Branches - Germany
Types of secondary establishment
Businesses have two alternatives for establishing themselves in Germany:
A branch establishment is not legally separate from the parent company and, as such, is also subject to the laws governing the (foreign-based) main establishment. However, the branch establishment conducts business independently and must be listed in the commercial register. In theory the business name of the branch establishment must include the same business name as the main establishment (in a foreign language, where appropriate), suffixed with the legal form.
A subsidiary has its own legal personality and is therefore regarded as a business which is legally independent of the parent company.
Depending on the legal structure chosen for the subsidiary, the relevant statutory provisions must be observed (entry in the commercial register, rules on minimum capital, business registration, etc.). The main types of subsidiary are the limited liability company (Gesellschaft mit beschränkter Haftung – GmbH) – including the ‘trading concern with limited liability’ (Unternehmergesellschaft [haftungsbeschränkt]) – and the public limited company (Aktiengesellschaft – AG). Here too, a business registration is required along with a permit or, where appropriate, an entry in the register of crafts in cases where the relevant business is obliged to have this.
Many of the requirements and procedures for opening a secondary establishment are the same as for starting up a business.
The same formalities as when setting up a new business need to be followed when opening a subsidiary. These depend on factors such as the company’s chosen legal form (e.g. entry in the commercial register or not) and the nature of the business (e.g. whether or not the business requires a permit, is a craft activity, etc).
The branch establishment of a foreign company in Germany is registered by the branch manager via the higher court under whose jurisdiction the branch is due to be established. Here too, a business registration is required along with a permit or, where appropriate, an entry in the register of crafts in cases where the relevant business is obliged to have this.
Details should be provided of the parent company (head office, legal form, etc.) and the branch establishment itself (capital, any limitation, etc.).
The Services Directive: One-stop shops
The Services Directive is a European law that aims to make life easier for businesses that wish to provide services in the European Union – in their home country or abroad. The Directive defines the rules that apply to entrepreneurs wishing to establish a business or perform temporary services in the EU/EEA area (the 27 EU member states, plus Iceland, Liechtenstein and Norway). It obliges member states to eliminate unnecessary bureaucracy, simplify formalities for businesses and make public administrations more efficient.
For the implementation of the Directive, each member state had to set up ‘Points of Single Contact (PSC)’ , e-government portals which help businesses complete their administrative procedures on-line. The PSCs provide comprehensive information on all administrative matters related to setting up or expanding a services business in a given country. This includes for example:
- Which licences, notifications or permits do I need to obtain to start a business (at home or abroad)?
- What do I need to do when I want to offer my services abroad on a temporary basis?
- What do I need to do to apply for a licence? Which authority is responsible?
- Are the licences subject to a fee? What kinds of deadlines apply?
- Which acts and decrees apply in my sector?
- What do I need to do to establish, for instance, a restaurant or a shop? Or to work as a tour operator in another country without actually setting up a company?
- Where can I turn for personalised advice and further information?
With the PSCs, you no longer need to approach various authorities one by one!! The PSC allows you to find all relevant information and to send in your online applications to the responsible authority through one single contact point, the PSC. You can complete your administrative formalities electronically through the PSC. Just contact the PSC of the country that you want to do business in.
All PSCs are part of the European EUGO network ; through a central website you can easily access all PSCs in Europe. Of course, the services of the PSCs are optional. You may always address yourself directly to the relevant authorities, too.
Check also the legislation on this topic in: