There are basically two types of company in Germany. Partnerships such as the GbR (Gesellschaft bürgerlichen Rechts), the OHG (offene Handelsgesellschaft) or the Kommaditgesellschaft (KG) and corporations such as the GmbH (Gesellschaft mit beschränkter Haftung) or the AG (Aktiengesellschaft). In the case of partnerships, the focus is on the persons involved and their activities for the company. They manage the business, must contribute capital in case of doubt and are personally liable. In the case of corporations, the partners make a capital contribution and are only liable to a limited extent for this capital contribution. A managing director takes over the management. This makes corporations attractive for investors and for founders who value limited liability.

The choice of the right legal form ultimately depends on the founders’ goals, priorities, and overall vision. Key considerations include liability, financing, taxation, and—for foreign founders—immigration requirements.

If you want to get started quickly and with minimal administrative effort, a sole proprietorship or a civil law partnership (GbR) is the best option. There is no minimum capital requirement and hardly any formalities, enabling you to begin operations almost immediately. However, this simplicity has a significant downside: you are personally liable with all your assets, including for mistakes of your co-founders. The extent of these liability risks depends on the type of business and therefore requires an individual assessment. In practice, however, they are often underestimated, particularly in the early stages.

If limiting personal liability is a priority, corporate structures such as the GmbH or the smaller UG (limited liability) are usually preferred. The GmbH in particular conveys professionalism and credibility, which can be important when dealing with investors, banks, or larger corporate clients. The UG can be founded with as little as €1 in share capital, but from an economic perspective, it is only suitable in rare cases. In many industries, it is perceived as less financially stable, and business partners often view critically. The traditional GmbH, which requires a minimum share capital of € 25,000, has a strong reputation in Germany and internationally, signalling reliability and long-term commitment.

From a tax perspective, hybrid structures such as the GmbH & Co. KG can also be worth considering. This model combines the limited liability of a GmbH with the tax transparency of a partnership, making it particularly appealing for family businesses, investment structures, and asset-holding entities. In practice, issues like profit retention, distributions, business sales, and succession planning play an important role.

For foreign entrepreneurs seeking a residence permit for self-employment, the GmbH is usually the standard choice. German immigration authorities, chambers of commerce, and economic development agencies generally consider a GmbH with fully paid-in share capital to be a strong indication of a serious and sustainable business project. Providing the share capital and presenting a realistic business plan is therefore not only economically relevant, but also crucial from an immigration law perspective, as it significantly improves the chances of a successful visa application.

There is no one-size-fits-all solution when it comes to choosing the “right” legal form. Each situation requires an individual assessment. For this reason, we recommend seeking professional advice at an early stage. Our specialised lawyers will be happy to support you throughout the process.

We often advise international corporate clients who are looking to enter the German market on whether a subsidiary or branch office would be the better option.

There is no one-size-fits-all answer. The right structure depends on your intended market presence in Germany, the level of liability you are willing to accept, and the amount of administrative work you are prepared to take on.

A subsidiary is a legally independent entity. In most cases, it is set up as a GmbH, as this legal form offers a suitable capital structure. The parent company holds all or part of the shares and sets the strategic direction, while the subsidiary operates independently on a day-to-day basis. It can enter into contracts in its own name and German banks, authorities, and business partners generally view it as a fully established local company. This local presence is often a key advantage, especially for public tenders or larger B2B contracts, where a German entity is frequently required or preferred. Importantly, liability is usually limited to the subsidiary's assets, thereby ensuring a clear separation of risk.

Setting up a subsidiary is more formal and time-consuming than registering a branch office. It follows the same formation process as a standard GmbH, including all legal requirements. Ongoing operations also require proper accounting, annual financial statements, and a managing director.

A branch office, on the other hand, is not a separate legal entity, but rather an extension of the foreign parent company. This means the parent company remains fully liable for all the branch's activities. The main advantage is the speed and simplicity of setting up, since no new company is formed and no share capital is required. However, in practice, a branch still requires proper accounting under German regulations and must file tax returns, so the administrative burden is often underestimated.

A branch office can be a good option for initial market entry or when a minimal presence in Germany is desired. However, there are some practical challenges to consider, such as difficulties with German banks when opening accounts for certain foreign branch structures, and the fact that the parent company remains directly liable and exposed to enforcement risks.

We analyse your business model, your planned setup in Germany, your financing structure, and your ong-term objectives. Based on this analysis, we will provide you with tailored scenarios, including costs, timelines, and key practical considerations, to help you make an informed decision."

A subsidiary is typically established as a GmbH. In most cases, the foreign parent company acts as the sole shareholder, although structures with multiple shareholders are also possible. The incorporation process follows the standard GmbH formation procedure (see FAQ: “How does the formal process of setting up a GmbH work?”), but there are a few additional requirements because a foreign entity is involved.

The main practical hurdle for international investors is providing proper proof of the company’s legal existence and of the authority of the individuals acting on its behalf. This documentation must be prepared differently depending on the country of origin.

In most cases, the German commercial register requires certified, apostilled, and translated documents, such as extracts from the commercial register, articles of association, shareholder lists, share certificates, or board/shareholder resolutions. Delays often occur not because documents are missing, but because they do not meet the specific formal requirements of the German registration process.

We have extensive experience in handling these requirements and can help you to avoid unnecessary delays. Our team is happy to support you with any further questions.

A subsidiary is particularly suitable if you want to clearly separate your operating business from the overall group risk, while also benefiting from the tax advantages of a holding structure. An additional key benefit for foreign companies is that a German subsidiary can significantly strengthen credibility and market acceptance in Germany and across Europe.

The main legal advantage is the clear separation of liability between the parent company and the subsidiary. If the subsidiary (GmbH) faces financial difficulties or insolvency, creditors generally cannot access the aparent company's assets. This separation is a core element of risk management in corporate groups.

There are also clear tax advantages. Dividends paid from the subsidiary to the parent company are usually 95% tax-exempt, provided the parent holds at least 10% of the shares (known as the participation exemption). In practice, only 5% of the dividend is treated as non-deductible and taxed at the level of the parent company, resulting in a very low effective tax burden. The same applies to the future sale of the shares: capital gains are also 95% tax-exempt if the participation threshold is met. While this is often most relevant in exit situations, it is also an important factor in private equity and venture capital structures. Additionally, double taxation treaties and rules on interest deduction limitations and hybrid mismatches influence how profits, interest, and royalties are taxed in different countries.

With proper guidance, the incorporation process is straightforward despite its formal structure. It begins with planning the structure, particularly the shareholding of the parent company. While a wholly-owned subsidiary is the most common option, joint venture structures are also possible. Once the structure has been finalised, the company is incorporated before a notary and the managing directors are appointed. After opening a German business bank account and depositing the share capital, the company is registered with the commercial register. This registration marks the legal existence of the GmbH. Further steps then include registering the business, registering for taxes with the tax office and reporting the beneficial owners to the transparency register.

Yes, this is possible under certain conditions.

If you are the managing director and majority shareholder of a German company, you can apply for a residence permit for self-employment under Section 21 of the German Residence Act (AufenthG). The key requirement is a solid and credible business plan that clearly outlines your business model, founders, target market, financial planning, staffing, and how your project will benefit the regional economy. In particular, the authorities look for evidence of a genuine economic interest in your project in Germany and secure financing. These are central requirements for approval.

While the process is relatively complex, it is managable with good planning. Your project will be reviewed by the local Chamber of Industry and Commerce (IHK) or another relevant authority, which will then provide an expert assessment. Based on this assessment, the immigration office will make a decision. If successful, you will first receive a temporary residence permit. If your business develops well, you can usually be granted a permanent settlement permit after 3 years instead of 5.

In practice, the main challenge is usually not the business idea itself, but rather presenting it in a clear, realistic, and convincing way to the authorities. Based on our experience, we know what authorities in different industries tend to focus on, and we can therefore adjust your business plan accordingly.

If you hold less than 50% of the shares, you are legally considered an employed managing director. In this case, the process falls under employment-based immigration law,. You can apply for an EU Blue Card (Section 18b AufenthG) if you meet the academic and salary requirements. Otherwise, you can apply under Section 19c AufenthG for other qualified executives.

This route is often faster, and f the requirements are met (especially for the EU Blue Card), it can grant a legal entitlement. However, it also requires higher salary levels and more formal corporate structures, so it is not always the right fit.

The articles of association form the legal basis of your GmbH. They set out the company's key structure and define how it operates. This includes the company name, registered office, business purpose, and share capital, as well as the basic shareholder and management structure.

They also cover important governance rules, such as the appointment and powers of the managing directors, matters requiring shareholder approval, how shareholder meetings are held and decisions made, profit distribution, and rules for transferring or cancelling shares. Additionally, optional provisions such as confidentiality, non-compete obligations, and dispute resolution can be included.

As the articles of association are publicly available in the commercial register, they only contain the company's formal framework. More sensitive or internal arrangements are not included and should be set out in a separate shareholders’ agreement instead. This agreement usually covers more commercial and strategic topics, such as founder vesting, drag- and tag-along rights, exit provisions, and special veto rights for investors.

The formation of a GmbH involves a series of clearly defined legal steps, although there is some flexibility in the practical execution.

First, the company's structure is agreed upon. This includes drafting the articles of association, defining the shareholdings between the shareholders, and appointing the managing directors.

At the notary appointment, the articles of association are formally notarised by a German notary. From this point onwards, the company exists as a “GmbH i.G.” (company in formation). It can already conduct business, but it does not yet benefit from full limited liability protection, so the shareholders may still be personally liable during this phase.

If foreign companies are involved as shareholders, they must provide proof of their legal existence and the authority of their representatives. Depending on the country, this may require certified, apostilled, and translated documents. In practice, this is often the most time-consuming step, so early preparation is strongly recommended.

After notarisation, the managing director opens a business bank account. The shareholders then pay in the share capital. Banks typically require identity verification of the managing director and (in the case of foreign shareholders) additional compliance (KYC) documents.

Once the capital has been deposited, the notary submits the application for registration to the commercial register. Once the company has been entered into the commercial register, it becomes a fully established GmbH with limited liability, and the company becomes responsible.

Further mandatory steps after registration include tax registration, registration with the transparency register, and business registration.

In practice, we often coordinate these processes so that operations can begin as soon as registration and tax setup are complete. We also offer service packages for international clients that allow the entire incorporation process to be completed remotely.

It is often neither realistic nor economically feasible for foreign clients to travel to Germany to set up their company. We have therefore developed an efficient procedure that enables us to represent our foreign clients at the mandatory notarial appointment for company incorporation in Germany, meaning they do not have to appear in person.

For this, a certified power of attorney is required. If the future managing director is also to be represented, a certified commercial register application is also required. Other documents do not need to be certified. Certification can be obtained in various ways. The most efficient method is to visit a German embassy, consulate, or honorary consulate at the client’s place of residence, as these agencies can issue the necessary certificates. The certified original document is then sent to us in Germany so that we can file it with the notary.

In the run-up to the incorporation, we advise our clients on the most efficient, fastest, and most cost-effective approach, working with them to develop an optimal procedure tailored to their individual requirements.

Opening an account is usually straightforward for German clients. For clients who reside or are domiciled abroad, however, the situation is sometimes different. If the managing director does not live in Germany, it can be hard to find a German bank willing to open an account for the company.

Foreign shareholders, on the other hand, pose fewer problems as long as the management is based in Germany. However, this does not apply without exception, as it also depends on the shareholders’ country of origin. In particular, countries of origin classified as high-risk under the Money Laundering Act present a problem at the shareholder level.

We have many years of experience advising international shareholders, investors and entrepreneurs on establishing and structuring their companies in Germany, and we work with German banks to find suitable solutions for them.

As a rule, a subsidiary is founded via a limited liability company (GmbH). The parent company is then the sole shareholder. The formation itself follows the usual procedures for founding a GmbH (see: FAQ How does the formal process of founding a GmbH work?). Only the proof of the existence of a foreign parent company, if any, must be considered separately here. This proof depends on the country in which the parent company has its registered office.

We have many years of experience in obtaining suitable proof and will be happy to answer any further questions you may have.

The foundation costs consist of government fees, notary fees, and fees for legal and tax advisors. Notary fees are based on the GmbH’s share capital. For a standard GmbH with a share capital of € 25,000, notary fees typically amount to around € 850 plus applicable VAT. Fees for the commercial register entry are approximately € 300, and for the business registration usually costs around €150.

Our law firm’s legal fees cannot be quoted without further information, as we offer tailored packages depending on the specific situation, the desired structure, and the overall circumstances of the case—for example, if the client wishes to combine the company formation with a residence permit for the management. Our clients recognise that the professional, personalised support provided by our experts at vpmk is an investment in their business. This ensures that the formal incorporation process is handled smoothly and quickly, with minimal effort on the client's part. Moreover, our clients see us as partners from the very beginning. Together, we establish an optimal structure and provide advice on all questions that arise during the process, thereby relieving the burden on the client’s representatives. This enables them to focus on building their business in Germany without being overwhelmed by German authorities and formalities.

Full-service solutions, such as those offered by vpmk, provide countless benefits and genuine relief for clients. Consequently, the costs are higher than those of standard online services, which are not comparable in any way.

Please feel free to contact us. We will explain our cost structure to you and provide you with a non-binding, customised quote if needed.

After incorporation, the company can generally start its business. This also applies to the period between incorporation and registration of the company. In this case the company must bear the suffix i.G. (in formation) in its name. It should be noted that the liability of the parties involved changes during this period, as the limitation of liability does not yet fully apply.

After the formation, the initial tax registration must be carried out promptly, which we always recommend to have carried out by a tax adviser.

The date of incorporation marks the company’s inception. Following this, it is necessary to open a corporate bank account and pay in the share capital. As the incorporation of a company often signals the beginning of an immigration process, and as managing the newly incorporated company initially requires a residence permit for Germany, it is generally not possible to open an account with a German bank. However, we have developed effective solutions to circumvent this issue efficiently, so that our clients generally do not encounter any problems. Once the share capital has been paid in, the company is formally registered in the Commercial Register and ready for business.

The business registration, which remains legally binding after incorporation, as well as the entry in the Transparency Register, are generally included in our full-service packages, so our clients do not have to worry about them.

From a tax perspective, the so-called initial tax registration with the tax office is required. This process involves registering the company with the tax office and submitting a profit forecast. The company will then receive a tax identification number and a value-added tax (VAT) identification number if requested. We can provide these services either directly or in collaboration with our clients’ tax advisors or those in our network

A GmbH has relatively high administrative costs. In particular, the costs for bookkeeping and tax advice should be mentioned here, which of course also vary considerably from one individual to another.
Regular costs are also incurred for membership of the Chamber of Industry and Commerce.

The registered office of a GmbH is the city in Germany where it is officially listed in the commercial register. This does not necessarily have to coincide with the location of the office, warehouse, or production facilities. This is outlined in the articles of association. It is important to note that relocating the registered office involves more than just a change of address. It is neccessary when a company relocates to another city and requires amendments to the articles of association. This must be adopted in a notarised shareholder resolution and then filed with the Commercial Register by the management.

Please note that a simple change of address is processed differently. In this case, it is sufficient for the management to file the change with the Commercial Register, but this must be done via a notary.

The purchase and sale of shares in a limited liability company (GmbH) are among the most important transactions in corporate law. Share purchase agreements are required when admitting new shareholders or welcoming new investors to the company, as well as when adjusting internal structures. Succession plans are often implemented in this context, too.

The transfer of GmbH shares must be carried out via a notarised purchase and assignment agreement. While the purchase price is generally negotiable, tax considerations must be taken into account to avoid issues under gift tax law, which can result in substantial tax liabilities.

When drafting or negotiating such purchase agreements, the provisions in the articles of association must be observed. These often contain so-called transfer restrictions (requirements for approval by the company or the co-shareholders) or pre-emptive rights. If these are overlooked or ignored, significant problems may arise.

Notarisation can generally be carried out by authorised representatives. Our highly specialised attorneys provide the best representation solutions for our clients in Germany and other European and non-European countries.

We advise our clients on existing structures, draft purchase agreements, and can also draft appropriate contracts upon request. We specialise in venture capital arrangements and represent investors, founders, and companies in the international arena. Please feel free to contact us for an initial, no-obligation consultation.

"The purchase or sale of GmbH shares, also known as a share deal, is a relatively complex legal process that is subject to clear formal requirements. Unlike stocks, GmbH shares cannot simply be transferred; in Germany, notarisation is required. This protects the rights of existing shareholders and ensures the accuracy of the commercial register.

Before deciding whether to purchase GmbH shares, a substantive review of the company must be conducted to determine the value of the shares (due diligence). The purchase agreement itself is then executed as a Share Purchase Agreement (SPA). This SPA is usually drafted by lawyers, as it involves not only standard wording, but also individual provisions that should be handled by specialist attorneys.

This agreement governs not only the purchase price, but also warranties, indemnities and the effective date of the transfer. Flexible provisions such as profit sharing, buyback rights, and the assumption of partnerships, investments or other agreements regarding investor rights are also often included. Notarisation is mandatory for this agreement.

When transferring shares, any transfer restrictions set out in the company’s articles of association must often be taken into account. In such cases, partnership agreements stipulate that the remaining partners or the management must approve the sale. Any existing pre-emptive rights of co-shareholders must also be considered.

The share deal is finalised by filing the new, updated list of shareholders with the commercial register. Only upon the inclusion of this new list in the register is the acquirer officially recognised as a shareholder, entitled to exercise voting rights and receive a share of profits."

A change in management always requires a shareholders' resolution to remove the previous management and appoint the new management. This resolution must comply with the formal requirements regarding notice, notice periods, quorum and required majorities. However, these requirements only become relevant if the change of management is disputed, i.e. if there is no consensus among the shareholders or with the current management.

The change in management must be notarised and filed with the Commercial Register by the notary. This is usually done by the new management, but the outgoing management may also be authorised to do so by the shareholders' meeting. In this case, the resolution to remove the management must be worded accordingly.

We frequently represent clients who must carry out a contested change in management. Ideally, we provide advice prior to dismissal, prepare a legally sound resolution and assist clients with its implementation. Please contact us if you require advice and support.

If the current management has a managing director employment contract, it must be terminated. Otherwise, it would remain unaffected by the dismissal.

Market perception plays a decisive role in business success, not only in Germany and Europe. A German GmbH is a clear signal to customers, employees, banks, and government agencies for a long-term commitment to Germany as a business location. It conveys security and predictability. While a mere Branch Office is often perceived as a “temporary presence,” the GmbH establishes a local identity and builds trust.

It attracts skilled workers, as highly qualified employees seek security, structure and a German employment contract.

Access to government subsidies, research grants, and other funding is often limited to German companies. The same applies to participation in public tenders.

The GmbH is a subsidiary structure that can be used to scale up and optimise taxes on your international business. Securing investment from potential partners is a viable option, as is integration into international corporate groups.

Legally, it serves as a protective shield for your parent company or for you as the founder and shareholder. By strictly limiting liability to the GmbH’s German corporate assets, the assets of the foreign parent company—as well as your personal assets—are protected from the uncertainties of market entry and, later on, from claims by creditors.

At the same time, corporate groups benefit from attractive tax provisions such as the “Schachtelprivileg,” under which profit distributions to the parent company can remain virtually tax-free under certain conditions.

For over two decades, the specialised attorneys at VPMK have successfully and sustainably implemented corporate structures for international entrepreneurs and companies. The positive feedback and the enormous trust our clients place in us are demonstrated not only through words. Instead, it is the long-standing and, in some cases, cross-generational collaboration that encourages us in our work.

If you no longer need a GmbH or want to have it dissolved for other reasons, you must first assess the company’s financial situation. If there are debts that the company cannot pay, or if there are other grounds for insolvency, you must file for bankruptcy. This is done by submitting an application to the bankruptcy court.
This is usually followed by an assessment by an insolvency expert, who must determine whether there are still assets available in the insolvency estate; depending on whether this is the case, insolvency proceedings are opened.

If the company has no debts, or if these can and should be paid by the company and/or the shareholders, the standard procedure is liquidation. In this process, a resolution to liquidate is passed, a liquidator is appointed, and the liquidation begins with the so-called call for creditors, marking the start of a one-year liquidation moratorium. During this year, potential creditors have the opportunity to file claims. If this does not occur, the company may be dissolved after the moratorium year. Until then, however, it must continue to fulfill all tax and commercial law obligations.
Another option is to sell the company. However, this depends heavily on the company’s specific structure and history.
An interesting alternative is a merger, which we discuss in detail in the following FAQs.

We provide our clients with comprehensive advice on the options for dissolving a GmbH in a cost-effective, swift, and legally sound manner. Please contact us.

If a limited liability company (GmbH) is no longer to be continued, formal liquidation is only one of several options. For this reason, it often makes sense to explore alternatives:

1. Liquidation

If the company has no debts, or if these debts can and should be paid by the company and/or the shareholders, the standard procedure is liquidation. In this process, a resolution to liquidate is passed, a liquidator is appointed, and the liquidation begins with the so-called “call to creditors,” which initiates a one-year liquidation moratorium. During this year, potential creditors have the opportunity to file claims. If no claims are filed, the company can be dissolved after the moratorium period.

The disadvantages of such a liquidation are the lengthy formal process, which ultimately also entails additional costs that the shareholders no longer wish to bear once a company is to be dissolved. This is because, until its dissolution following the suspension period, the company must continue to fulfill all tax and accounting obligations, particularly regarding the preparation and publication of annual financial statements.

2. Deletion of an asset-less GmbH without formal liquidation

If the GmbH has no assets, it can be deleted from the registry by the registry court without liquidation. The prerequisite is the absence of assets without over-indebtedness. In the case of over-indebtedness, insolvency proceedings would be the appropriate course of action. However, if there are no longer any distributable assets—that is, no assets eligible for distribution to shareholders—and at the same time no debts, the company is considered to have no assets. In this case, ex officio dissolution due to lack of assets may also occur pursuant to § 394 FamFG. The registry court may ex officio strike a GmbH with no assets from the register. To this end, the registry court is notified accordingly, and the court then decides on the strike. Since there is no legal entitlement to such a strike, we often do not recommend this approach. This is because, should the court reject the strike, the shareholders will have wasted time and, in some cases, incurred unnecessary costs, leaving them in the same position as before. The company continues to exist and must then be dissolved by other means.

3. Insolvency Proceedings

If there are debts that the company cannot pay, or if there are other so-called grounds for insolvency, insolvency must be filed. This is done by filing a petition with the insolvency court. This is usually followed by an assessment by an insolvency expert, who must determine whether there are still assets available in the insolvency estate; depending on whether this is the case, the insolvency proceedings are opened.

4. “Silent” Liquidation or Transfer to a Shell Company

The company is not formally dissolved; instead, operational business activities are ceased, the remaining assets (e.g., equity interests) are sold, and the liabilities are settled. The GmbH remains in existence as a legal entity (“shell”) and can be reactivated or used for other purposes at a later date. A clear disadvantage of this option is that the company remains in existence. Administrative costs (such as annual financial statements, shareholder meetings, or disclosure requirements) continue to accrue.

5. Merger with another company or the sole shareholder

Instead of a lengthy liquidation process, the GmbH can be transferred via a merger to a group company or its sole shareholder (a natural person or another company). In this case, the GmbH ceases to exist without liquidation; the assets are transferred by way of universal succession, and the acquiring company or sole shareholder assumes all rights and obligations.

5. Sale of the company

Alternatively, it is also possible to sell the company. However, this depends heavily on the company’s individual structure and history. See FAQ [What do I need to consider when buying or selling shares?]

We provide our clients with comprehensive advice on the options for dissolving a GmbH in a cost-effective, swift, and legally secure manner. Please contact us.

Merging with the sole shareholder can be a sensible economic and legal decision in various scenarios. We increasingly recommend this approach to companies that are no longer operational or that have not been operational for some time. Through a merger, the GmbH can be dissolved without the formal liquidation process or the usual one-year waiting period. This avoids the often lengthy liquidation process.

A merger is not a 'risk-free shortcut'; there are risks involved that must be taken into account.

Upon a merger, the sole shareholder assumes all known and unknown liabilities of the GmbH without time limitation. The previous limitation of liability to the company’s assets is completely eliminated. The sole shareholder is liable with their personal assets without limitation.
Depending on the structure of acquisition costs and hidden reserves, the merger may improve the equity ratio (through revaluation of assets) or reduce equity in the event of acquisition losses. This must be taken into account, particularly in the case of debt-financed equity acquisitions.

If a company or part of a business with existing employment relationships is transferred through the merger, a business transfer generally occurs. The employment relationships are transferred to the sole shareholder, who assumes all employer obligations and is therefore responsible for continued payment of wages, among other things.
A merger is a viable alternative to traditional liquidation. While it is significantly faster, it is also associated with liability and tax risks. It is essential to conduct a careful preliminary review of the GmbH’s asset and risk structure — including real estate, pension obligations, and other long-term liabilities — before choosing a merger as a 'quick exit solution'.

Until the merger is officially entered into the Commercial Register, the GmbH remains a separate legal entity, subject to all the accounting and disclosure rules set out in commercial law.

Ongoing Accounting:

Until the merger takes effect, the GmbH must continue its accounting as usual and prepare annual financial statements in accordance with the German Commercial Code (HGB) on the regular reporting date. This includes a management report if required.

Closing balance sheet under the German Merger Act (UmwG).

In addition, a closing balance sheet is required for the merger to be registered. This must be prepared in accordance with the provisions governing annual financial statements and their audit, and it cannot be dated more than eight months before filing. It is submitted to the registry court, but not published in the Federal Gazette.

Disclosure in the Federal Gazette:

The obligation to disclose annual financial statements in the Federal Gazette remains unchanged. A company is not exempt from this obligation simply because a merger is planned; it only ends with the civil-law dissolution of the GmbH upon registration of the merger.

For tax purposes, it is necessary to distinguish between the tax transfer date and the merger's civil law registration.

For merger tax purposes, a final tax balance sheet must be prepared as of the transfer date. This date can generally be set up to eight months before the merger application is filed. The GmbH is taxed on this basis up to this date.
Between the tax transfer date and the merger's registration, the GmbH continues to exist under civil law. During this period, it remains subject to sales tax, payroll tax, etc., and must file the corresponding advance and tax returns. For tax purposes, the results of this period are taken into account by the acquiring legal entity due to the retroactive effect. However, from an organisational perspective, these returns are usually still filed through the GmbH.

Until the merger is registered, the GmbH must fulfil all its ongoing tax obligations — such as corporate income tax, trade tax, sales tax and (if applicable) payroll tax — and prepare a final tax balance sheet as of the tax transfer date.

If your GmbH has multiple shareholders, the shares of the remaining shareholders must first be transferred to a sole shareholder, who can then proceed with the merger.

The first step is to consolidate all shares into the hands of a single person. The remaining shareholders then transfer their shares to the future sole shareholder. This is usually done through purchase or transfer agreements. Once this process is complete, there will only be one shareholder left and the GmbH will become a 'one-person GmbH'.
Legally, this is a standard share transfer and not part of the merger itself, but rather a preliminary procedural step. For tax purposes, this transaction is treated like any sale of GmbH shares. As the GmbH has usually made little or no profit in recent years, a tax-neutral transfer at par value or less should be possible.

Once a single person holds all the shares, the merger with the sole shareholder can be carried out. A merger agreement is concluded and notarised between the GmbH and the sole shareholder. This agreement stipulates that the GmbH's assets are transferred in their entirety to the shareholder and sets a merger effective date. This date can be up to eight months in the past, meaning that a separate balance sheet may no longer be required, and instead the most recent annual financial statements can be used. This saves costs.

The merger is filed with the Commercial Register and, upon registration, the GmbH ceases to exist without liquidation. Any remaining assets and liabilities are transferred to the sole shareholder by way of universal succession.

GTC and terms of use can be defined as framework conditions that are to apply to a variety of contracts. For example, a company can stipulate that all business transactions are to be carried out only on the basis of these GTC.

First of all, the possibilities are manifold. Legally, they must stand up to the so-called AGB control. In particular, they must not be surprising or unreasonably disadvantage one side.

B2C means business to customer and defines the legal relationship between companies and consumers. Here, considerable narrower limits are set by German and European laws, which must be observed.

B2B means Business to Business and defines the legal relationship between entrepreneurs. Here, there are more and more far-reaching possibilities for regulation.

The online shop GTC regulate the sale of goods and services via the internet. In the B2C area in particular, the many consumer protection rights must be observed. In particular, there are narrow limits to the possibilities for regulating revocation, warranty and liability.

An imprint is a mandatory requirement on every website in Germany. It must name a responsible person or company. Correct contact details must be given and, in the case of companies, the registration numbers.

Copyright protects a work of an artist, it comes into existence with the creation of the work and does not require registration or anything similar. A trade mark can be registered for terms, signs, images, logos and many other variations. Registration of the trade mark is a prerequisite for protection. This distinguishes it from copyright. The same applies to designs and patents. While designs protect the shape of objects, patents are only possible for technical inventions.

Copyright protection in Germany is automatic. It cannot and does not have to be applied for separately. Problems often arise in the context of proving who did what first and how. It is therefore advisable to take evidence of one's works, in particular the time at which they were made.

In addition to the classic and most important trademark forms of the word mark, word picture mark and figurative mark, there are a variety of other trademark forms. For example, colours, holograms, multimedia signs and sounds can be protected as trade marks.
From a territorial point of view, in addition to national trade marks, there is also the Union trade mark, which covers the entire territory of the EU, and the possibility of international registration, with which national trade marks can be extended to other national territories. This is possible in all countries that have signed the so-called Madrid Protocol.

The cost of a trade mark application depends on the desired scope of protection. Trade marks are always divided into so-called Nice Classes. The Nice Classes essentially cover all areas of goods and services, so that you can have your trade mark protected specifically in the areas in which it is to be used. Each Nice Class you choose will cost additional fees.

The official fees for a German trade mark start at 290 EUR and for an EU trade mark at 850 EUR.

Data protection regulates the use of personal data. Since 2018, data protection in the European Union has been largely uniformly regulated by the GDPR. In Germany, further regulations from special laws must be observed in addition to this and the Federal Data Protection Act.

As a general rule, personal data should be processed as sparingly as possible. There always needs to be a reason and justification if you want to process data.

We are happy to provide comprehensive and goal-oriented advice on data protection.

Protecting one's own know-how is a difficult task in companies. With regard to third parties, the signing of so-called NDAs (Non Disclosure Agreements) is both necessary and sensible. Internally, technical and organisational measures should be taken to ensure good protection. Legally, in the event of a breach of confidentiality, one can rely on the law on the protection of business secrets.
We advise companies both preventively on the possible measures to safeguard their know-how and we represent them in proceedings in the event of infringements.

No, an employment contract can also be concluded orally or tacitly, in which case it can of course be difficult to prove the content of the contract. However, fixed-term contracts must be agreed in writing, usually before the employment contract begins. Termination agreements or notices of termination must also be in writing.

Under the Verification Act, companies are also obliged to confirm the essential terms of the contract to the employee in writing.

In principle, an employment contract can be terminated subject to the statutory minimum notice period. However, for companies that usually employ more than 10 employees - after the expiry of a 6-month waiting period - the Employment Protection Act (Kündigungsschutzgesetz) is usually applicable, which imposes additional requirements for termination by the employer.

Unless severance pay is already offered in the employment contract or with the notice of termination in the event that no action is brought, there is usually no entitlement to severance pay. If a dismissal is contested by means of an action for protection against unfair dismissal, however, a severance payment is often agreed by way of a settlement in order to end the dispute over the right to dismissal.

The notice period for employee terminations is regulated in § 622 of the German Civil Code (BGB). As a rule, it is 4 weeks (unless otherwise agreed in the employment contract) to the 15th or to the end of a calendar month.

In contrast, the notice period for employer-side terminations is staggered according to how long the employment relationship existed; here the notice period is extended after 2 years to 1 month to the end of a calendar month, after 5 years to 2 months to the end of a calendar month, and so on. The exact periods of notice are regulated in § 622 BGB.

In principle, the notice periods for employee terminations cannot be shortened. Longer notice periods may also be agreed for employee-side notices of termination, but these may not be longer than for employer-side notices of termination.

During a probationary period of a maximum of 6 weeks, the notice period may also be reduced - for both parties - to at least 2 weeks. However, this must be agreed.

The statutory minimum holiday entitlement per calendar year is usually 24 working days, which is regulated in the Federal Holiday Act. Working days are Monday to Friday, so this is 4 weeks. If 5 days are worked, this is to be quota accordingly, i.e. the statutory minimum leave is 20 working days, which is also 4 weeks. Less than 4 weeks of leave per calendar year cannot be agreed.

Additional leave (also called "contractual leave entitlement") is regularly agreed and can often be found in company agreements or collective agreements.