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Opening a Business in Germany

Opening a Business in Germany

Updated on Monday 14th September 2015

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How easy is it to set up a business in Germany?

A business can be set up in in Germany in two working weeks, following nine procedures. The process may seem complicated but with the help of a lawyer it can be simplified. Actually four of the steps of incorporation (the registration at the professional association, the registration at the labor office, the registration of the employees for health and social insurance and the registration at the tax office) are performed in the same day as the notification regarding the business and characteristics sent to the local office).
 
How easy is it to hire personnel in Germany?
 
The process of hiring personnel in Germany is usually time-consuming so it’s advisable to contact a recruitment agency in order to find the suitable candidates for the vacancies.
Before hiring a foreign person, the entities must be aware that besides the passport, a residence permit is necessary. The residence permits include work and residence authorization. The permits are issued by the embassy / general consulate in the home country or by the Alien Registration Authority in case the person is already in Germany. Usually a residence permit is usually issued for a period of time so it’s advisable to make employment contracts only on that period of time. 
Usually the following documents must be provided after signing the contract: the Wage Tax Card, the German Social Security Card, the Certificate of the Receipt of Child Allowance, the Holiday Certificate, documents on asset-creating benefits, work reference or leaving certificate and for foreign employees from non-EU-member states, their residence permit.
 
What are the main points of interest for foreign investors?
 
Germany is by far the most attractive European country for investment. With the largest market in Europe and with a central location, Germany is considered the third strongest economy in the world. 
The German economy is characterized by the fact that 85% of all businesses are small or medium-sized (Mittelstand). The quality of the products made in Germany is internationally recognized, the exports are also contributing to the German high standard economy.
The economy is mainly formed by the service sector with a contribution of around 70% of the total GDP, industry 29.1%, and agriculture 0.9%.
The rights of the investors are protected by the transparent and reasonable laws. Actually the legal system is copied by many jurisdictions and the country is situated on the fourth place in the top of legal security issue.
Germany is also in the top of innovations, resulted from the good collaboration between the industry and the research institutes.
 
What are the advantages of a holding company in Germany?
 
Holding company beneficiates from a number of advantages which makes Germany an appealing destination for foreign investments.  Among the advantages, there are the following: no withholding taxes on incoming and outgoing dividends, no withholding taxes on liquidation distributions, exemption of capital gains on the disposal of shares, deductibility of finance costs, current-value depreciation and goodwill, liberal anti avoidance legislation and thin cap rules, no controlled foreign corporation rules, a large double tax treaty network, low corporate income tax rate (only 15%), low VAT taxation (19% and in certain cases only 9 %) and also no exit taxation.

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