Company formation in Germany for foreign companies
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Step by step to success
Are you looking to expand your business to Germany? Our step-by-step guide will show you what foreign companies should consider when establishing a branch in Germany.
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3Step 1: Apply for a business visa or residence permit for Germany
To establish a company in Germany, foreign entrepreneurs must ensure that the managing directors are actually permitted to remain in Germany during the establishment process. Different regulations and requirements apply depending on the company's country of origin.
Company formation in Germany for entrepreneurs from the EU:
Entrepreneurs from EU countries as well as from EEA countries such as Norway, Liechtenstein and Iceland benefit from the freedom of establishment and freedom of trade that apply within the Schengen area.
Freedom of establishment: EU citizens have the right to reside and work in any EU Member State, whether as an employee or self-employed. This includes freedom of entry, choice of residence, and place of work or study.
Freedom of trade: Citizens of the EU and EEA are allowed to establish a business in all member states.
Conclusion: Entrepreneurs from the EU do not need a special residence permit to set up a business in Germany.
Company formation in Germany for citizens of third countries:
Founders from non-EU countries require a residence permit to operate in Germany. They must first apply for a business visa.
Schengen visa: This visa allows a stay of up to 90 days in Germany and is sufficient in most cases to take all the necessary steps to set up a business.
National visa: If the stay lasts longer than 90 days, a national visa is required. Entrepreneurs who wish to remain in Germany permanently must have this visa converted into a residence permit upon entry.
Exception:
Citizens of the following countries can apply for a residence permit directly at the immigration office within three months without requiring a national visa:
- Australia
- Israel
- Canada
- Japan
- New Zealand
- South Korea
- USA
The Federal Foreign Office provides a detailed overview of countries with and without visa requirements.
Requirements for a residence permit:
A residence permit for starting a business is usually granted if the business idea arouses economic and/or regional interest, positive effects on the local economy are expected and the financing of the start-up is secured through equity, subsidies or a valid loan commitment.
Documents required for the immigration office:
- Valid passport
- Biometric passport photo
- Health insurance coverage
- Notarized partnership agreement
- Business plan with financing plan
- Proof of professional qualifications
The Chamber of Industry and Commerce (IHK) reviews the business idea and investment project. If the IHK approves it, the business registration can proceed.
Difference between residence permit and settlement permit:
Founders initially receive a temporary residence permit valid for a maximum of three years. After the successful completion of the business, they can apply for a permanent settlement permit. Those who have already held a residence permit for five years are generally also entitled to a permanent settlement permit.
Step 2: Select the appropriate legal form and, if necessary, conclude a partnership agreement
When establishing a business in Germany, foreign investors and entrepreneurs have the same freedom as German founders in choosing the legal form of their company. Various company forms are available, including corporations such as AG and GmbH, partnerships such as GbR, OHG, and KG, as well as branches where liability lies with the head office. In some cases, it is necessary to conclude a partnership agreement to regulate the details of the company structure and management.
Step 3: Register your business and have it entered in the commercial register
Before a commercial activity can be commenced, both foreign and German entrepreneurs are obliged to register their company in the relevant public registers.
Business registration
Every entrepreneur must register their business with the trade or regulatory office of the relevant city or district before commencing business operations. The entrepreneur will then usually automatically receive a tax registration questionnaire from the tax office.
Commercial Register
Entries in the commercial register are mandatory for the following legal forms:
- General partnership (OHG)
- Limited partnership (KG)
- Limited liability company (GmbH)
- Public limited company (AG)
The application for entry in the commercial register is made through a German notary.
Do you need assistance finding a notary in Germany? Invest in Bavaria will be happy to help you find a suitable notary in your area.
Checklist for foreign entrepreneurs when setting up a company in Germany:
Foreign entrepreneurs who want to establish a company in Germany should consider a few important points. First, the entrepreneur must have a valid residence permit for the duration of the company establishment. In some cases, a longer stay may be required. Furthermore, a business license is required to legally operate.
It is also important to have sufficient language skills to be able to register the company with the commercial register through a German notary. If this is not possible, an interpreter can be called in. Proof of health insurance coverage is also required to ensure health coverage during the company formation process.
A business plan, which also includes a financing plan, is also important to outline the company's financial basis and long-term strategy.
During the start-up phase, some additional preparations must be made, such as opening a business bank account and signing leases for office space or business premises. For individuals over the age of 45, proof of contributions to a statutory or private pension insurance plan is also required.
These steps are important to ensure the start-up process in Germany runs smoothly and successfully.
We help you with company formation in Germany for foreign companies
Do you run a business within the EU or a third country and are planning to establish a company in Germany? We are here to actively support you with your investment project. Our services for your company start-up include strategic planning and preparation, the search for and selection of the best location, implementation of the founding steps, and support for further growth in Germany.
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