Expanding a business into Germany requires compliance with specific legal, tax, and digital criteria before commercial activity begins. The Federal Republic of Germany (Bundesrepublik Deutschland) is a civil law jurisdiction with regulated entry requirements for foreign companies.

Business Structure and Legal Entity Formation

Legal Entity Options

• German law recognises multiple corporate forms, including Gesellschaft mit beschränkter Haftung (GmbH), Aktiengesellschaft (AG), Unternehmergesellschaft (UG), and branches of foreign companies.
  
  

• The GmbH requires a minimum share capital of €25,000, with at least €12,500 paid in before registration.
  
  

• An UG (“mini-GmbH”) can be established with a share capital of €1 to €24,999, subject to mandatory reserves until €25,000 is reached.
  
  

• The AG requires a minimum share capital of €50,000.
  
  

• Foreign companies may establish a branch (Zweigniederlassung) without separate share capital but must register the parent company’s details in the German Commercial Register.
  
  

Registration Requirements

• Registration in the Commercial Register (Handelsregister) is mandatory for corporations, partnerships, and branches.
  
  

• Legal representatives must appear before a German notary to notarise the articles of association and shareholder resolutions.
  
  

• Company registration requires presentation of passports of directors, proof of paid-in capital (for GmbH/UG/AG), and a German business address.
  
  

• Business names must be unique and comply with the Act on Regulation of Commercial Names (Namensrecht).
  
  

Licensing and Regulatory Compliance

Industry-Specific Licenses

• Certain sectors require federal or state licences before operations, including financial services, healthcare, pharmaceuticals, and food production.
  
  

• Banking and financial services require authorisation from the Federal Financial Supervisory Authority (BaFin).
  
  

• Pharmaceutical distribution requires permits under the Medicinal Products Act (Arzneimittelgesetz).
  
  

Mandatory Registrations

• Companies must register with the local Trade Office (Gewerbeamt) before commencing operations.
  
  

• Registration with the Statutory Accident Insurance (Berufsgenossenschaft) is required to provide workplace accident coverage.
  
  

• Employers must register employees with the Health Insurance Provider and the Pension Insurance Fund.
  
  

Taxation in Germany

Corporate Income Tax

• Corporate income tax (Körperschaftsteuer) is levied at a 15% rate on taxable profits.
  
  

• A Solidarity Surcharge (Solidaritätszuschlag) of 5.5% of the corporate tax amount is added, effectively increasing the rate to 15.825%.
  
  

• Trade tax (Gewerbesteuer) is imposed by municipalities with rates typically between 7% and 17.5% of profits, resulting in an effective rate of approximately 30% when combined with corporate tax.
  
  

Value-Added Tax (VAT)

• Standard VAT (Mehrwertsteuer) in Germany is 19%.
  
  

• A reduced rate of 7% applies to specific goods and services, including certain food items, books, and cultural events.
  
  

• VAT registration is mandatory once taxable supplies are made in Germany, even if total sales exceed the intra-EU threshold.
  
  

Payroll and Social Security Contributions

• Employers must withhold wage tax (Lohnsteuer) from employee salaries and remit it to the tax authorities.
  
  

• Social security contributions include pension insurance (Rentenversicherung), health insurance (Krankenversicherung), unemployment insurance (Arbeitslosenversicherung), and long-term care insurance (Pflegeversicherung).
  
  

• Employer and employee each contribute roughly 50% of social insurance premiums within statutory limits.
  
  

Tax Filings and Compliance Deadlines

• Corporate tax returns must be filed annually with the Federal Central Tax Office (Bundeszentralamt für Steuern).
  
  

• VAT returns are generally filed monthly or quarterly, depending on annual turnover.
  
  

• Annual financial statements must be filed with the Commercial Register and, if required, the Federal Gazette (Bundesanzeiger).
  
  

Employment Law and Workforce Regulations

Employment Contracts

• Employment contracts must comply with the German Civil Code (Bürgerliches Gesetzbuch) and specific labour laws.
  
  

• Contracts must specify compensation, working hours, notice periods, and applicable collective agreements if relevant.
  
  

• Probationary periods must be explicitly stated; maximum probation periods are typically six months.
  
  

Working Time and Leave

• The Working Hours Act (Arbeitszeitgesetz) limits weekly work hours to a standard of 48 hours averaged over six months.
  
  

• Employees are entitled to a minimum of 20 paid vacation days per calendar year based on a five-day week.
  
  

Termination Protection

• The Protection Against Dismissal Act (Kündigungsschutzgesetz) applies to employers with more than 10 employees and employees with more than six months tenure.
  
  

• Notice periods for termination depend on years of service, ranging from four weeks to up to seven months for long-serving employees.
  
  

Digital and Online Business Requirements

Domain Registration

• Online presence requires a country-specific domain; companies operating in Germany often use a .de domain to signal local presence and trust.
  
  

• Domain acquisition and management options include de domain registration services, which handle German country-code domain setup and compliance with DNS requirements.
  
  

Data Protection and Privacy

• Germany enforces the EU General Data Protection Regulation (GDPR), which mandates lawful processing of personal data, data minimisation, and explicit consent where required.
  
  

• Companies processing personal data must appoint a Data Protection Officer (DPO) if core activities involve large-scale monitoring or sensitive data.
  
  

• Data breaches must be reported to the Federal Commissioner for Data Protection and Freedom of Information (BfDI) within 72 hours of detection.
  
  

E-Commerce Regulations

• Online sellers must display a legally compliant Impressum (legal notice), including company name, legal form, address, and contact information.
  
  

• Terms and Conditions (AGB) must be accessible and legally valid if used; unclear or unfair clauses can be void under consumer protection law.
  
  

Financial Reporting and Auditing

Accounting Standards

• Companies must prepare annual accounts according to German Generally Accepted Accounting Principles (HGB) or IFRS if applicable for consolidated accounts.
  
  

• Small enterprises may qualify for simplified reporting under HGB.
  
  

Audit Requirements

• A statutory audit is required for corporations exceeding two of the following thresholds:
  
  

• €6 million in total assets
  
  

• €12 million in revenues
  
  

• 50 employees on average
  
  

Conclusion

Entry into the German market involves defined legal structures, registration in official registries, sector-specific licences, and compliance with corporate, payroll, and VAT tax regimes. Expansion also necessitates adherence to employment law, data protection mandates, and digital requirements including domain registration and online disclosures. Each requirement must be properly documented and filed with the competent authorities before commencing commercial activity.