Legal forms

in English: private limited company

The most widely used and well-known form of German company with share capital is the GmbH. Prerequisite is original capital of at least EUR 25,000. Liability is limited to the share capital. For these reasons, this form is primarily suitable for entrepreneurs wanting to limit their risk of liability.

in English: partnership

The difference between the Personengesellschaft, also known as “Teilhaberschaft”, and companies with share capital is that the respective partners bear the personal and unlimited responsibility for the liabilities instead of the company. The Gesellschaft bürgerliches Rechts (GbR; in English: civil law partnership), the offene Handelsgesellschaft (oHG; in English: general partnership) and the Kommanditgesellschaft (KG; in English: limited partnership) also number among the partnerships. All of them other than the GbR need to be entered in the commercial register.

in English: independent subsidiary/branch

A branch is not a separate legal entity to the main contractor. It is subordinate to the main subsidiary. In the event of branches established by foreign companies, their internal constitution is based on the company by-laws and the competent foreign law.

Typical characteristics of a branch:

  • The location of the two subsidiaries needs to be clearly separate from each other.
  • This does not mean that the branch can be located in the same municipality or the same commercial register district.
  • The setting up of the branch needs to comprise a specific timeframe
  • The implementation of the corporate goals of the main subsidiary is the main task of the branch, although it may in turn be larger and more important
  • The business activities are not factually distinct from the main subsidiary and may thus not be limited to ancillary or executory activities

The branch needs to be both factually and personally independent. Factually in this case means that even in the event of a cessation of the main subsidiary the branch is still able to exist and be run (usually disposal of operating resources, separate bookkeeping, own bank account).

In the case of the personal perspective this means that it needs to have a manager with a commercial power of attorney or procuration who can independently conclude transactions associated with the branch.

in English: dependent subsidiary/operating facility

A dependent subsidiary may involve several business premises (branches, subsidiaries). However, the branch, also known as operating facilities, is dependent on the main office in every respect. All business processes are conducted via the main subsidiary. Operating facilities are not entered in the commercial register, but do need to be registered with the competent Gewerbeamt (German Trade Office).

in English: representative office

In principle, the term "Repräsentanz" does not exist in Germany, which is why German trade or commercial law does not recognise it. Consequently, a distinction is made between two possibilities. The first possibility is that the legal issue concerned is a dependent subsidiary/operating facility, with the office of the company in Germany being itself commercially active as a component of the proprietary organisation and needing to be commercially registered. The second possibility is that an office is opened and managed by an externally commissioned independent trader, although no commercial activity of the foreign company ensues in Germany.

Registration

Summary of the steps for setting up a GmbH:

• State Capital Düsseldorf:
Ordnungsamt

Link to commercial register:

• Register portal: Handelsregister.de

NRW-Justiz: registry access

Employees

The Düsseldorf employment market offers a large selection of qualified employees. Roughly 46 universities and colleges are located in Düsseldorf and surrounded area. Further information can be found under:

Agentur für Arbeit Düsseldorf
Grafenberger Allee 300
40237 Düsseldorf
Phone 01801 - 664466
duesseldorf@arbeitsagentur.de
www.arbeitsagentur.de/duesseldorf

Social security system:

Unlike other industrial counties, the social security system in Germany is essentially financed by a pay-as-you-go method. The current social security expenses (pension payments, medical treatment, nursing charges and unemployment benefit) are financed by the current contribution payments of employers and employees.

The German social security system consists of five individual components:

  • Health insurance
  • Pension insurance
  • Unemployment insurance
  • Nursing care insurance
  • Accident insurance

All contributions are borne equally by employer and employee. Only the accident insurance contributions are financed solely by the employer. The employee alone bears the additional contribution in the health insurance. The entire employer's share of the social security contributions amounts to approx. 21% of an employee's gross wage.

Every component of social security is managed and administrated by social insurance carriers, to which the insured employees are assigned. Only in health insurance are employees allowed to choose freely between various statutory health funds or (under certain circumstances) take out a private health insurance.

More information:

www.deutsche-rentenversicherung.de