The Legal Process of Setting Up a Company

Information about the legal requirements involved when starting a business in Germany...

In order to start a business in Germany, it is necessary to:

  • Organise two sets of tax registration:
    • for commercial tax at the Gewerbesteueram
    • for the local tax office at the Finanzamt
  • Hire a notary and register the business at the local court (Amtsgericht)

The most important decision in starting a business is the form the business will take. The entrepreneur has a choice between sole proprietorships, non-incorporated and incorporated firms.

One-person businesses

If the business is to be formed by one person alone, the following options are available:

  • Sole proprietorship
  • One-man GmbH

When a trade is registered with the Trade Office and the company is managed by a single person, a sole proprietorship is automatically created. This also applies to freelancers if they apply for a tax number at the local tax office.

When conducting a trade (as opposed to a freelancer), it is necessary to register the company in the commercial register as a "business established as a commercial operation".

A one-man GmbH must be entered in the commercial register by a public notary. Although there are exceptions to the rule, a GmbH may only be founded by those conducting a trade and not by freelancers.

Partnerships

If the company is to be set up with partners, the following options are available:

  • Non-incorporated firms
  • Incorporated firms

Both types must be entered in the commercial registry and registered by a public notary.

Documents required

For setting up a company in Germany, the following is required:

By an individual:

  • Proof of German settlement permit (Niederlassungserlaubnis), if required
  • Passport
  • Nominal capital for a GmbH (€25,000 plus fees)

By a legal entity:

  • Certified translation of the parent company's registration
  • The nominal capital for a GmbH (€25,000 plus fees)
Information approved by Kanzlei am Rosa-Luxemburg-Platz Christian Regnery, Rechtsanwalt Torstr. 49/Ecke Schönhauser Allee, D-10119 Berlin Tel: 030 4404 2733, Fax: 030 4404 2777, www.regnery.de