Germany is one of Europe’s most attractive markets for foreign businesses, thanks to its strong economy, central location, and robust infrastructure.
Most Common Business Forms for Foreign Companies
The Gesellschaft mit beschränkter Haftung (GmbH) is the most commonly used legal form for foreign businesses in Germany.
- Comparable to a limited liability company (LLC) in other jurisdictions.
- Requires a minimum share capital of €25,000, of which at least €12,500 must be paid upon incorporation.
- Shareholders’ liability is limited to the amount of their contributions.
For smaller ventures, the Unternehmergesellschaft (UG), also called a “mini-GmbH,” offers a lower share capital requirement (as little as €1). However, profits must be retained until the minimum €25,000 capital is reached.
Setting Up a GmbH and Directorship
Incorporating a GmbH involves the following steps:
- Drafting and notarizing the Articles of Association.
- Depositing the minimum share capital in a German bank account.
- Registering the company with the Commercial Register (Handelsregister) and the local trade office (Gewerbeamt).
Foreign nationals can act as managing directors (Geschäftsführer) of a GmbH. While there are no nationality or residency restrictions, directors must comply with German business and tax regulations.
Taxation and Withholding Taxes
German GmbHs are subject to corporate income tax at a flat rate of 15%, plus a solidarity surcharge of 5.5% on the tax amount. Additionally, businesses pay a local trade tax (Gewerbesteuer), which varies by municipality (usually 14–17%).
Regarding distributions:
- Dividends are subject to a 25% withholding tax, plus the solidarity surcharge. However, tax treaties often reduce this rate for foreign shareholders.
- Germany has a strong double taxation treaty network to prevent double taxation on international income.
Service Providers for Company Incorporation
These companies assist with legal, administrative, and taxation processes, ensuring a seamless incorporation experience for foreign entrepreneurs.

