Forming a German company abroad is always more difficult due to the extra bureaucratic hoops to jump through. The difficulty level, however, depends on whether you’re an EU or EWR, non-EU or German citizen.
Read on to find out how the process of forming a company from abroad works and what you should keep in mind when doing so.
What are the bureaucratic peculiarities of forming a German company abroad?
You may freely choose a legal company form for your company in Germany as a citizen of an EU country or of a non-member country (Drittstaat).
However, foreign entrepreneurs will need to provide additional notarised documents, such as an apostilled translation of the certificate and articles of incorporation or a letter of authentication for the respective founding documents.
Proof of qualifications (for the German authorities)
In addition to the usual steps of the company formation process, you may also be required to provide proof of your professional qualifications. This is the case, for example, when you are planning to open a handicraft business where the presence of a master craftsman is necessary (Meisterpflicht).
Make sure to find out what requirements you’ll have to meet when opening a business in your chosen industry.
Business bank account for your new company
Opening a business bank account is a common challenge for many foreign entrepreneurs. The requirements for opening a business bank account can vary dramatically from country to country and bank to bank.
Opening a company account in Germany is usually a straightforward process if you are a citizen of an EU member state.
For citizens of non-member states, there are often stricter rules for opening accounts.
Duration of the formation process
You should generally plan for a longer formation process as a foreign entrepreneur, as the additional time it takes to mail in documents, communicate with German authorities and wait for authorisations and notarisations can add up quickly.
If you’re married, you should also verify whether your marital status will play a role in your company’s formation and if there are any relevant regulations that have to be contractually defined.
Forming a company in Germany from an EU or EWR country
Generally, forming a company in Germany as an EU citizen is quick and straightforward.
This also applies to citizens of EWR countries (EU member states as well as Iceland, Norway and Liechtenstein) and Switzerland. In these countries, there are certain laws in place that predominantly make forming a company from abroad easier, such as the right to the freedom of movement, freedom of establishment and freedom to pursue a trade or business.
This makes it possible for all EU citizens to carry out self-employed or freelance work and do so commercially if they wish.
Although company formations from other EU countries aren’t handled any differently than formations within Germany, there are still certain conditions for founding a company that should be met.
Entrepreneurs planning to form a company in Germany are not required to speak German.
Keep in mind, however, that your options may be significantly restricted when it comes to business activities in Germany if you don’t speak German. It will be significantly harder to present your business concept to a bank when applying for a loan.
It will also be more difficult to perform an analysis of your competitors in the German market and to communicate with German-speaking customers.
The notarisation process for forming a company in other countries is exactly the same as forming a company in Germany.
If your German skills are lacking, make sure to ask if your notary can hold the appointment in another language. Many notaries offer appointments in English or French.
If you don’t speak any of the languages offered by your notary, you’ll have to bring an interpreter to your appointment. Keep in mind that several notaries will only proceed with the appointment if you bring a certified interpreter.
In addition, you’ll also have to provide the notary with an apostille or letter of authentication for the translation of your company’s certificate and articles of incorporation.
In most cases, each of your company’s managing partners must be present at the notary appointment.
Obtaining a residence permit is usually quite easy for entrepreneurs from countries that belong to the European Economic Area. As the freedom of establishment applies within the EU, it is generally quite easy to obtain a residence permit from the German authorities.
Itching to form a company but no desire to deal with the paperwork?
While all EU citizens enjoy the freedom of establishment, starting a business in Germany is, unfortunately, not as easy for citizens of non-EU countries.
In order to pursue self-employed work, a non-EU citizen must obtain a residence permit (Aufenthaltserlaubnis) or a settlement permit (Niederlassungserlaubnis).
You can apply for these permits at your relevant immigration authority (Ausländerbehörde). Residence permits are always limited in their duration, but settlement permits do not expire.
Requirements for obtaining a residence permit (Aufenthaltserlaubnis)
A residence permit can be granted if there is a national economic interest or a particular regional economic interest for the company you’re planning to form.
Additional reasons for granting a residence permit include an expectedly positive impact on the economy or secured funding for your company, whether from your own capital or from a binding loan commitment.
Requirements for obtaining a settlement permit (Niederlassungserlaubnis)
In order to obtain a settlement permit as a citizen of a non-EU country, the following requirements must be met, according to § 9 of the German Residence Act (Aufenthaltsgesetz, or AufenthG):
- Temporary residence permit held for at least five years
- Secure subsistence
- At least 60 months of compulsory or voluntary contributions paid into Germany’s statutory pension scheme
- A clean criminal record
- A work permit (employed or self-employed status)
- Proven command of the German language
- Proof of sufficient knowledge of Germany’s legal and social systems and way of life
Managing a company from abroad
Generally speaking, a non-EU citizen may manage a company with headquarters in Germany while abroad, but the following principle applies: He or she must be able to fulfil their duties as a managing director without restriction.
You can define those duties and obligations in a director’s contract. Forming a company does not automatically grant its managing director an unlimited residence permit.
Be sure to verify that your relevant immigration authority allows non-EU nationals to work as the managing director of a company in Germany – otherwise, there may be legal consequences.
The notary appointment often poses a challenge for foreign entrepreneurs. All managing directors absolutely must be present – otherwise, the founding documents cannot be signed. A company’s partners do not have to be present, but they must send an authorised representative (often one of the managing directors) in their place.
If a foreign partner cannot participate in the company’s incorporation appointment, they must provide a notarised proxy form. Generally, this form must be provided in German at the time of the appointment, often making a translation into German necessary.
Depending on the proxy form’s country of origin, an apostille or letter of authentication of the translation may be required for the legal processing of the document in Germany.
Forming a company abroad as a German citizen
If you hold German citizenship but will be abroad at the time of your company’s founding and are unable to personally attend the notary appointment, you can authorise a representative to sign the formation documents on your behalf.
After the formation documents are signed, the notary will send you a copy of all relevant documents. This is possible by mail and email.
Afterwards, you’ll need to take the (printed) documents to the German embassy in your country of residence. There, all documents, as well as an authorisation document, will be signed.
It is extremely important to wait until you are in the embassy to sign the documents, as the embassy will notarise them.
The original documents will then be sent to the German notary, where the next steps of your company’s formation will be carried out.
Forming a company in a foreign land can sometimes be like wandering in the dark.
The information published on our site is all written and checked by experts with the utmost care. Nevertheless, we cannot guarantee its accuracy, as laws and regulations are subject to constant change. Therefore, always consult an expert in a specific case – we’d be happy to put you in touch.
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