Company incorporation in Germany

If you do business in Germany there may be a point that it makes sense to set up a local company. Then you need to know how to comply with local regulations and who can help you.

This article describes:

the most likely types of company to set up;
how you do this and who can help you;
a few important fiscal regulations.

Your legal entity in Germany

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.

Do you need a local company?

A local entity is not always the answer. A distributor, an agent or an employer of record gives you presence in the market without the administration of your own company.

You do need one when you hire local staff, hold stock or an office, bid for public tenders, or when your activity creates a permanent establishment for tax purposes. The alternative is usually a branch: cheaper to set up, but the parent company stays liable.

Do you need help in Germany?

Our service providers are local specialists. They know the market, the regulations and the parties that matter, and they can support you with the steps on this page.

Ask a professional

Setting up a company in Germany in three steps

Step 1

Choose the legal form

Compare a limited company, a branch and a representative office on liability, minimum capital, local director requirements and what a bank will accept.

Step 2

Incorporate and register

Prepare the statutes and identification documents, register with the trade register and the tax authority, and open a local bank account — usually the slowest step.

Step 3

Stay compliant

Arrange bookkeeping, VAT and payroll from day one and note the filing deadlines. Fines for late annual accounts are common and easy to avoid.