Germany

Country in Central Europe, bordered by the Netherlands, Denmark, France, Czech Republic, Austria, Switzerland, Luxembourg, Belgium and Poland, has access to the Baltic and North Seas.

Capital

Berlin

Government

Federal state, divided into 16 autonomous territories. The form of government is parliamentary republic. President is the Head of state, Head of Government is the Chancellor. The legislative power is represented by Bundestag and Bundesrat, the government consists of cabinet of federal ministers appointed by the President at the recommendation of the Chancellor.

Official language

German

Currency

Euro (EUR)

Legal system

Based on civil law.

Economy

Germany's gross domestic product is among the five world leaders. Main industries are automotive, heavy industry, electronics and chemical industry.

Corporate law

  • Companies Act 1892 as amended by 2008
  • Joint Stock Companies Act
  • The law on equal business conditions 1976
  • Commercial Code
  • Tax Code 1976

Types of companies

  • Limited liability company (Gesellschaft mit beschrankte Haftung, GmbH)
  • Joint-stock company (Aktiengesellschaft, AG)
  • Limited partnership (KG)
  • General partnership (Offene Handelsgesellschaft, OHG)
  • Branch of a foreign company (Zweigniederlassung)

Limited Liability Company (GmbH)

  • minimum share capital is EUR 25 000, at least half must be paid by money.
  • the company may have one founder (member). Members are responsible for the debts of the company within the limits of their deposits in authorized capital.
  • shares of such company can not be listed in stock exchange and are not certified by securities. Ownership is transferred by a notarized documents.
  • Since 2008 it is possible to establish the so-called mini-GmbH. It is a business company with initial capital of 1 EUR. The authorized capital of mini-GmbH must be fully paid in cash prior to registration. In such a company a reserve fund shall be formed, where one-quarter of annual profits excluding the losses for the previous yerar shall be contributed. When the amount of such fund reaches 25,000 euros, the company becomes an ordinary GmbH.

Joint-stock company (Aktiengesellschaft, AG)

  • minimum registered capital is EUR 50,000;
  • shareholders' liability is limited by shares;
  • may be established by a natural person;
  • AG shares can be listed on a stock exchange;
  • the founder (founders) must appoint an auditor and the supervisory board (this decision shall be notarized);
  • company becomes a legal entity from the date of its submission to the Companies Registrar.

Limited partnership (Kommanditgesellschaft, KG)

  • minimum registered capital is EUR 50,000;
  • the partnership shall have the main partner who takes full responsibility and limited partners who are responsible within the limits of their contributions;
  • main partner represents the partnership in relations with third parties;
  • not only an individual but a company with limited liability may become the main partner;
  • authorized capital is divided into shares that are proportional to contributions of the partners;
  • agreement between the members is notarized and entered into the trade register.

Taxation

Corporate income tax is charged at a flat rate of 15% (as of 2011). A reduced rate is sometimes applicable. In addition to general taxes there is a municipal trade income tax at the rate that takes into account local factors (14% -17%). In 2011 the effective income tax rate including corporation tax, municipal sales tax and solidarity tax is 30% -33%. Partnerships, in contrast to other types of companies, do not pay income tax, but partners individually pay tax from the income derived from activities of the partnership: from EUR 8,000 to EUR 53,000 - at progressive rates, rising from 14% up to 42%; from EUR 54,000 to EUR 251,000 at a rate of 42%; from the amount exceeding EUR 251,000 at a rate of 45%. The standard rate of VAT is 19%; imports are taxed; export is exempt from tax; there are exemptions under the VAT for "small businesses".

Annual financial accounting and audit

Each company must maintain current accounting to reflect its financial state. Reports should be submitted no later than 31 March in the year following the tax year. The report shall be certified by the auditor only if the number of employees in the company is more than 50 people; turnover for the financial year is more than 2 million Euro; total assets exceed 4 million Euro. All documentation relating to the financial statements should be stored in the registration office at least 10 years from the date of incorporation.

Information available on request of third parties

Company name, registered office, registration number, registered capital, the names and addresses of directors and shareholders, payable

Agreements on avoidance of double taxation

Agreements on avoidance of double taxation concluded with many countries.