Germany has a vast legislation on the registration and management of companies. However, certain types of companies must abide by certain laws. Even if the German Commercial Code provides the main regulations for setting up a company in the country, the joint stock company (Aktiengesellschaft, AG) falls under the specific regulations of the German Stock Corporation Act (AktG). The process of opening a joint stock company in Germany can be handled by our team.
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Legal framework of the joint stock company
The Stock Corporation Act governs the procedural matters on:
- the incorporation procedures,
- management,
- powers of the supervisory board of the German AG,
- the rights and obligations of the shareholders,
- the share capital requirements,
- dissolution procedures for German AG.
Among the other laws governing joint stock corporations are the German Civil Code and the Insolvency Code. For complete information about the legislation on this type of company and the process of setting up joint stock corporations you may also ask our German attorneys.
Requirements to open a joint stock company in Germany
German joint stock corporations may be registered by one person or legal entity and the main documents with respect to its registration are the Articles of Association. The German AG’s management system is dualistic and it must be divided into the management board and the supervisory board. The management board will manage the German AG’s day-to-day activities, while the supervisory board acts as a non-executive director and will monitor the management board’s activities. The shareholders of the German company will exercise their powers during the annual general meeting or other extraordinary meetings.
Below, we present the main characteristics of a joint stock company in Germany:
When it comes to share capital requirements, a German joint stock corporation must have a minimum share capital of 50,000 euros. However, only 12,500 euros must be deposited upon the incorporation of the company. The German joint stock company’s name must contain the words Aktiengesellschaft or the abbreviation AG. The company may not operate until it has been registered with the German Commercial Register.
Accounting requirements for the German AG
The German joint stock company must register for taxation purposes. The management board is required to maintain the accounts. They must also prepare the annual accounts, the annual balance sheet, the profit and loss statements and other notes on the bookkeeping. The accounts will be verified by the supervisory board.
A German joint-stock company will be subject to the local GAAP or IFRS for accounting purposes. Moreover, companies are required to keep their books in the country, however, our accountants in Germany can also give you details about the option to keep the books in electronic format. You can discuss more about these requirements with our team.
With respect to the taxation of German joint stock companies, they will be subject to the corporate tax, the dividend tax and the trade tax. Depending on the types of goods or services they provide. Our team can help you open a joint stock company in Germany.
Documents needed to register a joint stock company
To register a joint stock company in Germany, certain documents and procedures are required. Below is a list of the main documents needed for registering an AG in Germany:
- Articles of Association (Satzung): must be drafted and signed by the founders of the JSC in Germany. This document outlines the internal regulations of the company;
- Proof of minimum share capital;
- Notarial certification of the incorporation: the incorporation of the JSC in Germany must be notarized by a German notary public;
- List of the members of the management board;
- Appointment of the company’s management and supervisory board members: document confirming the appointment;
- Business address proof;
- Tax registration documents: the German JSC will need to be registered with the local tax office(Finanzamt);
- Public announcement of incorporation;
- Proof of identity of the shareholders and board members;
- Application for Commercial Register registration.
Benefit from the assistance offered by our specialized German law firm in order to prepare all the needed documentation to open a joint stock company in Germany.
Tax incentives for joint stock companies in Germany
Germany offers various tax incentives that can benefit joint stock companies (AGs). These incentives are designed to encourage economic growth, innovation, and investment in sectors like research and development (R&D) and sustainability. Companies in Germany that engage in research and development can benefit from tax credits or deductions. The German government encourages innovation, particularly in industries such as technology, healthcare, and engineering. By deducting eligible R&D expenses, companies can reduce their taxable income, ultimately lowering the overall tax.
Some regions in Germany offer grants or subsidies to businesses that invest in capital-intensive projects, especially those related to green technology, digital transformation, and infrastructure improvements. These grants are often targeted at fostering regional development and job creation.
Dividends paid to corporate shareholders may be exempt from withholding tax under certain conditions, provided that the shareholder is a corporate entity within the EU or EEA. This allows for easier reinvestment of earnings within the corporate group.
Germany has signed numerous double taxation treaties with other countries, which can help companies avoid double taxation. These treaties often reduce withholding taxes on dividends, interest, and royalties, making Germany a favorable location for multinational corporations.
Our attorneys in Germany can offer additional information regarding the taxation system in this country, especially for German joint stock companies.
Taxation data for JSC in Germany
The taxation of joint stock companies in Germany is governed by various corporate tax laws, as official data mentions:
- Corporate tax: 15% on taxable income;
- Trade tax: Between 7% and 17%, depending on the municipality;
- Solidarity surcharge: 5.5% of corporate tax;
- VAT: 19% standard rate, 7% reduced rate for certain goods and services;
- Dividend tax: 25% withholding tax on dividend distribution, plus a 5.5% surcharge;
- Capital gains tax: 25% on capital gains, with some exemptions;
Furthermore, our team of German accountants is also able to provide you with information on various business aspects in Germany, such as the need to register for VAT in Germany. This assessment is based on the size of your company, as well as the recorded annual turnover (for the previous calendar year), and/or the estimated turnover for the current calendar year. You can rely on our assistance for VAT registration in Germany, as well as filing and payment compliance. More than that, EORI registration in Germany is also required when the company is involved in trade activities. Our specialists can help in this matter too.
If you need guidance when setting up a joint stock corporation in Germany you can contact our Germanlawyers. Our team can also help you open a limited company in Germany.