Establishing a subsidiary in Germany is an excellent strategic decision for foreign companies seeking access to one of the largest markets in the European Union. Whether you are looking to expand your business activities or enter the German market for the first time, understanding the process of setting up a subsidiary is essential to the success of your venture. There are obviously stages to consider, as well as legal and tax aspects.
For European countries, setting up in Germany is easier than for countries outside Europe. Indeed, the European Union regulates aid and laws.
What are the Requirements to Set Up a Subsidiary in Germany?
For all companies:
You will need to complete all the necessary formalities with the German commercial register, as well as with the tax and social security authorities. In addition, you need to obtain an employer’s number before taking on employees and registering them for health insurance.
It can take between 6 and 12 weeks to process this information. During this period, it is advisable to open bank accounts in Germany. In addition, the parent company’s board of directors must pass a resolution explaining the decision to set up a subsidiary. Certain documents may need to be officially notarised before being submitted to the German commercial register.
Under local regulations, a subsidiary usually operates as a limited liability company with its own share capital, management structure and accounting system, separate from those of the parent company. You can also set up a branch of your parent company in Germany and carry on business under the name of the parent company.
Indeed, setting up a subsidiary is more complex than opening a company branch; it depends on the time and investment a company has allocated to this project. A subsidiary will allow the company to be a fully-fledged player on the German market and to act as a local. The subsidiary is free to change its name, why not a German name that might be more suited to the country, for example.
Also, being close to the customer allows to be at the heart of the action, to understand the cultural differences and the market directly and above all to be able to anticipate certain obstacles and complexities.
If you need more details and support with your incorporation, feel free to contact us.
