Foreign investors find Germany a very attractive destination for setting up new companies Therefore they come from abroad and invest in company formation. What they need to know firstly is that there are more business structures and each type of company has different requirements and offers various advantages.

• What is the German trade register?

The Trade Register in Germany is known as Handel register, which means Companies House. This is actually the official institution whit which all companies have the obligation to register. The German trade register falls under the regulations and supervision of the local district courts, also known as. The trade register in Germany mainly deals with the registration of companies in this country, but also with facilitating information about companies to the public. It is the duty of the trade register in Germany to supervise and observe if the companies respect the German Commercial Code

The trade register in Germany is divided into two parts. One is responsible with all that involves company registration procedures for all types of businesses from the articles of association to the shareholders and board of directors. The second division deals with ensuring the good functioning of companies according to the legislation in Germany.

• How can a company register with the German trade register?

Company registration in Germany can only be completed if some documents of the company are submitted. These papers must be notarized and sent via Internet or submitted at the local district court. The local authorities must decide within a month if the application is complete and after issuing the registration certificate, the German trade register provides information to the Chamber of Industry and Commerce, as well as tax authorities in order to announce the new company.

• How can I have access to the German trade register?

The trade register in Germany is a public institution; therefore it allows the public to have access to the database. Besides, it is one of the main roles of the German Trade Register. Anyone can come to an office of the local trade register and search through the numerous companies that are registered or ask for details on a specific company in Germany.

Incorporation Procedure in Germany

All rules and regulation regarding the formation of German companies are included in the Company Act.

Preliminary procedures of company incorporation in Germany imply the verification of the name uniqueness at the local chamber of industry and commerce, notarize the company’s articles of association and the opening of a bank account where the minimum share capital or the initial capital of a partnership must be deposit.

The following documents must be delivered to the German Commercial Register in order to start the registration process: an application for registration, the notarized articles of association, a document showing the management board structure, a certificate showing that the share capital was deposit. All the above must be submitted in an electronic form. The registration of the newly formed company is made on a central electronic platform by the Commercial Register.

The next step in company incorporation in Germany is applying for receiving the trading license from the local Office of Business and Standards followed by the registration at the statistical office (which will send a questionnaire that must be filled with the company's business data) and at the chamber of industry and commerce and the labor office. The labor office is issuing an eight-digit operating number which must be reported at the social security. The entity must then apply for the federal health insurance office. A notification must be sent to the Tax Office regarding the newly formed business entity, this leading to the registration for the corporate taxes and VAT.

After company registration in Germany, the business can begin its commercial activity. The majority of the companies started in Germany need employees. Employers are offered a well-trained workforce. They can ask for help on job websites and recruitment agencies. In this way, work providers can find the best suited personnel for the jobs offered. 

Economy Overview in Germany

Germany’s economy is highly ranked on the world’s map. It is actually considered the fourth largest economy in the world. This is the reason why the country attracts numerous foreign investors who want to start new companies. Germany is actually one of the best destinations in the world as far as the foreign investment is concerned. Besides, Germany is the second most important exporter in the world. Workforce is also a plus for foreign investors who are ready to start a company in Germany, especially since employees bring an important contribution to the business’ development. Quality of life and stable labor relations are of great important for the employees in Germany. Moreover, the social security system is very well structured.

Taxation in Germany

Taxes are levied at federal, state and municipal level in Germany. The German taxation system applies several direct and indirect taxes among which the most important are the income tax and the value added tax (VAT). Also, the German Constitution establishes several taxation principles which apply according to:

Types of taxes in Germany

The following taxes are applied at federal level in Germany:

• - customs taxes,

• - electricity taxes,

• - motor vehicles taxes,

• - beverages taxes,

• - a solidarity surcharge 

The taxes applied at state level can be divided into:

• - inheritance taxes,

• - real estate property taxes,

• - gambling taxes,

• - fire protection taxes.

At municipal level, the German authorities will levy a real estate property tax, beverage, pets and inns taxes. However, the largest incomes to the state budget are generated by the income tax and the value added tax.

The German income tax

The income tax applies to both residents and non-residents in Germany. If German residents are applied the income tax on all their incomes earned in and outside the country, non-residents are required to pay the tax on the income arising in the country alone. The German income tax applies to incomes derived from business operations, employment, capital income and other agricultural activities. The tax rate an individual must pay in Germany varies and ranges from 0% to 45%. Also, based on the extended network of double taxation agreements Germany has, foreign investors will benefit from numerous tax reductions or exemptions.

The corporate tax in Germany

German companies are required to pay the corporate tax arising from business profits. All types of German companies are required to pay the corporate tax. Foreign companies with subsidiaries or branch offices in Germany benefit from the same taxation regime and exemptions or reduction as national companies. The current corporate tax rate in Germany is 15%. However, another solidarity surcharge and trade tax applies to the income made by companies.