Setting Up Business Operations in Germany: Company … › fileadmin › AHK_Italien › ... · 2017-04-13 · Setting Up Business Operations in Germany: Company Establishment,

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Setting Up Business Operations in Germany: Company Establishment,

Corporate Taxation and Incentives

Udo Sellhast, Senior Manager Tax & Legal Services,

Germany Trade & Invest

www.gtai.com

I. About Germany Trade & Invest

II. Business Establishment in Germany

III. Initial Information on Corporate Taxation

IV. Incentives Overview

September 30, 2014 2 Setting Up Business Operations in Germany

www.gtai.com

Company Tasks

The foreign trade and inward investment promotion agency of the Federal

Republic of Germany



Investment Attraction Location Promotion Export Promotion

German Parliament Resolutions for Founding/Financing

Federal Government

Federal Ministry for Economic Affairs and Energy - Shareholder

www.gtai.com

Two Headquarters in Germany - 50 Locations Worldwide


September 30, 2014

Chicago New York San Francisco Toronto Washington D.C.

Buenos Aires Bogotá Mexico City Santiago de Chile Sao Paulo

Athens Brussels Helsinki London Madrid Milan Paris Stockholm The Hague

Dubai Istanbul Riyadh

Accra Cairo Johannesburg Nairobi Tunis

Almaty Belgrade Budapest Bucharest Kiev Moscow Prague Warsaw Zagreb

Bangkok Beijing Hanoi Hong Kong Jakarta Kuala Lumpur Mumbai New Delhi Seoul Shanghai Taipeh

Tokyo

Sydney

Jerusalem

Berlin Bonn

Setting Up Business Operations in Germany 4

www.gtai.com

Macroeconomic analyses and forecasts

Country and industry analyses (over 125

countries)

International projects and tenders

Foreign economic and tax law

Customs information and tariffs

Practical business tips

Business contacts

Coordination of federal foreign trade

activities

Areas of Activity


For Companies Abroad

(Foreign Investors)

Setting Up Business Operations in Germany

For Companies in Germany

(Exporters/Investors)

Identification of attractive markets and

companies

Economic framework in Germany

Site specific information

Industry specific information

Direct contact with potential investors

abroad

Investor consultancy services

Project management support

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September 30, 2014 5

www.gtai.com

Germany Trade & Invest serves as a one-stop consultant to the investing

company with German expertise, supported by the Federal States.

September 30, 2014 6

Investment consultancy services:

Discussion on the market / industry and competition in Germany and Europe

Information on tax and legal issues in Germany

Information on the financing of the project (including incentives)

Joint project management with regional economic development agencies

Discussion of location proposals / site evaluation incl. site visits

Assistance in applying for incentives

Information on different registration or licensing requirements

Investor



Economic Development Agencies of the Federal States

www.gtai.com






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For Italian companies there are different ways to establish a German market

presence.


Italian Company

Subsidiary Indirect Forms Branch Office

Establishment of a new legal entity.

Different legal forms

are available (e.g. GmbH or UG).

German Market Presence

Fully part of the Italian company.

Registration of a

German physical business presence.

No independent business activity.

Activities typically

via a commercial agent.

8 September 30, 2014 Setting Up Business Operations in Germany

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9

GmbH:

Is suitable for almost every business object (except for e.g. listing on the stock exchange).

Combines high flexibility with relatively few obligations.

Well-known company form with good reputation not only within Germany. Requires a minimum share capital of EUR 25,000 (cash or kind). The liability of the shareholders is limited to their respective contribution.

The German private limited liability company (GmbH) is the most widely used legal form for corporations in Germany.

September 30, 2014 Setting Up Business Operations in Germany

www.gtai.com


The managing director(s) (Geschäftsführer) represent(s) and manage(s) the GmbH.

The shareholders’ general meeting (Gesellschafterversammlung) is sovereign and

can issue directions binding the management.

There are no requirements regarding nationality or domicile of the managing

director or the shareholders.

German business address as well as a local representative are required.

10

The GmbH has two mandatory bodies1: the managing director(s) and the shareholders’ general meeting.

GmbH

Managing Director(s) Shareholders’ meeting Binding Instructions


1 A supervisory board can be appointed in addition, but is only mandatory if it is prescribed by law (e.g. in a GmbH with more than 500 employees).

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11

Drafting of articles of

association (AoA)

Notarization by a German

Notary

Opening a bank

account & payment of

share capital

Entry in commercial

register

Trade office notification;

further licenses or

registrations (e.g. in crafts

sector)

The establishment procedure of a GmbH is straightforward with well-defined

steps.

The timeframe for a GmbH establishment is ideally 1-2 weeks. The statutory regulated establishment costs for a standard GmbH are around EUR 800.


www.gtai.com


UG (haftungsbeschränkt):

The UG is largely subject to the same provisions as the GmbH (establishment

procedure, mandatory bodies, limited liability etc.).

Main differences include:

For the establishment of an UG a minimum share capital of only EUR 1 is sufficient.

The UG has to retain a quarter of its annual profit until it has accumulated the minimum share capital of an ordinary GmbH (EUR 25.000).

The accumulated EUR 25.000 can be converted into share capital and the UG can change its corporate affix from “UG” to “GmbH”. From now on profit can be fully distributed, if desired.

The UG – Unternehmergesellschaft (haftungsbeschränkt) – also known as Mini-GmbH is a special form and a starter version of the GmbH.


www.gtai.com

For Italian companies there are different ways to establish a German market

presence.


Italian Company

Subsidiary Indirect Forms Branch Office

Establishment of a new legal entity.

Different legal forms

are available (e.g. GmbH or UG).

German Market Presence

Fully part of the Italian company.

Registration of a

German physical business presence.

No independent business activity.

Activities typically

via a commercial agent.


www.gtai.com


Branch office (autonomous):

Dependant upon head office at internal level, but engaging in business activities

independently, e.g.: own management with power of attorney separate bank account accounting (on its own or via head office company) independent business assets (allocated by head office company).

No minimum share capital. No separate legal personality.

The foreign head office company is fully liable for the debts of the branch office.

A branch office can be another way of establishing a business presence in Germany for Italian companies.


www.gtai.com


The steps for the registration of an autonomous branch office are similar to the establishment of a GmbH.

Decision to set up a branch office

Entry in commercial

register

Trade office notification;

further licenses or registrations (e.g. in crafts sector)


The timeframe for a branch office establishment is ideally 1-2 weeks. The statutory regulated establishment costs for an autonomous branch office are

around EUR 300.

www.gtai.com






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Germany does not have a consistent nationwide tax rate for the corporate

income taxation – it depends on the locally varying trade tax.

1National German average. Lower overall tax rates in certain areas are possible, e.g. only 22.83% in certain municipalities. 2Top corporate income taxation rate incl. local taxes; lower starting rates or other special tax rates available. 3Based on standard rate of IRAP (3.9% of value creation; reduction to 3.5% in April 2014 not yet included).

Source: Federal Ministry of Finance (BMF)

III. Corporate Taxation

Average Corporate Tax Burden (2013, in %)

17 Setting Up Business Operations in Germany September 30, 2014

www.gtai.com

Income taxation of corporations consists of three taxation components.

1. Corporate Income Tax

(Körperschaftsteuer)

2. Solidarity Surcharge

(Solidaritätszuschlag)

15 % of the taxable income

0.825 % all over Germany

(5.5% of the corporate income tax rate of 15%)

15.825 %

18

3. Trade Tax

(Gewerbesteuer)

Trade tax rates are individually determined by each municipality.

Trade tax rates range starts with 7.0 % and the average trade tax rate is around 14 % of the taxable income

Starts at 7 %

III. Corporate Taxation


www.gtai.com






www.gtai.com

Germany offers various public funding instruments for different business

activities.



Incentives in Germany

Mezzanine Capital

Grants Loans Equity Capital Guarantees

Public funding instruments:

Personnel Investments Working Capital

Specific Purposes

Research & Development

Required funding for:

Financing available by any of the following public funding instruments (combinations of instruments usually possible)

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The main funding instrument that significantly lowers investment costs is the

Investment Grant program.

September 30, 2014



Investment Grant

Objective Job creation by setting up new manufacturing or service facilities

Offered in Specific regions throughout Germany

Offered as Non-repayable grant, covering up to 40%1 of eligible costs

Eligible costs Purchase or production costs of new buildings, machinery, and equipment and

purchase costs of new intangible assets or salary costs for 2 years

Requirements Creation of long-term “quality” jobs

Subsidized equipment and positions must remain on-site for at least 5 years

Mezzanine Capital



Personnel Investments Working Capital Specific Purposes



Note: 1 depending on investment location, company size, investment volume, and respective federal state Investment Grant regulation

www.gtai.com

To reduce cap-ex, Germany offers Investment Grants of up to

40 percent, depending on the region, the company size, the investment

volume, and on respective state regulation.

Notes: 1 Includes a bonus of 20%; 2 Includes a bonus of 10%; 3 Until 31 December 2017; aid intensity 2018-2020 as in „Non-predefined C Regions“; 4 “De-minimis-rule“


September 30, 2014

The bonus of 20% for a small enterprise and of 10% for a medium-sized enterprise is not granted to large investment projects with eligible investment costs > EUR 50 million. An additional aid intensity reduction would apply in these cases.

Timeframe

01.07.2014-31.12.2020

Small Enterprises1

(< 50 employees and ≤EUR10 mio annual

turnover or ≤ EUR 10 mio annual balance sheet total)

Medium-sized Enterprises2

(< 250 employess and ≤EUR 50 mio

annual turnover or ≤ EUR 43 mio annual balance sheet total)

Large enterprises

Predefined

C Region 35%3 25%3 15%3

Border area

to Poland 40% 30% 20%

Non-

predefined

C Region

30% 20% 10%

D Region 20% 10% max.

EUR 200,0004

C/D Region 30% / 20% 20% / 10% 10% / max.

EUR 200,0004

22 Setting Up Business Operations in Germany

www.gtai.com

Mezzanine Capital






September 30, 2014

Depending on the scope of the planned R&D project grants are available at the

European, national and/or regional level.

European Level:

National Level:

Regional Level:

Horizon 2020 - The EU Framework Program for Research and Innovation:

Projects require transnational cooperation

EU periodically calls for project proposals mainly targeted for specified research topics

High-Tech Strategy: calls for proposals focusing on 6 “future priorities” (one of them: Sustainable Economy and Energy)

Technology-open programs also available, Central Innovation Program for SME (ZIM)

Programs available in all German states

Programs usually technology-open



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When hiring from the pool of the unemployed, different grant programs are

available, independent of industry and location.



Mezzanine Capital






Recruitment support Training support Wage subsidies

Objective Finding new personnel Training potential

candidates Hiring unemployed

candidates

Offered in Throughout Germany, independent of industry and location

Offered as Non-repayable grant,

covering up to 100% of eligible costs

Non-repayable grant, covering up to 100% of eligible costs for max. 3 months

Non-repayable grant, covering normally up to 50% of eligible costs for max. 12 months

Eligible costs Depending on program of

local employment agency

Labor costs of trainees

Costs for training courses

Wage costs, including employer´s contribution to social security system

Requirements Depending on program of

local employment agency Only unemployed

candidates covered

Only unemployed candidates covered

Long-term labor contract

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Public loan programs from different sources are available for all funding

purposes.


September 30, 2014

Regional level (State Development Banks)

Usually max. amount EUR 10 million (depending on program)

For financing of investment costs and working capital

Special programs available for R&D, energy efficiency and other specific purposes

National level (KfW Bankengruppe)

Usually max. amount EUR 25 million (depending on program)

For financing of investment costs and working capital

Special programs available for R&D, energy efficiency and other specific purposes

European level (European Investment Bank)

Loans to individual projects with total investment costs exceeding EUR 25 million

Loans to local banks and other intermediaries which subsequently lend to the final beneficiaries


Mezzanine Capital






Public loans offer reduced and fixed interest-rates, long terms, and repayment-free years.

www.gtai.com

Contact

© 2014 Germany Trade & Invest GmbH All information provided by Germany Trade & Invest has been put together with the utmost care. However , we assume no liability for the accuracy of the information provided.

Tax & Legal Services Mr. Udo Sellhast Senior Manager

T. +49 30 200 099-509 F. +49 30 200 099 77-509

[email protected]

26 September 30, 2014

Supported by the Federal Ministry for Economic Affairs and Energy on the basis of a decision by the German Bundestag.


Documents

Setting Up Business Operations in Germany: Company … › fileadmin › AHK_Italien › ... · 2017-04-13 · Setting Up Business Operations in Germany: Company Establishment,