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The Federal Republic of Germany is a state which is situated in the central Europe with convenient access to the Northern and Baltic seas.

The Federal Republic of Germany is a state which is situated in the central Europe with convenient access to the Northern and Baltic seas.

The major part of its history Germany was disunited feudal state leading constant internecine wars but with constant tendency to unite. This tendency was expressed in work of genious philosophers, composers and politicians.

Germany could completely unite and peacefully develop only in the end of the XXth century.

Now Germany is advanced industrial country taking one of the leading places in the world on industrial production volume and foreign economic relations, famous for responsibility and punctuality of the citizens.


1. German legal, economic and political systems are one of the most developed and stable in the world.

2. Progressive infrastructure, hi-tech manufacture, high qualification of labor.

3. Tax privileges for investment projects are established in the East German federal lands.

4. There are eight free ports operating according to the European Union right: Bremen, Bremerhaven, Kukshaven, Deggendorf, Duisburg, Emden, Hamburg and Kiel. Within the above mentioned ports exempted from taxes processing and manufacture of goods for external for the EU markets are permitted. Such an activity is permitted both for local and for foreign legal entities.

Companies forms

GmbH is a limited liability company. Participants of GmbH bear responsibility within the contributions made by them.

GmbH Authorized capital

The minimal authorized capital is 25 000 euro.

If GmbH is established by one person, the authorized capital should be paid completely or in a part (not less than 50 %), under condition of guarantee of other part (50 %), for example, by bank guarantee.

If GmbH is established by 2 and more founders, each of them should at the moment of registration pay not less than ¼ of the contribution, thus a total part of the paid authorized capital should make at least not less than 50% (12 500 euro). Each participant bears joint responsibility with his personal property within the limits of unpaid shares in an authorized capital. Terms of payment of the rest 50 % aren't established by the law.

Authorized capital payment is possible both by means of monetary funds and by making property contributions. In the latter case such a contribution should be estimated by the corresponding estimator – this can complicate the procedure of authorized capital payment.

Registration terms

GmbH registration terms are not legislatively regulated. In practice the registration lasts for 2-4 weeks. However a company can carry out business from the moment of incorporation (open bank accounts, make transactions, engage employees etc.). In that case the company operates not as GmbH, but as a simple partnership where the responsibility of participants isn't limited by the size of authorized capital. In such cases "GmbH i.g." is indicated (that means «GmbH at the registration stage»). As soon as the company is registered (is included in the Trade register), its responsibility becomes limited.


Managing bodies

The minimum number of directors in GmbH is one.

Directors can be only physical persons. If a director is a citizen of the EU, the international passport is necessary. Any special permits are not required. If a director is the resident of the Russian Federation, Belarus, Ukraine he should besides the international passport confirm the possibility of free entrance to Germany for realization of the functions.

The legislator distinguishes a director-founder and a director for hiring. In the 1st case there is the legal relationship regulated by corporate law (the participant is the managing body), in the 2nd case the legal relationship is regulated exclusively by labor law (including work permit, registration in the territory of Germany etc.).

Besides a post of director the German legislation provides also a post of a procurator. The post of a procurator in a company isn't obligatory. If a director can solve all the questions independently the post of a procurator is not necessary. A procurator has representation powers, comparable with the authorized representative operating on the basis of the general power of attorney. These powers are fixed in a separate line in the Trade register (and in the extract) that allows a procurator to operate on behalf of the company without any power of attorney, within the limits of presented powers. However powers of a procurator concerning transactions with the land plots demand additional special powers.

A procurator isn't the body of a company (though has almost the same powers) and doesn't bear responsibility as company body. For example, in the case of untimely initiation of competition bankruptcy proceeding.


AG – is the joint-stock company, authorized capital of which is divided into shares. The responsibility of founders (shareholders) is limited.

AG authorized capital

According to joint-stock companies law (Aktiengesetz) from 9/6/1965 the minimum size of authorized capital of AG is 50 000 euro. The authorized capital should be paid in euro. The quarter of authorized capital should be paid at the moment of company registration.

The law permits both registered and bearer shares.

AG managing bodies

1) The Board is a principal organ of management in a joint-stock company. The board can consist of one or several persons. In the company with authorized capital exceeding 3 million euro the board should consist of not less than two persons if only it is not established by the charter that it consists of one person.

2) The Supervisory board carries out the supervision of activity of Board of directors, appointment and discharge from the post all of the participants. The supervisory board should consist of minimum 3 and maximum 21 participants.

3) General meeting of shareholders makes the decision about election and dismissal from the post all of the members of the supervisory board, about changes in the charter and profit distribution, about dissolution of the Board of directors and the Supervisory board, about the appointment of the auditor, about measures on attraction of the capital and capital reduction, and also about the termination of activity of a company. General meeting is convoked by the board under the decision which is accepted by the simple majority.


AG incorporation

AG incorporation occurs by drafting the project of articles of association. Founders should get all the shares. The articles of association should define the name and registered address of a joint-stock company, property objects (especially in the cases of industrial or trading company), the sort of production or goods which will be produced and sold. Also it’s obligatory to point out the size of authorized capital (capital distribution in shares with nominal value or without one), the kind of shares and a number of shares of each kind. Articles of Association should be certified in judicial and notarial order. The joint-stock company begins to from the moment of including into the record of the Trade register.


The joint-stock company annual report should be published as it is defined both in the Trade code and joint-stock companies law. The joint-stock company should submit the report of business affairs and annual balance to the Trade register.


A. The corporate tax (Koerperschaftsteuer) is the tax charged on universal profit of corporations. It is calculated according to balance profit of a company at the rate of 15 %.

There is also a tax extra charge in support of solidarity which contains - 5,5 % from the sum of the corporate tax. Totally the size of the corporate tax at the moment is 15,83 %. The payment is made quarterly, and upon financial year termination the final declaration is made.


B. The tax at source. The dividends paid by corporations (GmbH, AG) to non-residents companies are taxed at source under the rate of 25 % (25,38 % taking into account the extra charge). The dividends received by corporations, irrespective of the source of their origin, aren't imposed with the tax at source.

The tax at source on royalty paid to residents is not withheld. However the royalty paid to non-residents is imposed with the corporate tax.

The percent paid to non-resident companies isn’t subject to taxation with this tax. An exception is the percent received under convertible bonds, bonds with the right of profit participation of the companies, the share loan (syndicated credit). In this case percent is taxed under the rate of 25 % (25,38 % taking into account the extra charge).

C. Tax on trade (Gewerbesteuer). It is paid from profit of any business activity (irrespectively of its legal form). It’s a regional type of tax, the factor of the tax rate is established and varies in the regions within 15-18 %. The tax extra charge in support of solidarity (5,5 % from the sum of the trade tax) is also charged. Totally the size of the corporate and trade tax makes ~ 30 %-35 % from net profit.

D. The VAT (Umsatzsteuer). The standard rate of this tax is 19 %, the lowered rate - 7 %. First two years of GmbH activity the company is obliged to hand over monthly (including dormant) VAT declarations.

Foundations and trusts

The activity of foundations in Germany is liberally enough regulated with legislation. The legislation allows to establish foundations for any private and state purposes. Foundations are under the supervision of regional authorities. Commercial activity can be the source foundation income. There are not any restrictions for the size of the authorized capital but in practice assets not less than 50,000 EUR are considered the most suitable.

Public information

The company name, registered address, the information about directors and shareholders of the company, the company accounts.


A financial year is equal to a calendar one. Each taxpayer until the 21st o May is obliged to submit to a revenue service tax declaration and tax calculation. According to the calculation taxes are withheld. The account is not formalized but should comply with the requirements specified in the legislation and Accounting principles (Grundsätze ordnungsgemäßer Buchführung). Depending on the sum of balance currency, the gain sum for a year, the number of employees, the tax service may require quarterly report, detailed accounts, drawing up explanatory note, the report on movement of the basic funds, the report on movement of monetary resources.

Prohibited activity

The companies registered in Germany have a right to carry out any activity which is not forbidden by the legislation.

Currency control

No currency control.

Nominal service

Nominal service is not possible.

The chief executive (Geschäftsführer) manages GmbH. The Chief executive may be only physical person, citizenship or legal relationship with Germany isn't obligatory. The chief executive has the right to be the investor in the authorized capital. If there are more than 500 persons in the company, the managing body is the board of directors.


Agreements on double taxation avoidance


Germany signed agreements on double taxation avoidance with 88 states, including Ukraine, Russia.

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