The Federal Republic of Germany lies in the centre of Europe and borders the Netherlands, Belgium, Luxembourg, France, Austria, Switzerland, Denmark, Poland and the Czech and Slovak Republics. It covers an area of 357,000 square kilometres. The capital is Berlin. Other major cities are Hamburg, Munich, Frankfurt, Stuttgart and Cologne.


Germany's population is approximately 82.5 million. About 80% of the population live in cities and Berlin has approx. 3.5 million inhabitants.

Political Structure

The Republic of Germany is officially headed by the President. The Federal Parliament consists of two Chambers, the Lower Chamber (Bundestag), which is directly elected by the German electorate on the basis of proportional representation and the Upper Chamber (Bundesrat) consisting of delegates from the individual states. The Chancellor is elected by the Bundestag. The Federal Republic is divided into 16 states (Bundesländer), each with its own parliament and government, acting fairly independently, managing their own local affairs including education. The legal system is based on written law promulgated in Acts of Parliament. The ultimate legal source is the "Basic Law" (Grundgesetz) or Constitution.

Infrastructure and Economy

Germany is a member in the EU and has close connections to other institutions such as EFTA and OECD.

Germany is one of the major industrial nations and manufacturing still accounts for almost half of the GNP.

The main industries are chemicals, automobile, data processing and electrical engineering.

GDP growth is expected to increase to 2.8% in 2007. Germany has had a fairly high unemployment, presently around 9 - 10%; the per Capita GDP is €26.388.


German is the official language.



Type of Law

Civil Law

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Principal Corporate Governance

German Code of Corporate Governance issued by the Federal Ministry of Justice.

Public Commercial Registers (Handelsregister) are decentralized in Germany, with the information on corporations available in the local register in the region where the company has its legal seat.

Type of company for international Trade and Investment
  • Gesellschaft mit beschränkter Haftung (GmbH or Limited Company)
  • Aktiengesellschaft (AG or Joint Stock Company)
  • Limited Partnership (KG)
  • Limited Partnership with a Limited Liability Company as a General Partner (GMBH & CO KG)
  • General Partnership (OHG)
  • Civil Law Partnership (GBR)
Procedure to Incorporate

Once a name has been cleared the formation document has to be drawn up, recorded by a German Notary and be signed by all founder members. The company must be registered in the Commercial Register at the county court. The registration document for an AG must include confirmation from the Directors that the minimum share capital has been paid up and an opening balance sheet. In addition, proof has to be made to the Registry that in case of an AG, the Board of Directors can dispose of the capital without restrictions; respectively the Geschäftsführer (Manager) for a GmbH and that the capital has in fact been paid up.

Restrictions on Trading

Certain restrictions apply to areas such as those that affect public safety, public transport, banking and insurance.

Powers of Company

A company has all the powers of an individual.

Language of Legislation and Corporate Documents


Registered Agent Required


Shelf Companies Available

In principle, yes, but rarely used.

Time to Incorporate

Approximately one month, however also depends on the local courts.

Name Restrictions

A company name should not already be in existence otherwise any name is possible, must no longer indicate the business activity. Competition law may have to be considered. Nothing should be added to the name, which may deceive the public as to the size of the business. The suffix must be added to the name.

Language of Name


Names Requiring Consent or a Licence

Names like banking, insurance and re-insurance, financial services.

Suffixes to Denote Limited Liability

GmbH for Limited Company

AG for Joint-Stock Company

Disclosure of Beneficial Owners to Authorities

Generally there is no requirement to disclose the ultimate beneficial owner.

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Authorised and Issued Share Capital

GmbH: €25,000 with a minimum of 25% paid up. Capital may be paid up in cash or in kind.

AG: €50,000 divided into ordinary shares of equal nominal value of at least €1 fully paid up.

Classes of Shares Permitted

Registered shares and preference share with or without voting rights.


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, and church tax and VAT.

Current Tax rates are:
Corporation Tax 15%
Solidarity Surcharge 5.5%
Municipal Trade Tax 7% - 17.5%
Withholding Tax 25% on dividends
Up to 25% on interest
Sales Tax/VAT 19%
Capital Gains Tax

There is no special capital gains tax.

Double Taxation Agreements

Germany has an extensive treaty network with all Western European nations, most Eastern European countries and many others worldwide such as Australia, Brazil, China, India, Japan, and the US. Most treaties follow the OECD model.

Licence Fee


Financial Statements Required

All companies, including branches must submit an annual return with balance sheet and profit and loss account, including returns for the Federal Corporate Tax, the Municipal Trade tax, net worth tax.

Whilst small companies can file abbreviated accounts within six months of their year-end, medium and large corporations must prepare their financial statements and an annual business report within three months of their year-end.

Accounts must be in the German language and in Euro currency. All companies apart from small sized companies (including small AG's) must be audited.


GmbH must have a minimum of one manager who can be owner at the same time.

AG's can have only one Director, but needs a minimum of two if the capital exceeds DM 3 million. The Director (Vorstandsvorsitzender) can also be owner at the same time.

AG's must also have a Supervisory Board and has a minimum of three members. Depending on the size of a corporation the Supervisory Board may have to have labour representation.

Company Secretary



GmbH: one member.

AG: one founder member.


German law does not recognize the concept of Common Law Trust.

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