Types of secondary establishment
Businesses have two alternatives for establishing themselves in Germany:
The 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. It 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’ (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.
When setting up a new business, the same formalities need to be followed when opening a subsidiary. This depends 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 registration of a 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 to the parent company (head office, legal form, etc.) and the branch establishment itself (capital, any limitation, etc.).
Points of single contact
In the course of the implementation of the EU Service Directive, each Member State has established ‘Points of single contact’ (PSC) and e-government portals. They help the companies, to process all administrative formality together with the foundation or temporary cross-border service provision online. The PSCs grant complete information to all administration matters, that are connected to the foundation or expansion of a service company in a certain country. The following is a list of possible questions:
- Which licences, notifications or permits do I need to obtain to start a business (in my country of origin 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?
Thanks to the PSCs, you no longer have to turn to different authorities!! Turn to the PSC in your country, in which you want to perform your business activity.
All PSCs belong to the European EUGO-Network and can be easily reached though a central website.