Establishing a Business in Germany
(firmenpresse) - FRANKFURT, GERMANY -- (Marketwire) -- 11/10/11 -- Benefitax, German chartered accountants in Frankfurt am Main, recommends purposeful preparation for the German market to companies who want to sell their products in Germany. Taxation and organizational traps can be very costly.
Access to the German market is usually accomplished via a representative office, a branch or a subsidiary. Those who only desire a small investment will found a representative office. Since a representative office does not exist under German law, it is treated as a direct investment of the parent company. Disadvantages of the representative office include more difficult or impossible reimbursement of input VAT and the lack of acceptance among German customers. Oliver Biernat, managing partner at Benefitax GmbH, warns: "When a representative office pursues certain activities in Germany for long periods of time or the German employees have far-reaching power to contract, a permanent establishment is involuntarily founded. In this case, the fiscal authorities will demand bookkeeping under German law and the taxation of profits allocated to Germany."
A branch registered in the commercial register is an alternative. Branches have to maintain accounting records, determine profits and pay tax on the same. In terms of income taxation, there is little difference compared to a German subsidiary. However, the "standing" of branches is less favorable. The parent company also has direct and unlimited liability for obligations. This is why chartered accountant Biernat advises founding a subsidiary.
The legal form of GmbH is almost always recommended for subsidiaries. Prior to founding, it is necessary to verify whether the company name is permissible. The founding shareholders should come to Germany for the foundation. Since the existence of the foreign investors from certain countries (e.g. India), due to the lack of an official company register, are not recognized in Germany, the German embassy should be contacted to clarify whether the registration court can enter the GmbH into the German commercial register. Otherwise detours are required.
Banks are obligated to examine new customers for suspicion of money laundering, and sometimes refuse new customers from "critical" countries. This is why various banks should be contacted, since the entry in the commercial register can only take place if at least 50% of the minimum share capital of EUR 25,000 has first been paid into a bank account.
Based on bad experiences with VAT carousel transactions, the fiscal authorities examine the tax registration of the foreign investor in detail before issuing a tax number. Invoices cannot be sent out without a tax number. If all documents are issued immediately, a GmbH can be registered and ready to operate within two weeks. For more information and to order our "Law and Tax Guide", visit: . To be continued.
Benefitax is a tax consulting and public audit company in Frankfurt, Germany, focussing on financial administration of foreign owned German entities and international taxation.
Contact:
Benefitax GmbH
Attn. Mr. Oliver Biernat
Managing Partner
Phone: +49 (0) 69-25 62 27 60
E-Mail:
Internet:
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Datum: 10.11.2011 - 11:43 Uhr
Sprache: Deutsch
News-ID 86317
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FRANKFURT, GERMANY
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Investment Opinion
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