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Incorporating a limited company in Germany

thomas.skowron.biz

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Re: Incorporating a limited company in Germany

#81

Post by realityking »

blsquare wrote: post #72

Germany is one of the worst options in Europe to incorporate, except you reside in Germany. My top 10 list of why not to incorporate in Germany: 1. Yearly accountant costs of a limited (UG/GmbH) is around €2,000; you need this accountant, he is kind of an API to the German tax system which is super complicated and even native Germans wouldn't be able to handle its requirements or to file in all the paperwork themselv…

Agree with some, disagree with some but this one surprised me:

> and to migrate to a GmbH later is a PITA

I've never done it myself but what I know it should just be a short trip to the notary, they take care of the rest. Did you have a different experience?

Re: Incorporating a limited company in Germany

#82

Post by pantalaimon »

WildUtah wrote: post #76
tornadoboy55 wrote: post #60

Earlier quoted context omitted.

Please don't put a smile after that. Corporate tax evasion is a blight on society and people facilitating it are scum. Pay your dues, just like the people of a society have to.

It's not a company's responsibility to pay more than it owes. It's the people's responsibility to elect a government that will write rules without such gross and long standing loopholes. Or at least to elect a government that will close them after a decade or two of abuse instead of keeping them permanently.

According to that logic, if I found a software exploit that allows me to order anything for free on Amazon, I should be allowed to keep all the stuff without any consequences, because it's the resistibility of Amazon to prevent such loopholes from being used?

Re: Incorporating a limited company in Germany

#83

Post by king_phil »

retromario wrote: post #31

A couple comments (having started both an UG and GmbH): - I don't recommend starting an UG with less than 2k capital. If you do the minimum (1 euro), you won't have anything to pay your startup bills and it costs extra money (and a trip to the notary) to change your company's investment capital. - While a GmbH requires 25k capital, only half has to be paid into the company. The rest is marked as a liability on the sh…

One more comment that saves quite a lot of money in the phase where you are building your company: DO NOT APPLY FOR VAT TAX EXEMPTION!

If you are in the initial investment phase and you have more bills than earnings, you'll get 19% of the bills back from Finanzamt. You'll pay 19% of your invoices, too, but if thats less, you're saving.

If you're starting to earn, the Finanzamt will remove the exemption anyways.

Don't know if that makes sense for an outsider, but just read it up and thank me later.

Re: Incorporating a limited company in Germany

#84

Post by sparkling »

therealmarv wrote: post #46
crypt1d wrote: post #25

Not sure if there is a specific benefit in incorporating in Germany vs some other EU country. If there isn't, I'd suggest looking into Estonia and their e-residency program. They have a fixed 20% corporate tax which you only pay when you take the money out of the company (as opposed to paying on income). I've recently applied and the bureaucracy has been a breeze so far. You can find some more info at https://bkpk.me…

In my opinion this is only great if you live outside the EU and want to have a financial place in the EU. One example: Imagine you live in Germany. When you create this company in Estonia good luck in describing to German tax authorities why you have founded it there and not in Germany! You probably also have to pay more taxes in total (to Estonia and Germany) if you are transferring money to yourself.

> good luck in describing to German tax authorities why you have founded it there and not in Germany

Why would you need to explain my business choices to any german authorities? It's none of their business. On top, Estonia is a member of the EU, not some off-shore tax-evasion island.

Re: Incorporating a limited company in Germany

#85

Post by atemerev »

matt4077 wrote: post #58
atemerev wrote: post #3

The same story in Switzerland, perhaps even worse. Any company here generally requires a full-time administrator to handle the paperwork (and salaries here are huge). Or you can outsource it to the agency, but it will cost at least $10k/year, even for the smallest operations (cheaper than hiring a full-time administrator, however, agencies tend to miss things).

If you actually look at the meat of the article you'll notice that all it takes for the setup is about an afternoon with a notary and 500 Euros. Yearly expenses are mentioned by the author somewhere in this threat, and he says 2000 Euro pa, but note that they're talking about a business that must do at least 6-figures revenue (otherwise VAT reporting wouldn't be on a monthly basis). For a minimum shell company, you c…

It's not expensive, but quite time-consuming. :(

Re: Incorporating a limited company in Germany

#86

Post by sparkling »

syllogism wrote: post #62
crypt1d wrote: post #25

Not sure if there is a specific benefit in incorporating in Germany vs some other EU country. If there isn't, I'd suggest looking into Estonia and their e-residency program. They have a fixed 20% corporate tax which you only pay when you take the money out of the company (as opposed to paying on income). I've recently applied and the bureaucracy has been a breeze so far. You can find some more info at https://bkpk.me…

If you direct the company from Germany, you'll be accountable for taxes in Germany anyway, regardless of where you incorporated.

Forgive me if im wrong, but as long you don't receive a salary (or money transfers in general) from the Estonian company entity, you should not be paying any personal taxes in Germany since all the money remains in the company?

Re: Incorporating a limited company in Germany

#87

Post by sparkling »

helge5 wrote: post #73
velcro wrote: post #49

Earlier quoted context omitted.

have always wondered on the benefits of forming a company in Estonia - I'm not an expert - but wouldn't you still need to pay personal taxes in your country of residence (where you spend 6+ months in a year) in addition on what you pay in Estonia?

You pay personal taxes on your personal income (the salary the company may give you). That is completely distinct to the type of the company discussed in the link, a GmbH/UG. A company construct like that is its own legal person and it pays its own taxes (which usually works different to your 'personal taxes'). Where it has to pay them is a question for your tax accountant, I think (ignoring loopholes) a company prod…

Just to clarify, as long as all the money remains in the Estonian company entity (e.g. you are not paying yourself a salary), you should not owe any personal income tax in Germany since their is no income, correct?

Re: Incorporating a limited company in Germany

#88

Post by therealmarv »

tornadoboy55 wrote: post #60
helge5 wrote: post #56

Earlier quoted context omitted.

If you want to keep it simple it very likely makes sense to found the company where you reside. If you don't mind complexity, lookup `Double Irish With a Dutch Sandwich` :-> If you want to move to Europe (which I think was part of the idea of the article), it may indeed make sense to consider where to move. Germany (and one of its startup hubs, like Berlin or Hamburg) is probably not the worst place to be for various…

Please don't put a smile after that. Corporate tax evasion is a blight on society and people facilitating it are scum. Pay your dues, just like the people of a society have to.

Well in your logic all big companies are scum. There are whole industries which making a lot of bucks for tax evasion (I mean the 100% legal one) and a lot of people are working there. So they are all scum? Just saying... if you are doing everything 100% legal according to the laws of your country why not optimize it? It's unfair that small and medium fish cannot do the same as big fish ;)

Re: Incorporating a limited company in Germany

#89

Post by therealmarv »

sparkling wrote: post #84
therealmarv wrote: post #46

Earlier quoted context omitted.

In my opinion this is only great if you live outside the EU and want to have a financial place in the EU. One example: Imagine you live in Germany. When you create this company in Estonia good luck in describing to German tax authorities why you have founded it there and not in Germany! You probably also have to pay more taxes in total (to Estonia and Germany) if you are transferring money to yourself.

> good luck in describing to German tax authorities why you have founded it there and not in Germany Why would you need to explain my business choices to any german authorities? It's none of their business. On top, Estonia is a member of the EU, not some off-shore tax-evasion island.

It was an example. If you are a German citizen you have to explain the tax authorities your business (and I'm pretty sure this is also valid for every or most other EU country)... this includes foreign companies which you own because you need to pay taxes to the country where you live (and it does not matter if your companies are abroad!!!).

Re: Incorporating a limited company in Germany

#90

Post by sparkling »

Atropos wrote: post #77
blsquare wrote: post #72

Germany is one of the worst options in Europe to incorporate, except you reside in Germany. My top 10 list of why not to incorporate in Germany: 1. Yearly accountant costs of a limited (UG/GmbH) is around €2,000; you need this accountant, he is kind of an API to the German tax system which is super complicated and even native Germans wouldn't be able to handle its requirements or to file in all the paperwork themselv…

You need to differentiate between where your company has its "real seat" (= place of business activity) and your "legal seat" (=incorporated as GmbH or LLC or ...). If your office building is in Berlin and you employ a local team (your "real seat"), it does not matter if your company is a GmbH, a UK Limited or an Estonian e-company - you are still under German tax, employment, insolvency, consumer protection law... I…

Forgive me if im wrong, but as long you don't receive a salary (or money transfers in general) from the Estonian company entity, you should not be paying any personal taxes in Germany since all the money remains in the company?
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