Considered by many as Europe’s powerhouse. The small and medium sized enterprises of the country make up a huge proportion of the economy.
Germany is providing a good infrastructure, a favorable situation in the heart of Europe and a well-qualified workforce..
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Germany is the economic locomotive of Europe. The country has a population of about 82 million people and a world-class infrastructure. Germany is centrally located offering convenient access to over 500 million of the EU consumers.
Germany had long been tipped as the rising star of European real estate and now seems to have finally come into its own. “European investors, particularly those from Southern Europe, are still drawn to London, but are also turning to Germany: if you are looking for a safe haven in the event of a Eurozone dissolution, Germany is a major country to invest.
The German economy is heavily oriented towards manufacturing and exports and German companies lead the world in many industries such as automobile, mechanical engineering, electrical engineering and chemicals.
Setting up a business
Germany is home to tens of thousands of businesses ranging from small sole proprietorships to large conglomerates. In fact, a large part of the reason for the prominence of Germany’s economy on the world stage can be linked to the small and medium sized businesses of the Mittelstand. The German government is very open to the establishment of all types of businesses – regardless of whether or not it involves a German or a foreigner.
Regarding the choice of entity, just one person is sufficient to set-up Gesellschaft mit beschränkter Haftung (GmbH) (Limited liability company). This is by far the most widespread company form. Under it shareholders are not personally responsible for the company’s debts.
Aktiengesellschaft (AG) (Joint stock company, corporation). In order to set up one of these there must be at least five members. The minimum required share capital is €50,000, and these shares are the only ones that may be (but need not be) listed on the stock exchanges. Articles of association, authenticated by a court or notary, are initially required to set up an AG, and it only becomes a legal entity when it has been entered in the Commercial Register. The name of the AG is usually taken from the purpose of the enterprise and it must show the words “Aktiengesellschaft (AG).”
An AG must have a managing board (Vorstand), empowered to decide all matters relating to the operation of the business and appointed by and answerable to the supervisory board (Aufsichtsrat). The shareholders of an AG exercise their power to control its policies at regularly scheduled general meetings (Hauptversammlungen).
Offene Handelsgesellschaft (OHG) (General partnership). In contrast to the GmbH and AG, the partners in an OHG have unlimited liability. Every partner in the company is legally obliged to participate actively in operating the business unless the partnership agreement (Gesellschaftsvertrag) provides otherwise. The OHG is an association that can sue or be sued in a court of law. The Commercial Code provides that decisions should be made unanimously for internal matters, but partnership agreements usually allow for decisions by a majority of votes.
Kommanditgesellschaft (KG) (Limited partnership). This is basically a partnership but also provides for a limitation of liability by having two types of partners: 1) the general partner (Komplementär), who has an unlimited liability extending to his or her personal assets, and 2) the limited partner (Kommanditist) whose liability extends only to his or her nominal holdings in the firm.
GmbH & Co. KG (Limited partnership with a limited liability company as general partner). This combines a limited liability company with a limited partnership by making the former the sole general partner of the latter. The limited partners are, as in the case of all KGs, only liable to the extent of their registered holdings.
Töchtergesellschaft (Subsidiary). A non-independent company physically separated from the parent company, and to a certain degree independent. It usually has its own management, accounting system, balance sheet procedure and business assets.
Zweigniederlassung (Branch). This is more of a non-independent sales center, dependent in every respect on the head office, which also is in charge of central administration.
The distinction between a subsidiary and a branch office is important, as it determines whether an entry must be made in the Commercial Register. The distinction is also important in determining whether a place of business exists within the meaning of German tax law.
Living in Germany
In comparison with other countries within the Western world, Germany is pretty cheap to live in. Life is quite busy in Germany as in any other place. But in general, there is peace and quiet anywhere you go.
Regarding Education, it is well ordered in Germany. It is high quality, and it is free.
Every industry has its own challenges and opportunities and it takes expert market knowledge to pinpoint the right entry points for your venture. If you want to set-up a business, buy a company, live, study, get retired, buy a property or invest in Germany. Please, contact us.