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Business & Investment in Germany

Interested in doing business & Investment in Germany?

More than 55,000 foreign companies are currently operating in Germany, employing about three million people. This demonstrates Germany’s position as a top location for investors. As the strongest economy in Europe and one of the largest markets worldwide, Germany offers excellent opportunities for investment in all economic areas. Germany’s climate for innovation, the comparatively flexible labor market with its highly qualified work force as well as the advanced infrastructure are only some of the factors contributing to the outstanding success of German enterprises and investors in Germany. Despite the current worldwide economic slump, Germany established its position as a robust international player. While these perspectives set the foundation for investment decisions in Germany, a carefully planned investment strategy and well-structured implementing procedures remain the key to success.


The S·K· Business & Investment Guide for Germany gives a useful overview with regard to company formation and business tax as well as employment regulations in Germany. By providing general background information, this booklet will serve as reference guide for your preliminary planning efforts.


  • Our booklet can be found here for download.


Checklists in English


If you have any questions about individual topics, please contact us via our contact form or send us an email.

Profit Taxation in Germany

Generally, all German resident companies and entrepreneurs with commercial activities in Germany are liable for taxation. There is only limited tax liability for non-resident companies. Depending on their organizational form, they may be liable to pay taxes on business activities conducted in Germany solely. We have compiled a guide that gives a useful overview with regard to business taxes and special rules for businesses on profit taxation in Germany by providing general information and covering the most important regulations, also for groups operating cross-border.


  • The S·K· Profit Taxation Guide for Germany can be found here for download.

If you want to expand to Germany as a foreign company, you can, for example, establish a domestic subsidiary, a branch office or a permanent establishment or representative office. In order to start the business activity in Germany, generally a business registration and, if necessary, a separate state permit are required.


I)    Legal forms and foundation requirements

For expansion as a company based abroad, there are legally four forms of organization available to you in Germany. You can establish a domestic subsidiary, a branch office or a permanent establishment or representative office.


1)    Domestic subsidiary

a)    General

The subsidiary is a legally independent company in which the parent company holds a majority of the shares. A domestic subsidiary has its own legal personality independently of the foreign parent company. German law is applicable to the domestic subsidiary.


In particular, the following legal forms are available for you.

  • General partnership (OHG),
  • Limited partnership (KG) or limited partnership with a limited liability company as general partner (GmbH & Co. KG),
  • Limited liability company (GmbH),
  • Entrepreneurial company (UG haftungsbeschränkt), and
  • Joint stock company (AG).


The German legal provisions apply to the formation of the aforementioned companies. For example, an entry in the commercial register and a business registration are required.


b)    Special example of the GmbH (limited liability company)

For foreign companies, the most popular legal form is probably the GmbH (limited liability company).

The GmbH needs a minimum share capital of at least EUR 25,000 (EUR 12,500 may be sufficient). For this, in practice, the GmbH needs a bank account in Germany. The liability of the GmbH is limited to the paid-up capital contribution. Prerequisite is the registration of the company in the Commercial Register.
You can establish a GmbH in Germany as well as buy an already existing so-called Vorrats-GmbH (shelf company). 

The costs of establishing a limited liability company or taking over a stock limited liability company can amount to approximately EUR 2,500 to EUR 5,500 depending on time and effort.

c)    Special example of the UG haftungsbeschränkt (Entrepreneurial company)

An entrepreneurial company (UG haftungsbeschränkt) can be established with less capital. It is a special form of the GmbH and also called "Mini-GmbH". 

The foundation of the entrepreneurial company is possible with only EUR 1 share capital, but there is an obligation to build up equity until an amount of EUR 25,000. In principle, 25 % of the annual net profit (if any) must be allocated to a reserve (obligation to retain profits) until a capital of EUR 25,000 is reached.


This increase in the share capital can take place in two ways: Either by

1)    a capital increase from additional contributions from existing or new shareholders paid into the company, or 

2)    a capital increase from company funds arising as a result of the retention.


In the case of conversion from company funds, this may only be carried out on the basis of audited annual financial statements in accordance with commercial law, which show equity of at least EUR 25,000.

Regardless of which method you choose, each form of capital increase requires notarization of the shareholders' resolution. After the capital increase to EUR 25,000 has been entered in the commercial register, the "UG" may be renamed "GmbH". This also needs to be entered in the commercial register.

2)    Branch office

The German branch is part of the foreign company as a whole. This part is spatially and organizationally independent, but not legally. The branch does not have its own legal personality. It is therefore subject to the foreign corporate law of the head office. The decisive factor is the existence of a domestic organizational unit, which can continue as an independent company even without the head office abroad.

The business of the branch is required to be of a certain duration. The transactions must essentially correspond to those of the head office in particular, they must not be merely ancillary and execution transactions.

The branch has to be physically independent. For example, it needs its own bank account and separate accounting. It is not mandatory for the branch to have its own assets.

The branch must also be provided with personal independence. The manager of the branch must in principle be authorized to represent it independently in legal transactions.

The establishment of a branch office is effected by the actual process of its establishment. A business registration certificate and entry in the German Commercial Register are required. German law applies to the registration procedure.

3)    Permanent establishment or representative office

A domestic permanent establishment is a branch or subsidiary of the foreign company as a whole, which is set up as a place of business but is dependent on the head office abroad. They constitute a dependent branch, which may not have a company name different from that of the head office. The permanent establishment carries out auxiliary business activities that serves to prepare, arrange or execute the main business of the foreign enterprise. There is no entry in the commercial register. However, each operating site must be registered with the responsible consumer protection office.

The term "representative office", which is occasionally used by foreign companies, does not exist in the German trade or commercial law and is an undefined legal term. Either the office of the foreign company in Germany itself is commercially active as part of its own organization, in which case it is a permanent establishment. This must be registered under trade law. Or an office is opened which is managed by an external and appropriately commissioned independent tradesman (for example, a commercial agent). In this case, there is no independent commercial activity of the foreign company in Germany.

  • Read the article by Julia Tytko - HERE.


Employment and Labor in Germany

More than 55,000 foreign companies are currently operating in Germany, employing about three million people.

The labor market in Germany is comparatively flexible, but the high standard of employee protection sets limitations. While Germany’s highly qualified labor force offers foreign employers good conditions for recruitment and employment, this high standard is also expensive. Generous remuneration and the additional social security contributions amount to relatively high employment costs.

The S·K· Guide to Employment and Labor in Germany gives a useful overview on the labor law and on what needs to be considered when starting a employment relation in Germany, also with regard to the employment regulations in Germany, the labor costs and payroll procedure. By providing general background information, this booklet will serve as reference guide.



Employment Law - High Standards of Protection    
Employment Agreements    

I.    Content and form    
II.    Remuneration    
III.    Termination of Employment Relationship    

Employment of foreign workers    
Labor Cost
I.    Overview    
II.    Wages and Salaries    
III.    Social Security Contributions    
IV.    Total Personnel Costs (Example Calculation)    


Payroll Procedure    
I.    Employer based in Germany    
II.    Employer based outside of Germany    
a.    German Labor Law    
b.    Wage Tax Perspective    
c.    Social Security Perspective    
d.    Permanent Establishment Issue    
III.    Assignment of employees    
IV.    A1 Certificate    

Filing Requirements    

  • Our booklet can be found here for download.


We are looking forward to assisting you in doing business in Germany.

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Your personal contact

Lothar Boelsen

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Tel: +49 69 971 231-0

Edda C. Vocke

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Tel: +49 69 971 231-0

Julia Tytko

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Tel: +49 69 971 231-0