in Germany and to establish your company on the German market. It also makes the company seem more trustworthy.
What is a subsidiary not suitable for?
The bureaucratic effort and the high costs (esp. share capital) for opening a subsidiary often don’t pay off, especially for a business activity in Germany that is only temporary or rather marginal.
We advise foreign founders on expansion. Our law firm has many years of experience and comprehensive expertise in organizing company formations and our lawyers are familiar with the entire procedure.
|DESCRIPTION||COSTS (NET AMOUNTS)|
|Formation costs||Advice on legal form, advice on forming a company and advice on financial statements, drawing up of the articles of association and forming documents, organisation of the formation, representation during the entire formation process, company audit by the IHK, managing director contract, opening balance sheet and preparation of the trade and tax registration, VAT ID application and contract documents.||Fixed price: 209,– € (“formation package START-UP”), 599,– € (“Rechtssicher”) or 799,– € (“Rechtssicher PLUS”)|
|Notarisation costs||Notarisation of the articles of association and other forming documents. By providing prior advice on formation and drawing up the articles of association and the formation documents for a fixed price, we may save you the significantly higher costs of a contract drawn up by the lawyer notary on the basis of the RVG (German Law on Lawyer’s Fees), or when invoicing on an hourly basis.||Between 280,- (Standard Record) and 835,- € (individual Statutes) on average|
|Check of company name with IHK||If the responsible IHK / HWK conducts a preliminary statement procedure, we will conduct an examination procedure at your IHK /HWK for your company. This is to show whether there are any objections to your company name. In some cities or municipalities (e.g. in Berlin) the preliminary statement procedure is subject to a fee.||In some cities or municipalities about 45,- €|
|Entry into the commercial register||Often 170,- €|
|Commercial registration||Depending on the city or municipality, €10.00 to €60.00|
|Tax registration||Free of charge|
|IHK contribution||From 115,- €|
Formation of an UG at a fixed price
Our legal fee is a one-time fixed amount: you will not incur any further costs. In particular you will have to pay
- no higher lawyer’s/notary’s fee according to RVG for the formation consultation as well as the final consultation
- no higher lawyer’s/notary’s fee according to RVG for the preparation of your individual articles of association
- no higher lawyer’s/notary’s fee according to RVG for the organization of your incorporation/your representation during the incorporation process
- no higher notarial fee according to GNotKG for the preparation of the formation documents (shareholders‘ resolutions, etc.)
These costs are usually not fixed from the beginning and can get very out of hand. With us it remains with a fixed price, which is independent of the complexity or lengthiness of your case (price transparency).
Discount for serial founders or Holdings
Often several companies are founded. This happens especially in the case of serial founders or when several companies are established within the framework of a holding model. In this case, we grant a discount of 20% on our respective fixed price from the second company onwards.
Your formation team
Specialist lawyer for insolvency law
Business law graduate
Sara Garcia Corraliza
and a team
of legal advisors, business law graduates and other lawyers
free document reviews
free initial consultations
answered forum questions
Do you have a general question about „formation in Germany“? We answer them here for free! Enter your question here
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UG formation in Kaiserslautern or another place
Dear Sirs, I am interested in UG formation in Kaiserslautern or another place. Could you, please, assist? Kind Regards,
UG & CO KG
Hallo, ich möchte gerne als ” Einzelkämpfer ” eine UG und CO KG gründen. Ich bin seit gut 40 Jahren Selbständig, möchte aber aus der persönlichen Haftung raus. Leider verstehe ich Ihr Angebot nicht so recht, ich möchte absolut nichts mit der Abwicklung und Gründung zu tun haben und mit einem Festbetrag alles bezahlen. Was […]
Guten Tag, wir möchten die Einzelfirma meines Mannes in eine UG umwandeln. Wie sieht der zeitliche Ablauf aus und welchen Kosten müssen wir rechnen?
We want to open a company in Germany. Please let me know. Thanks!
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