Germany

Germany (judicially the Federal Republic of Germany) is a nation situated in central-western Europe. With a population of around 83 million, it is one of the most crowded nations in Europe. Frankfurt is the financial capital of Germany along with having the nation’s busiest airport. Germany has emerged to become one of the leading nations of importers and exporters.

At Global Upside, we can help you hire employees, set up legal entities, and grow your operations in Germany. We manage services such as talent acquisition, human resources, accounting, payroll, and legal compliance globally. Our team provides end-to-end services to keep your business operations running smoothly.

The hiring process in Germany can be a complicated, time-consuming, and expensive process. Our teams have the experience and expertise to help you navigate legal entity incorporation. We also offer PEO hiring solutions for companies interested in hiring employees in Germany quickly, without creating a legal entity in the country.

Capital City

Berlin

Currency

Euro

Language

German

Government

Republic

Country Overview

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. Data states that Germany:

  • Ranks as the 4th largest economy in the world by nominal GDP
  • Has the largest national economy in the whole of Europe
  • Has a highly skilled workforce, hence labor productivity levels are extremely high
  • Has a huge portion of share capital
  • Has low levels of corruption
  • Higher levels of creativity and innovation
  • Lowest rate of unemployment in Europe

Legal Entity Setup

The available legal forms of setting up establishments are:

Partnership

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

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

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 form 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.

On an average, it takes at least three to four weeks for the registration process to be

Human Resources

The major sources of employment laws for Germany are collective bargaining agreements, federal laws, and case law with work council agreements. The employment laws are only applicable for employees or dependent staff. Self-employed or freelancers are excluded. The documents 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:

  • Joining date
  • Period of service and agreed period
  • Job title and description
  • Location
  • Remuneration
  • Working time
  • Holiday and leave entitlements
  • Relevant notice period

Payroll

Generally, employee wages are paid once a month and the amounts are transferred to the bank accounts. However, employers can pay in cash as well as per employee requirements.

Accounting

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

Tax & Compliance

Corporate Tax

The income tax rate in Germany ranges from 14% to 42% depending on income.

Value Added Tax (VAT)

The standard VAT rate is 19%. There is also a reduced rate of 7% on goods and services.

Data Privacy & GDPR

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

Anti-Bribery & Anti-Corruption Law

The law of 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 offence 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