» Population

Germany's population is approximately 80 million. About 80% of the population live in cities and Berlin has approx. 3.5 million inhabitants.

» Political System

The Republic of Germany is officially headed by the President. The Federal Parliament consists of two Chambers, the Lower Chamber (Bundestag), which is directly elected by the German electorate on the basis of proportional representation and the Upper Chamber (Bundesrat) consisting of delegates from the individual states. The Chancellor is elected by the Bundestag. The Federal Republic is divided into 16 states (Bundesländer), each with its own parliament and government, acting fairly independently, managing their own local affairs including education. The legal system is based on written law promulgated in Acts of Parliament. The ultimate legal source is the "Basic Law" (Grundgesetz) or Constitution.

» Infrastructure and Economy

Germany is a member in the EU and has close connections to other institutions such as EFTA and OECD.
Germany is one of the major industrial nations and manufacturing still accounts for almost half of the GNP.
The main industries are chemicals, automobile, data processing and electrical engineering.
GDP growth is expected to increase to 2.8% in 2007.
Germany has had a fairly high unemployment, presently around 9 - 10%; the per Capita GDP is €26.388.

» Language

German is the official language.

» Currency

Euro.

» Type of Law

Civil Law

Principal Corporate Legislation

Handelsgesetz, GmbH and AG Legislation
Public Commercial Registers (Handelsregister) are decentralized in Germany, with the information on corporations available in the local register in the region where the company has its legal seat.

» Type of Company for International Trade and Investment

• Gesellschaft mit beschränkter Haftung (GmbH or Limited Company)
• Aktiengesellschaft (AG or Joint Stock Company)

Other forms available are partnerships such as the general partnership (OHG), limited partnership (KG), GmbH & Co KG, silent partnership, civil law association (BGB Gesellschaft)

» Procedure to Incorporate

Once a name has been cleared the formation document has to be drawn up, recorded by a German Notary and be signed by all founder members. The company must be registered in the Commercial Register at the county court. The registration document for an AG must include confirmation from the Directors that the minimum share capital has been paid up and an opening balance sheet. In addition, proof has to be made to the Registry that in case of an AG, the Board of Directors can dispose of the capital without restrictions; respectively the Geschäftsführer (Manager) for a GmbH and that the capital has in fact been paid up.

» Restrictions on Trading

Certain restrictions apply to areas such as those that affect public safety, public transport, banking and insurance.

» Powers of Company

A company has all the powers of an individual.

» Language of Legislation and Corporate Documents

German

» Registered Office Required

No

» Shelf Companies Available

In principle, yes, but rarely used

» Time to Incorporate

Approximately one month, however also depends on the local courts

.

» Name Restrictions

A company name should not already be in existence otherwise any name is possible, must no longer indicate the business activity. Competition law may have to be considered. Nothing should be added to the name, which may deceive the public as to the size of the business. The suffix must be added to the name.

» Language of Name

German

» Names Requiring Consent or a Licence

Names like banking, insurance and re-insurance, financial services

» Suffixes to Denote Limited Liability

GmbH for Limited Company
AG for Joint-Stock Company

» Disclosure of Beneficial Owners to Authorities

Generally there is no requirement to disclose the ultimate beneficial owner.

» Authorised and Issued Share Capital

GmbH: €25,000 with a minimum of 25% paid up. Capital may be paid up in cash or in kind.

AG: €50,000 with a minimum of 25% paid up.

» Classes of Shares Permitted

Registered shares and preference share with or without voting rights.

» Taxation

German tax law is based on the Basic Law (Grundgesetz), every German tax is regulated by a statute and there are presently 30 statutes in being.
The German tax system levies direct taxes on income and on net worth.

Types of taxes are: Corporation Tax, Personal Income Tax, Municipal trade tax on income, withholding taxes on dividends, rental, royalties, fees, interest, church tax and VAT.

Current Tax rates are:

Corporation Tax		25%
Municipal Trade Tax		18% (average)
Capital Gains Tax		45%
Withholding Tax		25% on dividends Up to 35% on interest
VAT		19%

» Tax Reform for 2008

The corporate income tax rate of currently 25% will be reduced to 15%. At the same time, the basic multiplier for the municipal trade tax will be reduced from 5% to 3.5%, which is a reduction by 30%. This lowers trade tax from a maximum of 20% to less than 15%, subject to local rate differences.

» Double Taxation Agreements

Germany has an extensive treaty network with all Western European nations, most Eastern European countries and many others worldwide such as Australia, Brazil, China, India, Japan, the US. Most treaties follow the OECD model.

» Licence Fee

None

» Financial Statement

All companies, including branches must submit an annual return with balance sheet and profit and loss account, including returns for the Federal Corporate Tax, the Municipal Trade tax, net worth tax
Whilst small companies can file abbreviated accounts within six months of their year-end, medium and large corporations must prepare their financial statements and an annual business report within three months of their year-end.
Accounts must be in the German language and either DM or Euro.
All companies apart from small sized companies (including small AG's) must be audited.

» Directors

GmbH must have a minimum of one manager who can be owner at the same time.
AG's can have only one Director, but needs a minimum of two if the capital exceeds DM 3 million. The Director (Vorstandsvorsitzender) can also be owner at the same time.
AG's must also have a Supervisory Board and has a minimum of three members. Depending on the size of a corporation the Supervisory Board may have to have labour representation.

» Company Secretary

N/A

» Shareholders

GmbH: one member
AG: one founder member.

» Trusts

German law does not recognize the concept of Common Law Trust.

	Word	PDF
Germany Fact Sheet	95KB	80KB
Enquiry Form	99KB	34KB
Order Forms	314KB	196KB
	Excel
Comparison Chart	114KB

Disclaimer

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. OCRA Worldwide does not accept any responsibility, legal or otherwise, for any errors or omission.