| Date: 11.05.2021
Tax registration is the most basic option if you plan to register your foreign company in Germany. This type can be used to sell products online in Germany and is required so that you can:
To register a foreign company in Germany with a VAT registration, you will need to complete a tax form and submit it to the Finanzamt (finance office). The Finanzamt will then issue your tax number. Some of the questions on the tax form you will need to answer are:
As a result of choosing this basic option and applying for a VAT number in Germany, companies are also able to carry out transactions that are taxable in Germany, to export products and to import products.
A dependent branch office is another way to establish a foreign company in Germany. In this case, the company might have many business locations that depend on a head office. The dependent branch office that is set up in Germany is linked or joined to the parent company and can only carry out the activities that the head office does. It doesn’t have autonomy and invoices are also issued in the name of the head office.
Setting up a dependent branch is a favourable alternative for many reasons. It lets you:
But there are some disadvantages to setting up a dependent branch to register your company in Germany, which include that:
An independent branch is legally linked or joined to the company’s main branch. This means it follows the laws that apply to the main branch. If it is set up by a foreign company, the branch is therefore overseen by the laws of the foreign country and the company statute.
However, even though it relies on the main branch to function, it acts independently in its business transactions. This means, in terms of the independent branch’s legal relations with its customers, it will be overseen by German laws. The independent branch also follows German law in terms of how the branch is legally treated in Germany.
There are many advantages of setting up an independent branch in Germany. Two of the main benefits are that:
There are also some disadvantages of setting up an independent branch in Germany to be aware of. Two of these include that:
If you choose to set up a subsidiary in Germany, you are choosing to create a company that is legally independent of the parent company. The subsidiary company that you choose to set up might be a GmbH or a UG company. Subsidiaries in Germany have no special or particular legal restrictions that prevent you from creating them – so you will not face any complications there. Foreign founders who create subsidiaries in Germany should know that German laws apply to the creation of the subsidiary, and the registration of the business, as well as the process of entering it into the commercial register. Foreign founders will also not encounter any problems when importing capital into Germany when forming the subsidiary.
You will require some documents to set up a subsidiary, which you can find out more about in our article ‘How to register a company in Germany’.
There are several benefits of setting up a subsidiary in Germany. Some of the benefits include:
There are a couple of disadvantages to choosing to establish a subsidiary in Germany. It might take more time, and the setup costs might be higher. It’s also the case that you will need your own capitalisation to set it up.
Even though there are many options to take when setting up a company in Germany, a subsidiary company is beneficial for many reasons. It might take longer to set one up, but we recommend a subsidiary company for two key reasons. It is ideal for establishing a completely German company, and you will not have the problem of needing international tax law knowledge. In the long term, there are no considerable differences in the maintaining costs of a subsidiary and independent branch. Explore your options at GmbH-UG.com to find out more about setting up a subsidiary company in Germany.