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Business Immigration
Company expansion to Germany
Many foreign companies would like to expand to Germany: In addition to easier access to the German sales market, this also means the opportunity to access specialists and the infrastructure in Germany. However, a company expansion to Germany also means a lot of bureaucracy. The steps required for the expansion initially depend on the type of expansion. Below you will find an initial overview of the various design options.
The most important facts in a nutshell:
- Establishing a branch in Germany offers a wide range of design options
- A distinction is made between subsidiaries, branches and permanent establishments
- In particular, regulations relating to foreign nationals must be observed and appropriate residence permits applied for
- As a rule, a business registration and further registrations must be made (e.g. entry in the commercial register, concessions, etc.)
Opportunities for business expansion
There are various ways to expand a company to Germany. Which type of expansion (subsidiary, permanent establishment and branch office) is chosen depends on the goals pursued.
subsidiary
A subsidiary is a legally independent company (e.g. OHG, KG, GmbH or AG) whose shares are held by the foreign main company ("parent company").
place of business
A permanent establishment is a branch that is legally and organizationally dependent on the main foreign company. The place of business is therefore only spatially separated from the main branch. Invoices and contracts will continue to be issued in the name of the head office.
branch
The branch office represents another possibility for company expansion to Germany: From a legal point of view, it is also only a part of the main company; however, it takes part in commercial transactions independently and can operate under its own name. A branch can only be founded by trading companies (e.g. GmbH, AG) and other merchants.
Advantages and disadvantages of the forms of establishment
The advantages and disadvantages of the various forms of establishment must be carefully weighed up in each individual case. In addition to many corporate and tax law structuring options, it is above all necessary to be clear about the planned tasks of the German branch within the overall company. The advantages of a subsidiary consist, for example, in having a legally and organizationally independent unit compared to the parent company; the subsidiary may operate under a different name and conclude contracts independently. Which form of organization makes sense from a tax perspective depends on various factors; In particular, it must also be checked whether a so-called double taxation agreement exists with the foreign state of the main company. It is therefore of great importance to determine the specific needs of your company and to find a solution tailored to your individual case.
Establishment of subsidiaries
The prerequisites for founding a subsidiary depend in particular on the legal form chosen for the subsidiary. The most important legal forms in practice are partnerships such as OHG or KG and corporations such as GmbH or AG. For example, for the GmbH, which is probably the most common, it is necessary to have the articles of association notarized and to raise share capital of at least €25,000.00 and to have the GmbH entered in the commercial register. A business registration is usually also required.
Establishment of branches
The founding of branches is regulated in §§ 13 et seq. of the Commercial Code. First of all, it is a purely factual act; This means you have to open a branch office, for example by acquiring and equipping a production facility. The branch office must be entered in the commercial register. Since the branch is legally dependent on the head office, the head office is liable for the liabilities of the branch. The branch office may, in certain circumstances, simply bear the name (the “Company”) of the head office; Often, however, a different name is desired, in which case the status as a branch office must be pointed out (e.g. "branch office Germany"). Here, too, a business registration is usually required.
Establishment of business premises
For the establishment of a permanent establishment, the purely actual establishment of the permanent establishment is also primarily necessary. Nevertheless, you must register the start of the activity with the responsible trade office. An entry in the commercial register is not required. The permanent establishment may also not have a name that differs from that of the main company.
business registration
In order to operate a trade, you must register with the Trade Licensing Office.
A business requires the following:
- long-term
- allowed
- for-profit and
- independent.
The only exception to this is in the liberal professions (e.g. doctor, engineer, pharmacist, architect, lawyer, etc.) and in primary production (e.g. agriculture and forestry) as well as in the mere administration of one's own assets. No business registration is necessary here; however, these professions are subject to their own regulations. Registration takes place at the responsible trade office; this is usually located in the city or municipality in which you open your subsidiary, branch or permanent establishment in Germany. When registering your business, you must provide the essential data on your planned activity and submit the relevant documents. This includes, among other things, a description of the company's purpose, official documents from the responsible manager of the branch, a valid residence permit, excerpts from the commercial register. concessions. The notification is made by the trader. In the case of a company, this is the legal representative (managing director, board of directors).
Special Permissions
In addition to the business registration and any necessary entry in the commercial register, it may be necessary to obtain further permits. This depends on the nature of the planned business activity. For example, you need a restaurant permit to open a restaurant or an entry in the register of craftsmen for certain craft businesses.
Immigration regulations
It is also important to keep an eye on the provisions of immigration law. In order to take up self-employment – i.e. to set up a company in Germany – non-EU foreigners generally require a special residence permit. In addition, foreign employees also need a residence permit that allows them to work in Germany. In principle, a special residence permit or a Blue Card can be used for this purpose. Applying for an ICT card can be suitable for the internal transfer of employees from the foreign headquarters to the German branch.
How much does it cost to set up a German branch?
The exact costs of setting up a branch in Germany depend on many aspects. In addition to the bureaucratic effort, the establishment of corporations in particular also entails costs in all possible areas (share capital or share capital, notary costs, commercial register fees, etc.). The fee for the business registration itself is comparatively cheap and is usually less than €100.00.
Short & sweet
For foreign companies, an expansion of your company to Germany can open up a wide range of opportunities. In the context of the expansion, the large legal design options should be taken into account when founding a German branch. For example, by founding a subsidiary, a legally and organizationally independent branch can be established in Germany. This appears in business as an independent company and under its own name, with the parent company continuing to hold the shares in the subsidiary. Even with a branch office, there is the possibility of running the company organizationally separately from the main office. However, from a legal point of view, it is not an independent company. The same applies to the permanent establishment, which is only physically separated from the main branch, but is legally and organizationally dependent on it. In addition, it is important for your company to also observe the regulations under immigration law in Germany. This includes, among other things, that residence permits may be required for the entrepreneurs and employees of the company. You should therefore receive a solution tailored to the needs of your company, which, in addition to tax and corporate law aspects, primarily focuses on the work and organization of your company.