Expand Business in Germany

Global Upside helps businesses expand into Germany by providing talent acquisition, human resources, accounting, payroll, tax, incorporation, and professional employer organization (PEO)/employer of record (EOR) services. Our comprehensive offerings create an end-to-end solution that helps you establish your business and optimize your operations, all while maintaining compliance with German laws and regulations.

The hiring and incorporation processes in Germany are often complex, time-consuming, and involve numerous legal and compliance challenges. Global Upside simplifies these processes and lifts the compliance burden from your business. Our teams have the experience and expertise required to help you establish a legal entity in Germany. We also offer PEO/EOR solutions to companies interested in hiring employees quickly, without setting up a legal entity in the country.

Capital City

Berlin

Currency

Euro

Language

German

Government

Republic

Country Overview

Germany is a nation situated in central-western Europe with a population of around 83 million. Frankfurt is the financial capital of Germany along with having the nation’s busiest airport. Germany has emerged as one of the leading nations for importers and exporters.

The German economy is mixed. The country permits a free market economy in business and consumer goods sectors. The government provides healthcare education and insurance, for which the residents pay the system (depending on their income) to receive the benefits.

  • Germany is the largest economy in Europe.
  • Germany is one of the world’s largest exporter of automobiles.
  • Germany also exports parts of motor vehicles, planes, and machinery.
  • One of the major imports is cars followed by petroleum oils and gases, and medicaments.

Legal Entity Setup

Options for setting up a legal entity in Germany include:

Partnership

GmbH & Co. KG, oHG (Offene Handelsgesellschaft), GbR (Gesellschaft bürgerlichen Rechts), KG (Kommanditgesellschaft)

  • No minimum share capital required
  • One partner is personally liable (unrestricted)

Corporation

GmbH (Gesellschaft mit beschränkter Haftung) – Limited Liability Company

  • Number of partner(s) – 1 or more
  • Minimum share capital is €25,000
  • Liability is restricted to only the share capital
  • One of the most recognized forms of setup
  • Individual establishment is also possible due to minimal compulsory provisions

UG (Unternehmergesellschaft haftungsbeschränkt) – Limited Liability Entrepreneurial Establishment

  • Number of partner(s) – 1 or more
  • Minimum share capital is €1
  • Liability is restricted to only the share capital
  • Strict prerequisites to collect annual revenue

AG (Aktiengesellschaft) – Stock Corporation

  • Number of partner(s) – 1 or more
  • Minimum share capital is €50,000
  • More number of shareholders involved
  • Stocks are convertible and can be traded

KGaA (Kommanditgesellschaft auf Aktien) – Partnership Limited by Stake

  • Number of partners – 2 or more – one as a general partner and one as a limited partner
  • Minimum share capital is €50,000
  • General partner is accountable without limitation
  • Limited partner is liable which is limited to only his share

It takes at least three to four weeks to establish a legal entity in Germany.

Human Resources

The major sources of employment law for Germany are collective bargaining agreements, federal laws, and case laws with work council agreements. The employment laws are only applicable to employees or dependent staff. Self-employed or freelancers are excluded. The hiring documents and employment agreements are to be handed over to the employees by the employers within a month of the former joining the organization. The law states it is mandatory to mention:

  • Name and address of both the employer and the employee
  • Joining date
  • Period of service and agreed period
  • Job title and description
  • Location
  • Remuneration
  • Working time
  • Holiday and leave entitlements
  • Relevant notice period

There are usually 9-12 statutory national holidays in Germany (depending on the state), and they are:

  • Jan 1: New Year’s Day
  • Good Friday
  • Easter Monday
  • May 1: Labor Day
  • Ascension
  • Whit Monday
  • Oct. 3: German Unity Day
  • Dec. 25: Christmas
  • Dec. 26: St. Stephen’s Day

Payroll

Generally, employee wages are paid once a month and the amounts are transferred to employee bank accounts. However, in certain cases, employers can pay employees in cash. The employer is required to give the employee a written payslip upon payment. The remuneration must be calculated and paid in euros.

Accounting

The German GAAP or Generally Accepted Accounting Principles within Germany are standard accounting criteria that generate common financial reports for all companies in Germany.

Tax & Compliance

Tax Rate

The corporate tax rate in Germany is 15%.

Value Added Tax (VAT)

The standard VAT rate is 19%. However, from 1 July 2020 to 31 December 2020, the German government has announced a reduction of the VAT rate – from 19 percent to 16 percent and a reduced VAT rate from 7 percent to 5 percent on certain goods and services.

Data Privacy

The Federal Data Protection Act (Bundesdatenschutzgesetz (BDSG)) controls the assortment and use of personal data.

Anti-Bribery & Anti-Corruption Law

Germany has an extremely strong legal and institutional anti-corruption agenda. Giving or taking bribes, or the facilitation of any illegal form of payment for or by public officials, is a criminal offense and subject to penalty. Under the German Administrative Offences Act, also known as Ordnungswidrigkeitengesetz:

  • Representatives of companies will be held legally responsible for corrupt practices with a monetary fine of €10 million imposed on the company and the officials guilty of bribery
  • All economic revenue acquired via bribery will be seized from the indicted
  • Officials and other people who are found guilty of bribery will face imprisonment of up to 10 years