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Company Formation in Germany or Netherlands

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Location and business environment in Germany

The largest economy in Europe is Germany, making up 22% of Eurozone GDP and having access to 454 million consumers.

It belongs to the largest exporters in the world and “Made in Germany” is recognised as an indication of high quality all around the world. The country’s optimal geographic location,

neighbouring the established markets of Western Europe on one side and the emerging markets of Central and Eastern Europe on the other, makes it a hub for expanding business

throughout Europe.


Type of Company for International Trade and Investment:


  • Gesellschaft mit beschränkter Haftung

  • (GmbH or Limited Company) (MOST POPULAR!) or UG

  • Aktiengesellschaft (AG or Joint Stock Company)

  • Other forms available are partnerships such as the general


partnership (OHG), limited partnership (KG), GmbH & Co KG,

silent partnership, civil law association (BGB Gesellschaft).

In Germany, the most common consideration is between the UG and the Gmbh. But we always suggest to go for the Gmbh, in case of a non-European client.


The reason is the reputation of the vehicle, and it will be easier to open the bank account. But also, if you decide to incorporate an UG, without capital deposit, there might be practical issues later on, when the client wants to change a director or shareholder. (The court might request for proof that the company is financially sound anyway).


However, the UG is very popular if you need a German company ASAP, and a local bank account is not a requirement(in short term)..


In that case, we suggest the UG, because the formation procedure is simpler, because no capital deposit is required if we incorporate the company with just a share capital of 1 EUR.

After formation of the company, we can still consider to open a bank account, in Germany, or in another European country. However in MOST cases, the bank needs to identify the director of the company in person.


Either way, both the UG and the Gmbh have their downside in Germany, and in any event, we suggest your client to visit Germany to start and finalize the procedure. We can schedule meetings with the notary, bank and bookkeeper, all in 1 day.

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Filing requirements and (tax) compliance

The German tax law is based on the Basic Law (Grundgesetz), every German tax is regulated by a statute and there are presently 30 statutes in being. The German tax system levies direct taxes on income and on net worth.


Types of taxes are: Corporation Tax, Personal Income Tax,

Municipal trade tax on income, withholding taxes on dividends,

rental, royalties, fees, interest, church tax and VAT.


Current Tax rates are:

  • Corporation Tax 15% (federal, see regional corporation tax below)

  • Municipal Trade Tax 14% (average)

  • Withholding Tax 25% on dividends

  • Up to 25% on interest

  • VAT 19%


Description


Minimum Capital Deposit   

 

Netherlands BV: No required  

Germany Gmbh: minimum 50% of 25.000 EUR


(Local) Bank Account requirement


Netherlands BV: No, bank account can be opened AFTER formation, and OUTSIDE Netherlands  

Germany Gmbh:Yes, the bank account must be opened BEFORE company formation, and INSIDE Germany


Registered Office requirement


Netherlands BV: Yes, typically 100 EUR pm

Germany Gmbh: Yes, typically 120-150 EUR pm


Formation Fees


Netherlands BV: € 750, including notary fees (based on standard Formation Deed)

Germany Gmbh: € 1.200 including notary fees (based on standard Formation Deed) (< 3 shareholders/directors (non-corporate entities))


(Entrepreneurial) Diploma Required for Formation?


Netherlands BV: No

Germany Gmbh:No


Translation Required (of Formation Documents)


Netherlands BV: No, but preferred

Germany Gmbh: Yes, unless the person speaks German. The notary might check if the shareholder understands the Formation Deed fully in its own language.


Time Frame Formation


Netherlands BV: 2 weeks on average

Germany Gmbh: 2-3 weeks


Remote Formation Possible


Netherlands BV: Possible (video call)

Germany Gmbh: Not possible, due to banking requirement.


Corporate Taxes


Netherlands BV: 15% upto 200.000, 21,4% above 200.000 (2021)

Germany Gmbh: Approx 30-35% depending on the 'State' in region


Withholding Taxes


Netherlands BV: 0% on royalties, 15% on dividends, 0% on interest. Over 100 treaties applicable.

Germany Gmbh: Withholding tax of 25%, plus 5.5% solidarity surcharge (giving an effective rate of 26.38%), is applied to dividend and interest payments.

15% plus solidarity surcharge on Royalties.


Chamber of Commerce Contribution


Netherlands BV: 50 EUR per year

Germany Gmbh: 150-200 EUR per year


Requirement to understand the local language


Netherlands BV: No, everybody in Netherlands speaks English well, and the authorities/banks/notaries are very cooperative

Germany Gmbh: Preferred, with the English language in Germany, its difficult to get the assistance of most authorities/banks/notaries


Non Resident Director Allowed


Netherlands BV: Yes

Germany Gmbh: Yes, however a work permit can be required before the formation of the company


Non Resident Shareholder Allowed


Netherlands BV: Yes

Germany Gmbh: Yes


Accounting Requirements


Netherlands BV: Bookkeeping Requirement, Filing of Annual Report, No Audit Requirement up to turnover of 8.8 million (or similar conditions)

Germany Gmbh: Bookkeeping Requirement, Filing of Annual Report, No Audit Requirement up to turnover of 4.8 million (or similar conditions)


Accounting/Bookkeeping Fees


Netherlands BV: In average 100 EUR per month

Germany Gmbh: In average 200 EUR per month

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10 Chapters on Company Formation in the Netherlands

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