Expert Guidance for Your Business Establishment and Management in Germany
Welcome to our dedicated service for international entrepreneurs and business owners! When establishing and managing a corporation or limited liability company in Germany, known as a „Gesellschaft mit beschränkter Haftung“ (GmbH), navigating through the legal and fiscal landscape can be challenging. Our firm specializes in offering tailored tax and accounting services for your business needs in Germany, ensuring compliance and efficiency from inception to daily operations and potential dissolution.
Braucht ihr dringend eine steuerliche Einschätzung oder Beratung? Wir wissen, wie schwierig es momentan ist, einen freien Steuerberater zu finden. Aber keine Sorge – wir
Germany continues to be a highly attractive destination for foreign companies seeking to expand their presence in Europe. The establishment of a GmbH offers numerous
Embarking on the journey of establishing a GmbH in Germany can be both exciting and daunting for foreign companies. Understanding the intricacies of German corporate
GmbH formation begins with deciding on the business structure and drafting the articles of association. Key aspects include determining the share capital (minimum of €25,000), appointing directors, and registering with the commercial register. We assist you in selecting the appropriate structure and navigating the necessary administrative steps.
The establishment of a GmbH can be undertaken by one or more individuals. This requires the conclusion of articles of association, which must be notarized. The minimum share capital for a GmbH is €25,000, of which at least €12,500 must be paid upon registration. It is also possible to contribute non-monetary assets, such as existing business assets, as share capital. Since 2008, there has been the option to establish a limited liability entrepreneurial company (UG) under § 5a GmbHG. Known as the „Mini-GmbH,“ it is particularly suitable for entrepreneurs with limited capital, as it can theoretically be founded with as little as €1 of share capital. With the UG, the entire share capital must be fully paid up, and non-monetary contributions are excluded during formation. The GmbH attains legal capacity only upon registration in the commercial register. In straightforward cases, formation can be conducted through a simplified procedure using a standard protocol, with the GmbH limited to a maximum of three shareholders and one managing director (pursuant to § 2 para. 1a GmbHG).
The transfer of a sole proprietorship into a GmbH, according to the tax provisions of § 20 UmwStG, refers to the factual transfer of the entire business assets of the existing sole proprietorship to the corporation. This transfer occurs either within the framework of establishing the GmbH or integrating it into an existing GmbH.
The tax implications related to the incorporation of a sole proprietorship into a GmbH are stipulated in §§ 20 to 23 UmwStG. Essentially, the contributed business assets are valued at the so-called fair market value, which represents the sale price of the business for entrepreneurs and simultaneously the acquisition cost of the company shares in the GmbH. Valuing at fair market values necessitates the disclosure of all hidden reserves, resulting in a capital gain subject to personal income tax. Entrepreneurs do not receive a cash sale proceeds, leading to what is termed as „Dry-Income.“ Outside of tax law, incorporation occurs as a non-cash contribution according to general civil law provisions. A case of partial universal succession arises only if the incorporation of the sole proprietorship is carried out through the spin-off of a registered merchant (sole proprietorship) into the GmbH. In other cases of incorporating a sole proprietorship into a GmbH, there is no universal succession. Entrepreneurs must, in principle, transfer each item and contractual relationship separately through individual legal succession. The consent of business and contractual partners may be required for this purpose. Employment contracts, however, generally automatically transfer to the GmbH.
When real estate is part of the business assets of the sole proprietorship, caution is advised regarding real estate transfer tax before incorporation into the business. This tax remains unaffected by the previously described book value continuation since the transformation tax law only concerns income taxes (profit taxes). Real estate transfer tax, on the other hand, is a transaction tax. This means that incorporations usually fall under real estate transfer tax because they involve a change of legal entity and thus a change of ownership. Additional considerations are therefore necessary before incorporating real estate into the business assets.
Insolvency of a GmbH can stem from various causes, including inadequate liquidity, lack of profitability, unexpected losses, or insufficient capitalization. Early detection of signs of impending insolvency is crucial to timely take appropriate measures and minimize bankruptcy risks. Immediate action in the face of impending insolvency is legally required, as the management must promptly file for insolvency upon becoming aware of insolvency. Possible measures to avoid or manage insolvency include preparing a restructuring plan, optimizing cash flow through improved account receivables management and cost efficiency, negotiating payment deferrals with creditors, seeking new financing options, or restructuring the company. Transparent communication with all stakeholders, especially creditors and employees, is essential to maintain trust and facilitate successful restructuring.
To preemptively prevent GmbH insolvency, robust financial planning and control are essential. This includes regularly reviewing the financial position and liquidity development and timely identifying risks and constraints. Adequate equity capitalization and prudent reserves accumulation can help to cope with financial difficulties and avoid insolvency. Furthermore, strict cost control and optimization are necessary to ensure the company’s profitability and efficient use of financial resources. Effective account receivables management, ensuring timely realization of receivables, and diversifying customers and markets can reduce the risk of payment defaults. To strengthen financial stability, measures such as subordination agreements on shareholder loans or waivers of claims by creditors can be considered. Subordination agreements entail shareholders agreeing to be reimbursed only after other creditors in the event of insolvency. Such creditor waivers can expand the financial leeway of the GmbH and overcome liquidity constraints. Additionally, forward-looking corporate governance, early recognition of opportunities and risks, and making strategic decisions based on sound analyses are required. Open and transparent communication with all stakeholders, particularly creditors, banks, and suppliers, is also crucial to build trust and enable supportive measures in case of financing needs. Proactive risk management and a solid financial foundation can ensure the long-term success and stability of a GmbH.
The concealed distribution of profits (vGA) is a legal concept occurring in GmbHs aimed at preventing hidden benefits or advantages to shareholders or related parties. A vGA occurs when the GmbH grants an undue benefit to a shareholder or a related person that is not adequately remunerated or documented, thereby reducing the company’s taxable profit. Causes of concealed profit distributions can vary, including inadequate documentation of agreements or transactions, inappropriate remuneration of shareholders or related parties, and the unauthorized use of company assets for private purposes. The consequences of a concealed profit distribution are significant and can have both tax and civil law implications. From a tax perspective, the vGA is treated as a concealed distribution and added to the company’s taxable profit, leading to a higher tax burden. From a civil law perspective, shareholders or creditors may claim damages if they have been disadvantaged by the vGA. To prevent concealed profit distributions, meticulous documentation of agreements and transactions is essential. All transactions with shareholders or related parties should be concluded under market-standard conditions and clearly documented. Moreover, regular review of business transactions for potential vGAs is necessary to counteract them promptly.
Director’s liability in a GmbH is a central issue concerning the responsibilities and risks of directors. Directors bear various duties and responsibilities towards the GmbH, shareholders, and third parties. Failure to fulfill these duties can lead to personal liability. Director’s duties include diligence, loyalty, bookkeeping, and the duty to conduct proper business operations. They must manage the company conscientiously and in the best interest of the corporation, ensuring compliance, efficiency, and success of the business. Director’s liability can be both civil and criminal in nature. In case of breaches of duty or misconduct, directors can be personally liable for damages, both to the company and to third parties such as creditors or employees. This can result in financial consequences such as compensation claims or recourse claims. To protect against liability risks, directors should take appropriate measures. These may include compliance with compliance guidelines, regular monitoring of business activities, securing through appropriate insurance such as D&O insurance (Directors and Officers Liability Insurance), and seeking legal advice on complex decisions or transactions. Transparent communication with shareholders, employees, and other relevant stakeholders is also important to build trust and detect and address potential liability risks early.
The liquidation of a GmbH is the formal process of dissolution and winding-up of the company. This step can occur for various reasons, such as insolvency, voluntary dissolution, merger, or acquisition. The liquidation of a GmbH follows a specific process and is subject to legal regulations to ensure proper winding-up. The liquidation process involves:
A GmbH offers limited liability protection, tax advantages, and a credible presence in the market, making it suitable for small to medium-sized enterprises.
Establishing a GmbH involves drafting a company agreement, registering with the commercial register, opening a business account, and depositing the share capital.
We provide comprehensive guidance on setting up a GmbH, including drafting the company agreement, tax registration, and opening a business account.
A GmbH must regularly pay corporate tax, trade tax, and VAT, and submit corresponding tax returns.
We handle accounting, prepare financial statements, and support with balance sheet and profit and loss account preparation, ensuring compliance with all relevant deadlines.
Payroll processing must consider social insurance and tax aspects. Our firm can handle the complete payroll process, including salary calculations, social insurance contributions, and tax filings.
We prepare all necessary documentation and offer support during audits by financial authorities, ensuring smooth and compliant processes.
GmbHs are subject to corporate tax and must consider specific rules for loss carryforwards and hidden profit distributions.
Yes, we provide advice on the tax and legal implications of restructuring or changing the legal form and support the implementation of these processes.
Dissolution involves settling financial obligations, liquidating assets, and deregistering the company. We guide you through the entire process.
inno:va
Steuerberatungsgesellschaft mbH
Hauptniederlassung:
Am Nordpark 3
41069 Mönchengladbach
Zweigniederlassung Düsseldorf:
Heinrichstraße 155 (ARAG-Bürohaus)
40239 Düsseldorf
Zweigniederlassung Kempen:
St. Huberter Straße 45
47906 Kempen
