Which lawful structure is best when entering the German market?

Germany is an attractive region, which can be measured by a number: 1,124 projects-Foreign companies have never made such a large investment. In 2017, total net direct investment was about 70 billion euros, a record high. According to EY ("European Attraction Survey 2018"), there are many reasons: qualified experts, good infrastructure, stable legal and political environment.

When entering the German market, one theme is particularly important: choosing the right legal form. Why is that? If you choose the wrong legal form, there may be higher costs and higher risks. You should accurately analyze in advance which legal form is best for your entrepreneurial activity.

The Federal Department of Economic Affairs and Energy outlines twelve aspects to consider when choosing a legal form:

Entrepreneurial independence

formalities

responsibility

tax

image

accounting

Public disclosure obligations

Obligation to conduct an audit

Minimum capital

Startup fee

Capital procurement

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Extension to Germany can also be achieved through domestic subsidiaries, branches, permanent establishments or representative offices.

Legal forms can be divided into three categories: partnerships, companies and other legal forms.

A limited liability company (GmbH) is the legal form of choice. Another option is "Unternehmensgesellschaft" (UG), also known as "Mini-GmbH". Germany Company Formation is usually a simple process, including many procedures that must be performed. Our company can help you set up a company in Germany. The German UG or GmbH company can be established within 2-5 days. The procedures and regulations are not significantly different from other countries.

The German corporate tax rate averages about 31%. The corporate tax rate includes 15% corporate income tax, 0.825% solidarity surcharge and regional trade tax. The local trade tax is between 14-17.15%. German local taxes are not deductible as operating expenses.

The VAT rate for services and goods provided by Germany in Germany is 19%. Within the EU, the value-added tax between VAT companies is 0%. The company can request a refund of VAT.

Germany is the main European economy, and many multinational companies are based in Germany. Germany has a high-quality workforce and advanced infrastructure, which provides a good atmosphere for the establishment of enterprises.

For non-EU entrepreneurs, it is also possible to set up a company in Germany and obtain local residency through German business immigration.

Have you also considered doing business in the Netherlands?