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Germany is my largest trade and economic and technical partner in Europe. According to incomplete statistics, at present I have set up in Germany about 500 various types of Chinese-funded organizations, the vast majority of which are limited companies, only a very few joint-stock companies. Germany is an open market, highly developed industrial country with large market capacity but fierce competition. Germany implements high wage, high welfare and high tax policies, labor and operating costs are very expensive. In recent years, the proportion of tertiary industry in Germany has been increasing, old industries are gradually transferring to the third world and other places, and the number of corporate bankruptcies has been climbing. Chinese enterprises to set up a company in Germany, should fully do a good job of market research, careful decision-making.

I. Comparison of the main forms of German companies and their characteristics

(a) Personengesellschaft (Personengesellschaft)

Personengesellschaft (hereinafter referred to as Personengesellschaft) refers to one or several natural persons who bear unlimited liability to the creditors of the company with all of their assets to be incorporated in the name of the individual and act as the owner or shareholder of the company, mainly The two companies (Kommanditgesellschaft, KG), unlimited trading company (Offene

Handelsgesellschaft, OHG) and so on. These companies are mostly family businesses established in the pre-war and early post-war period. Due to the unlimited liability of all personal assets, the primary form of company, the People's Joint Stock Company, is no longer in line with the development trend of the modern economy.

(B) Kapitalgesellschaft (Kapitalgesellschaft)

Kapitalgesellschaft (hereinafter referred to as Kapitalgesellschaft) refers to one or several natural or legal persons who have reached the minimum registered capital required by law to be capitalized. beschraenkter

Haftung, GmbH) and joint-stock companies (Aktiengesellschaft, AG), the two basic forms, that is, the domestic usually referred to as the basic model of the modern enterprise system.

1. Limited Liability Company

The minimum registered capital (Stammkapital) of a limited liability company is now 25,000 euros, with which it is liable, and personal property is excluded from the company's debts. The company can be established by one or several shareholders. The registered capital can be contributed in money or in kind, with a minimum contribution of 100 euros per share and a nominal value of 50 euros for shareholders in multiples of 50 euros. No shareholder may subscribe more than one basic contribution at the time of company registration. If the contribution is made in kind, the object of the contribution in kind and the amount of its valuation must be set forth in the articles of incorporation. The internal management system of German companies is different from that of the United States and China. The chairman of the board of directors is the chief executive officer (CEO) and there is no general manager. The chairman of the limited liability company that is the general manager or president, called Vorsitzender

der

Geschaeftsfuehrung, director (Geschaeftsfuehrer) that is the deputy general manager or vice president. There are also limited liability companies due to the small size, only a Geschaeftsfuehrer, this person is the chairman of the board.

2. AG

The minimum registered share capital (Grundkapital) of an AG is now 50,000 euros. The minimum nominal value of each share is 1 euro. An AG may or may not be listed, but listing is subject to authorization. The application for listing is made by the German credit institutions and the approval is given by the stock exchange. The stock exchange is responsible for the approval of the application for listing. The stock corporation is also subject to limited liability only in relation to the registered share capital. The general meeting of shareholders (Hauptversammlung) of a stock corporation elects the supervisory board (Aufsichtsrat), which consists of half representatives of management and half representatives of labor (50 percent of the votes of each party, in the absence of a majority, the chairman of the supervisory board has two votes), and which appoints the board of directors (Vorstand). As in a limited liability company, the members of the board of directors may or may not be shareholders, in most cases they are not, and are appointed on a contractual basis. Chairman (Vorstandsvorsitzender), the functions and responsibilities of the board of directors (Vorstandsmitglied) and the chairman of the board of directors of the limited liability company is no different, only the German name is different.

(3) The main forms of foreign companies establishing branches in Germany

The term branch in the literature on company law in China refers only to a branch of a company or a branch of a bank, and does not include independently operated wholly-owned subsidiaries or joint ventures, or representative offices in other places or countries, which are otherwise known as representative offices. The German term branch (Niederlassung) is a broad concept that covers all three situations. This article discusses the branch to the German concept for the object.

1. Representative office (Repraesentanz)

The procedure for setting up a representative office in Germany is relatively simple, only need to register in the local business registration office (Gewerbeamt), and the main person in charge can be exempted from work permits. According to the relevant German laws and regulations and the agreement on avoidance of double social insurance between the Chinese and German governments, the personnel of the representative office are "dispatched" (Entsendung) and are not obliged to participate in the local social insurance in the country where they are stationed. Since the representative office is not an independent legal person, it can only represent the domestic parent company to engage in indirect promotional activities such as contacting customers, market research, after-sales service, etc., and cannot sign legally effective economic and trade contracts; likewise, since it is not an independent legal person, the representative office does not need to pay enterprise income tax, business tax and other taxes that legal persons must pay, but at the same time, it cannot refund the tax (value-added tax on the public goods of the representative office). The only tax that needs to be paid is the personal payroll tax (Lohnsteuer).

2. Capitalized companies

As mentioned above, the limited liability company and the joint stock company are both capitalized companies, and are the most common forms of foreign company branching out in Germany (especially the former). Despite the difference in name, there is no difference between them in terms of scope of business, tax obligations, and corporate liability. The main taxes of a joint venture include: (1) corporate income tax (Koerperschaftssteuer) at a rate of 25%, which was reduced to 26.5% in 2003 due to the floods in Germany in 2002; (2) turnover tax (Gewerbesteuer), the effective rate of which varies from 17% to 21% depending on the region; (3) solidarity contribution ( Solidaritaetsabgabe), at a rate of 5.5% of net profit after deduction of sales tax and corporate income tax. The corporate tax bill is calculated on a three-tier progressive basis, with the average tax burden across Germany being around 40%.

Germany has a social market economy and is a high welfare state. Once a joint venture company employs an employee, it must insure him or her against old age, medical care, nursing care, unemployment, and workplace accidents in the five basic statutory insurance policies, of which the first four premiums are borne by the employer and the employee 50%, and 100% of workplace accidents are paid by the employer. The current rates for the five statutory insurances are 19.5%, around 13.7%, 1.7%, 6.5% and 2.7% (the rate for industrial accident insurance varies from industry to industry, and the 2.7% here refers to the rate for the foreign trade wholesale industry). The additional cost of the social insurance portion of the wages paid by the employer is about 23.4% of the total wages of the employees.

3. Zweigniederlassung (branch of a joint-stock company)

A foreign company that establishes a limited liability company or a joint-stock company in Germany may, depending on the needs of its business, set up a branch of its company in a city other than its head office or in the local area. A branch office is the concept of a branch office in Germany. For example, COSCO Deutschland GmbH is headquartered in Hamburg and has a branch (Zweigniederlassung) in Bremen, the second largest port in Germany. Its Bremen branch is not an independent legal person, and its salary is paid by the Hamburg head office, and its annual accounting statement is submitted to the Hamburg head office for summarization after the completion of the preparation, and the enterprise income tax, business tax, solidarity donation, etc. are paid by the head office uniformly. It should be noted that, although the branch is not an independent legal person, but still need to be registered in accordance with the relevant provisions of Germany, and business registration, business license.

II. Basic conditions and procedures for setting up a company in Germany

(A) Basic conditions

1. Residence permit

Non-EU citizens who intend to engage in business activities in Germany must present their residence permit, which does not contain relevant restrictions, to the competent authorities. Therefore, if our company intends to set up a business in Germany, its staff must first obtain a residence permit in Germany. Residence permits can be obtained from the German Embassy or Consulate in China. Before issuing a residence permit, the German Embassy or Consulate in China will contact the German Aliens Office (Auslaenderamt) for advice. The Auslaenderamt usually contacts the local authorities concerned by the application, such as chambers of commerce and industry, economic promotion companies, authorities in charge of economic and labor affairs, etc. The duration of the initial entry visa (residence permit) is generally three months. During this period, foreigners are required to report and register with the local Aliens Affairs Bureau or governmental authority or the police station near their place of residence as soon as they arrive at their destination. To extend the residence permit, an application should be submitted to the local Aliens Office. It is not necessary for the person opening a company in Germany to reside in Germany, but there must be a designated representative who resides in Germany and assumes the relevant responsibilities.

2. Labor Permit

Non-EU citizens who intend to work in Germany must apply for a labor permit. Labor permits are only issued to foreign nationals who have the right of abode. The issuing authority is the labor office of the region where the person intends to work. It is easier for foreigners with a residence permit to obtain a work permit, as applications submitted to German embassies and consulates abroad are pre-examined by the relevant authorities in Germany before being approved. A work permit is usually valid for 12 months at the beginning of the work period. However, the following persons are not required to apply for a labor permit: (1) unpaid trainees in Germany who are not involved in the management of the company; (2) legal representatives (managing directors) or senior representatives of joint-stock companies, limited liability companies, or partners in a joint stock company; (3) foreign nationals retaining their residence abroad who are engaged in the supervision of assemblies or the repair of imported equipment in Germany for a certain period of time; (4) heads of representative offices of foreign companies. The person in charge of the representative office of a foreign company.

3. Business activities requiring special authorization

The following trades and businesses require specialized knowledge and personal credibility, as well as special authorization from trade associations and chambers of commerce and industry in order to operate: banking and insurance; auctioneering; hotels and catering and hotels with more than eight beds; the production of weapons, ammunition and pharmaceuticals and their distribution; the wholesale and retail sale of animals, motor oils, power fuels, pharmaceuticals and plant protection agents; craftsmen are required to have special authorization; and the wholesale and retail sale of handicrafts. retail sales; handicraft operators requiring a trade technician's license

(Meisterbrief); freight transportation, passenger transportation, taxicabs, and car rental businesses. Company premises engaged in special operations require the approval of the Building Inspectorate and the Trade Inspectorate, in addition to the approval of the Order Management Department. The company's business license can be obtained before opening a business.

4. Domestic filing or approval

I intend to set up a trading company and representative office in Germany, you need to apply to the Ministry of Commerce for registration or approval. Enterprises to the provincial or single city foreign trade and economic cooperation departments to declare, the competent departments to consult my embassy (consulate) in Germany, the Department of Economic and Commercial Affairs (Office) for approval and reported to the Ministry of Commerce for the record, to apply for a certificate of approval; the central enterprises can be directly consult the embassy (consulate) in Germany, the Department of Economic and Commercial Affairs (Office), to the Ministry of Commerce to apply for approval, and to receive the certificate of approval. After receiving the certificate of approval, the enterprise shall, within one year, handle my customs, foreign exchange, banking and personnel expatriate management procedures and the registration of property rights of overseas state-owned assets.

According to the relevant provisions of the Ministry of Commerce, the competent authorities of foreign trade and economic cooperation in Shanghai, Beijing, Tianjin, Jiangsu, Zhejiang, Shandong, Guangdong, Fujian, Ningbo, Xiamen, Qingdao, Shenzhen and other provinces and cities can approve the establishment of enterprises in Germany to set up overseas enterprises or representative offices, but still need to fulfill the procedures for consulting with the embassies (consulates) of the Economic and Commercial Affairs Division (Office) of the German Embassy (Office).

(2) Procedures

1. Business declaration

(1) As long as business activities are carried out in Germany, a declaration must be made? The applicant should register the business in writing with the local government's "economy and order agency" (in some places called the business registration office) and receive a business license (Gewerbeschein). The extension of the scope of business, such as the installation of vending machines (e.g., selling cigarettes or sweets) within the scope of business or as an addition to the business at a public place, also needs to be declared. Copies of the return will be sent by the above organizations to the local finance bureau, vocational co-operative society and chamber of commerce and industry respectively, so that one does not have to file a separate return separately. Failure to file or to file on time in violation of the regulations can result in fines. The filing fee is generally very low, usually 18 euros. If an authorization is required, an additional authorization fee must be paid.

(2) Declarant

In the case of an individual enterprise, the owner of the enterprise declares; in the case of a limited liability company, the general manager declares; in the case of a bicorporation, the shareholders with unlimited liability declare; in the case of a civil law company or a company with unlimited liability, the shareholders declare; in the case of a joint-stock company or a registered association, the chairman of the board of directors declares.

(3) Documents and materials to be submitted

Completed declaration form and passport; in the case of a legal person (e.g., a limited company), a copy of the business register; relevant approvals for the industry to be approved; and, in the case of a handicraft enterprise, the Handwerkskarte card

(Handwerkskarte).

2. Business registration

(1) Business name of the company

The company must have as its business name the object of its business, or the names of all the shareholders or at least one of them, plus a note indicating the form of the company. The names of persons other than shareholders may not be used as the business name of the corporation. The business name of a joint stock company must bear the symbol "limited liability" or "joint stock company". The name of the company must not be misleading as to the scope of business of the company and must be clearly distinguishable from the names of other local companies that have been registered in the court.

(2) Registration fee

The registration fee varies depending on the amount of registered capital, and usually includes court fees, notary fees, publication fees, and consulting fees. The registration fee for a joint stock company is about 250 to 400 euros; the minimum registration fee for a limited liability company is about 750 to 1,000 euros; and the minimum registration fee for a joint stock company is 1,500 to 1,750 euros. In addition, if you consult with a lawyer, etc., you should also add a fee for this. Prices should be asked before consulting.

(3) Payment of capital

Prior to registration, a limited liability company pays cash contributions totaling at least 12,500 euros, and the remainder may be contributed in kind, which must be paid to the company prior to registration. In addition, if the company is set up by one person, the founder must also submit a guarantee for the unpaid balance of the capital. Joint-stock company registered capital can be paid in cash, in kind, but in-kind contributions need to be assessed to determine the value of physical.

(4) Commercial Register and Required Documents

According to the German Commercial Code, the establishment of a company must be registered in the commercial register in the local court in a public and credible form, i.e., notarized, in order to be entered into the commercial register. The commercial register is divided into two categories, A and B. Single traders and companies of persons are registered in category A (registration number HRA...) and companies of capital are registered in category B (registration number HRB...). The commercial registration of a joint stock company is more complicated, so please consult a company law or economic law attorney before proceeding. The registration procedure must be carried out by a notary public, who submits to the local court an application for commercial registration signed by the chairman of the board (managing director) of the company and accompanied by the following documents:

A copy of the domestic parent company's business license notarized by a notary public, together with the original notarized power of attorney of the chairman of the board of directors (the juridical person) granted by the parent company and its certified translation into German; the original or an officially certified copy of the articles of association translated into German; the shareholders' rights and obligations; and the name and address of the shareholder(s). officially certified copy of the articles of association; list of shareholders; power of attorney of the shareholders; certificate issued by a notary public; passport (for personal registration); residence and work permit; business license (you can also register first and then apply for a business license). In case of incorporation by proxy, the original power of attorney translated into German or an officially certified copy is required.

The official registration of a company in the commercial register is completed by an announcement in the German Federal Gazette and in a local newspaper or Die Welt. There is no need to make an announcement in other newspapers or other media after the registration.

(iii) What to pay attention to? Nowadays, there are a lot of fraudulent companies under the name of Federal Database, Public **** Publishing House, Company Registration Center, etc., to issue registration forms and remittance forms to newly formed companies. They imitate the publication format of the Federal Gazette, which makes it very easy to mistake them for official bodies. Once payment is made, it is equivalent to signing a long-term contract with them, and they will demand payment every year, ranging from a few hundred to a few thousand euros. It is very troublesome and difficult to terminate the contract, which requires a long legal battle and a lot of money. Please be vigilant when setting up a company, and if in doubt, consult the Chamber of Commerce and Industry and other organizations.

III. How to choose the right form of company

(I) New changes in the German Stock Act

In July 1998, the German Stock Act was amended to greatly simplify the approval requirements, with the aim of supporting and promoting medium-sized enterprises with a certain degree of strength, expertise and potential to take advantage of this form of company to embark on an accelerated track of self-better development. The main changes are as follows:

1. Cancel the original must have more than five shareholders limit, as long as there is a natural or legal shareholders can also set up a joint-stock company; 2. Cancellation of the approval of the establishment of the company must be sent to the local Chamber of Commerce and Industry for the record of the provisions of the local local court business registration can be sent to the Office of the 3. Cancellation of the convening of a general meeting of shareholders must be published in the newspaper before the announcement of the form of the provisions, simplified to as long as the form of registered mail, and the form of the company can be sent to the local court for the record. Simplify the requirement that shareholders be notified by registered mail before the shareholders' meeting is held; 4. Abolish the requirement of notarization for all resolutions of the shareholders' meeting, and limit the notarization procedure to the most important fundamental resolutions adopted by the shareholders' meeting; 5. If the number of employees is less than 500 (including 500), it is not necessary to arrange labor representatives in the supervisory board; 6. As long as there is a special provision in the articles of association, shareholders have the right to decide the proportion of reserves to be set aside in the profits; 7. The shareholders shall have the right to decide on the percentage of reserves to be set aside from the earnings, provided that there is a specific provision in the Articles of Association of the Company; 7. The right of non-shareholders of the Company to subscribe for shares shall be canceled in the event that the issue price of the Company's shares is not significantly lower than the trading price and that the percentage of the increase in the share capital does not exceed 10% of the registered capital.

(II) Comparison of the advantages of representative offices and capital joint venture companies

The advantages of setting up a representative office in Germany are simple procedures, no need to pay the tax that legal persons need to pay, and lower costs. The main person in charge of the representative office does not need to apply for a work permit, and the policy of linking the minimum wage to the work permit, which is implemented in some places in Germany, does not involve this part of the personnel, so the representative office can control and control the cost of the required fees to a certain extent. Since the representative office does not have a legal personality, it cannot be contracted out. This is where the advantages of establishing a joint venture in Germany lie. Enterprises with real strength and the intention to utilize the German market to vigorously develop import and export trade and economic and technical cooperation should still choose to set up a joint venture company in Germany. In terms of the five statutory social insurance responsibilities of the joint venture company for its employees, within the framework of the agreement on avoidance of double social insurance between China and Germany, the expatriates of my Chinese-funded company can be exempted from the obligation to take out pension and unemployment insurance in Germany, and the cost of their wages will be reduced by 25.6%, which is exactly the same as the exemption of the representative office. The agreement also stipulates that the exemption of these two insurance obligations of the Chinese companies once determined, that is, five years, after which you can apply for an extension of three years; while the representative office can only be exempted from the first four years, and then apply for an extension of three years.

(C) the choice of limited liability companies and joint-stock company comparison

As mentioned above, the two are the same as the joint-stock company, the tax obligations, tax levels, corporate responsibility and so on are exactly the same. But from the company's norms, size and image and other aspects of measurement, the joint-stock company are significantly better than the limited liability company. Among the millions of companies in Germany, there are only about 4,000 joint-stock companies. In Germany, most of the top 500 enterprises are also joint-stock companies, such as Mercedes-Benz, Volkswagen, Siemens, ThyssenKrupp and so on. It should be said that the joint-stock company is a more standardized and more modern advanced form of the joint-stock company, which can be seen from the number of entries in the German Limited Liability Companies Act (***86) and the Stock Act (***410) and the time of enactment (1892 and 1937, respectively). However, among the Chinese companies established in Germany at present, except for the People's Insurance Company of China, which was established as a German company in Hamburg in 1995 and was required to set up a joint-stock company according to German regulations, the rest of them are all limited liability companies.

In short, when planning to set up a company in Germany, domestic enterprises should fully consider the advantages and disadvantages of the various forms of companies permitted by German law, and choose the mode that best suits the company's situation according to its own conditions and long-term development goals. We are of the view that powerful domestic enterprises, even medium-sized enterprises with fist products that intend to actively explore the international market, regardless of their form of ownership, should seriously consider the possibility of setting up a joint-stock company if they wish to establish a presence in Germany. Of course, if the German and neighboring markets are relatively unfamiliar, the first step can be considered to set up a representative office in Germany, when the conditions are ripe and then turned into a joint-stock company.