Keeley is a Chartered Accountant with over six years’ experience in multi-territory accounting, reporting and coordination for a large portfolio of multinational clients’ subsidiaries throughout EMEA. We asked Keeley to highlight some of the things a company can expect to encounter when setting up in Germany.
How long can a Company expect local incorporation to take?
You can expect local limited company (GmbH) incorporation to take six to eight weeks if all information is readily available and presented in the correct format.
Unusually, in Germany a bank account needs to be opened in order to incorporate an entity. However, this itself is dependent upon a GmbH being in “foundation”. This occurs when a shareholder’s resolution to incorporate a GmbH is presented to a Notary in Germany (referred to as “the Notary date”). This essentially means that the GmbH is not fully registered with the German courts or effective as a limited liability company, but is in process until a German bank account is in place.
What are the most common barriers to getting off the ground?
Most delays revolve around German bank account setup, which is a necessary part of the incorporation. The German banks are very specific in what they will and will not accept and require a detailed breakdown of the ultimate beneficial ownership of the entity. How quickly an overseas company can get set up in Germany is dependent upon all the necessary information being provided in the correct format and notarised and apostilled where necessary.
If the GmbH is a subsidiary of an overseas parent company, then it is worth establishing whether the banking partner at HQ has a presence in Germany. If so, this may make bank account setup easier.
What is the minimum share capital for a GmbH?
German companies must have a minimum share capital of €25,000 (EUR) which must be paid in full shortly after the notary date.
Does a local Director need to be appointed?
It is easier to set up in Germany with a local Director, although it is not impossible to do so without one. If a foreign individual is appointed, they will need to be in Germany three to four times each year in order to prove that they are responsible for decision making on behalf of the GmbH. If they are present at the notary meeting for incorporation, it may expedite the process. If a foreign Director is unable to be present in Germany for the incorporation, they will have several registration documents to sign and have notarised/apostilled which must be returned to Germany for filing. This could cause delays.
Before progressing overseas (whether in Germany or elsewhere), speak to a global expansion advisor. They can provide valuable insight to ensure you maximise opportunities to help you succeed and avoid any pitfalls along the way.
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