🇩🇪 年度合规 — Germany

Underestimating the total tax burden by focusing only on the 15% corporate income tax rate

Fix: Always calculate the combined effective rate including solidarity surcharge and trade tax, which brings the total to approximately 30%. Factor this into financial projections from the outset and compare after-tax returns with other jurisdictions.

Attempting to incorporate without a German notary or using a non-German notary

Fix: German corporate law requires a German notary (Notar) for GmbH, UG, and AG formation. Remote notarisation via video is now possible for GmbH formations under certain conditions, but a German notary must still officiate. Plan for notary appointments early in the process.

Neglecting the managing director’s personal liability for insolvency filing

Fix: Under German law, the managing director (Geschäftsführer) must file for insolvency within three weeks of the company becoming insolvent (unable to pay debts) or over-indebted. Failure to do so can result in personal liability and criminal prosecution. Monitor cash flow carefully and seek legal advice at the first sign of financial difficulty.

Choosing a UG to save money without understanding the profit retention obligation

Fix: A UG must retain 25% of its annual net profits as a reserve until the retained earnings reach €25,000. This limits the amount you can distribute as dividends and can affect cash flow planning. If you have the capital, starting as a GmbH avoids this constraint and signals greater credibility.