Doing business in. Germany

Transcription

1 European Regional Meeting - Lucerne / Switzerland Doing business in Germany Denis Schultheis UP12 Rechtsanwälte

2 Doing business in Germany Index Specific Regulations Laws Business Structures: Types of Companies Incorporation Procedure & Formalities Commercial Register Principle Tax System Cross Border Transactions - Considerations

3 Specific Regulations Types of investment: Share or Asset Purchase Joint Ventures Incorporations In Principle: No! Even Encouragement: Incentive Programs Investment Incentives Packages Operational Incentives Packages Exemptions (National Interest) Specific areas of business (sensitive industry sectors) Defence/Military Industries Encryption Industries Satellite Industries Catch-all-Rules (e.g. 25% participation)

4 Specific Regulations (2) If Sensitive Industries (-): No general distinction between foreign and domestic investments If at all: Differentiation between Nationals EU based (+EFTA: Iceland, Liechtenstein, Norway, Switzerland) Rest Foreigners But some general rules concerning certain sectors Broadcasting Telecommunication Banking Insurance Postal Those sectors are generally regulated Any investments may be subject to review

5 Laws Foreign Relation Foreign Trade and Payments Act ( AWG ) Foreign Trade and Payments Regulations ( AWV ) General Restriction of Competition Act ( GWB ) Commercial Code ( HGB ) Unfair Competition ( UWG ) Specific Sectors State Broadcasting Treaty ( RStV ) Telecommunications Act ( TKG ) Postal Service Act ( PostG ) Satellite Data Security Act ( SatDSiG ) Aviation Compliance Documentation Act LuftNaSiG ) Banking Act ( KWG ) Act of the Supervision of Insurance Undertakings ( VAG )

6 Business Structures: Types of Companies (1) Decisive criteria for choice of legal form: intended function of shareholders, liability, terms of taxation Corporations Limited Liability Company ( GmbH ) LL Entrepreneurial C ( UG Mini GmbH) Stock Corporation ( AG ) Partnership Limited by Shares ( KGaA ) Partnerships Civil Law Partnership ( GbR ) General Commercial Partnership ( OHG ) Limited Partnership ( KG ) GmbH & Co. KG Branch Office Autonomous Dependant

7 Business Structures: Types of Companies (2) Corporation Holder of rights and obligations is not individual shareholder, but the company itself. Corporation itself concludes contracts, holds assets and is liable for taxation. Liability is limited to the corporations business assets, including share capital. Minimum share capital is required, and accounting obligations are more extensive than other business legal forms. Legal/Establishment Minimum Number of Form Partners Minimum Share Capital Legal Liability Establishing Formalities Limited Liability Liability limited to share One partner EUR 25,000 Company (GmbH) capital Moderate Limited Liability Liability limited to share Entrepreneurial Company One partner EUR 1.00 capital ("Mini GmbH") Low-moderate Stock Corporation (AG) One partner EUR 50,000 Liability limited to share capital Moderate-high General partner: personal Two partners: general Partnership Limited by unlimited liability Limited partner and limited EUR 50,000 Share (KGaA) shareholder: limited share shareholder liability Moderate-high

8 Business Structures: Types of Companies (3) Partnership Personal commitment of the partners to their working efforts to the partnership. At least two partners. Difference: Liability of partners and required registration obligation. Legal/Establishment Form Civil Law Partnership (GbR) General Commercial Partnership (ohg) Limited Partnership (KG) GmbH & Co. KG Minimum Number of Partners Minimum Share Capital Not independent legal entities but association of people. Individual partners are responsible for the liabilities of the company (incl. private assets). No minimum share capital and less accounting and publication requirements. Legal Liability Establishing Formalities Two partners Not required Personal unlimited liability Very low Two partners Not required Personal unlimited liability Low-moderate Two partners: general partner and limited partner Two partners: general partner (GmbH) and limited partner (the general partner is typically the limited partner of the KG) Not required Not required General partner: personal unlimited liability Limited partner: limited share liability General partner (GmbH): personal unlimited liability Limited partner: limited share liability Low-moderate Moderate-high

9 Incorporation Procedure & Formalities Principle Articles of Incorporation Registration at Commercial Register (Handelsregister HR ) via Notary No differentiation between foreign and local entrepreneurs

10 Commercial Register Company of the business Name of partner(s) and/or personally liable partner(s) Managing Director of executive of corporation Capital stock Liability limitations of partners Issuing and revoking of the p.o.a. Opening of insolvency proceedings Dissolving and ending of company

11 Principle Tax System - General Taxation of Income Taxation of Usage/Consumption Taxation of Substance (Property)

12 Principle Tax System - Companies Average tax burden on companies is less than 30 % (in some regions < 23 %) System: two levels 1. Corporations (GmbH, AG) Partnerships (GbR, ogh, KG) Corporate Income tax ( Körperschaftssteuer ) 15 % + solidarity surcharge (0.825 %) % 2. All business operations: Trade Tax ( Gewerbesteuer ) by local municipalities Difference up to 10 % Personal Income tax ( EinkSt ) 14 % - 42 % - 45 % ( 8652) ( 53,666) started 254,44 + solidarity surcharge (5.5 %) of the individual tax rate Flat % + solidarity surcharge (29.8 %) Companies must add VAT to their prices - paid by end user/consumer 19 % normal (7 % food, newspapers, local public transport, hotel = everyday goods/services) free (bank, health services, community work)

13 Cross Border Transactions - Considerations Stumbling blocks: (M&A transactions) - Sensitive business - 613a BGB/Employment Law - Share or asset deal (Due Diligence) - GWB (Cartel) permits - Trade permit - Tax

14 European Regional Meeting - Lucerne / Switzerland Thank you for your interest. Get more information in our Online Handbook about International Corporate Structures Chapter News & Dialogue