Germany is one of the most popular places for foreign entrepreneurs to open a company. Not only is it a European economic powerhouse, but the efficient, level-headed systems in the country make it a great place to base a business or to set up a branch. Here’s a guide through the company formation stages and the benefits of opening a company in Germany, especially during tough times.
The advantages of setting up in Germany
German’s stable economy is a boon to foreign entrepreneurs who also want to take advantage of the highly skilled, hardworking and creative workforce in the country. It is home to some of the most innovative scientists and engineers who bring in large amounts of research and development work.
On the trade side, it’s the world’s third largest exporter of goods which include vehicles, machinery, chemical goods, electronic products, electrical and transport equipment, pharmaceuticals and food products, and being part of the European single market means it has more than 450 million consumers to hand. Its fantastic location bordering eight other countries (Denmark, France, Belgium, Netherlands, Switzerland, Austria, Czechoslovakia and Poland) puts it right at the heart of European sales.
Related article: How to pay cross border VAT in the EU
But even though it’s surrounded by so many countries, it also has the advantage of not being landlocked. To the north, the two major ports of Hamburg and Bremen/Bremerhaven are pivotal to the intercontinental container transport market and a new deep-water terminal has been built in Wilhelmshaven to receive and ship the world's largest container vessels. As with any country, there’s still some paperwork to navigate and EORI numbers are required if you ship goods in and out of the EU, but that’s easily done if you do some basic research, (Take a look at our article The EORI number explained: what it is and why you need it to trade
Its industrial areas are really what sets the country apart. The car industry is especially strong in Germany and brands such as Mercedes-Benz, BMW, Volkswagen, Audi and Porsche have made their home in Germany with large factories, a strong workforce and high output.
Berlin is also home to one of the biggest and most exciting tech hubs in Europe and the German government are extremely open to foreign tech entrepreneurs basing themselves in the city. The ‘Silicon Allee’ campus in central Berlin is at the heart of Berlin’s new startup ecosystem which includes cheap shared working spaces to build connections and find new business partners. (For more information, read our article A Simple Guide to Starting a Business in Berlin.)
The process of opening a company in Germany
Luckily for foreign entrepreneurs, German law makes no distinction between Germans and foreigners who want to start a business and there are no restrictions on the repatriation of profits either.
The most common type of company in Germany is a GmbH which is the equivalent of a limited company. The minimum share capital for a GmbH is €25,000 and the minimum number of shareholders and directors is one. You can also choose the Ug company which only requires €1 share capital to start with. Unfortunately, a simple registered address cannot be an option with a GmbH and a virtual office (at least) or proper physical office is required. A German notary is also needed to certify the deed signing when incorporating the company.
In order to open a business bank account, you’ll need a business plan and office lease contract. The directors of the company will also need to visit Germany to open the account (although you can arrange a Power of Attorney for other directors if you wish only one director to visit). There is also the option to open the account with an online bank remotely.
Related article: The best country to start a business in Europe
The timescales for setting up a company are quite short. A GmbH can be set up from between four to six weeks, as long as all the documentation is correct. A branch or subsidiary can take an additional three weeks and the company can be registered 10 days after filing all the documents. The documents you’ll need include a notarized and apostilled copy of each director/shareholder’s passport and two utility bills that are less than three months’ old.
Even under tough times such as Covid and recession, Germany has revealed itself to be a sensible country that pulls together under difficult circumstances and makes good financial decisions that protect the economy and also its workforce. So, with those reassurances in mind you can feel comforted that opening your company in Germany is a sound decision for your business.
For any further information about company formation in Germany - notary advice, bank accounts, accountants and VAT - please call us on 0033 (0)1 53 57 49 10 or email us from our contact page and we’ll be happy to help.