Company formation (GmbH/UG) in Munich-area

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Can someone recommend English-speaking accountant/advisor that can streamline and assist with opening company in Germany? Ideally located in Munich area. 

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I don't know if you have tried here, but you could phone and ask if they offer advice in English or could point you in the right direction.

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Please read this thread on why setting up an UG or GmbH is not a good idea for someone starting out:

 

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4 minutes ago, PandaMunich said:

Please read this thread on why setting up an UG or GmbH is not a good idea for someone starting out:

 

 

Thanks for info. I am not starting, simply moving operation from UK to DE. Paying extra 2K per annum for limited liability sounds much but can be justified. 

 

The freelancer option is tempting but:

- limited liability 

- separating business from person

- expenses (I know freelancer can have expenses, but aren't they capped at certain level?)

- dividend based income 

 

I need a bit of hand-holding (someone who can explain in English each an every step of formation) hence request for info. I have general idea but it is the details that make me nervous. 

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16 minutes ago, Uncle Nick said:

I don't know if you have tried here, but you could phone and ask if they offer advice in English or could point you in the right direction.

 

There is link to English page, however consultations themselves are apparently in German only.

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35 minutes ago, IchBinJack said:

I know freelancer can have expenses, but aren't they capped at certain level?

 

No, they aren't.

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1 hour ago, IchBinJack said:

- dividend based income 

 

First off, your UG/GmbH has to pay:

  1. Körperschaftsteuer + Solidaritätszuschlag: 15%*1.055 = 15.825%
  2. Gewerbesteuer: 17.15% (in Munich: 490% * 3.5%).
    And if you do not have a company and your activity is one of a real freelancer as listed in §18 Absatz 1 Nr. 1 EStG (engineer, programmer, lawyer, medical doctor, ...) then you don't pay any Gewerbesteuer at all.
    If on the other hand you were a simple trader who is a gewerblicher self-employed (every activity except those listed in §18 Absatz 1 Nr. 1 EStG), you would pay 17.15% Gewrrbesteuer, but would get around 77% of that Gewerbesteuer back as an income tax credit.
    No tax credit possible for an UG/GmbH, no matter what is its activity.

 

Then, you have to tax the dividends that you get from your UG/GmbH additionally privately, either:

  • alternative 1: whole dividend with a flat 25% income tax rate, plus Solidaritätszuschalg, which comes to 26.375%
  • alternative 2: 60% of the dividend income taxed at your personal income tax rate plus Solidaritätszuschlag, i.e. 1.055 times your personal income tax rate. Only opt for this if your personal tax rate x is smaller than 41.67% (60%*x*dividend < 25%*dividend --> x < 41.67%), otherwise the standard flat tax of 25% is more advantageous to you. 

Details in:

and:

****************************************

 

As a self-employed, you would have to tax your profit with your personal income tax rate, see green line below (plus, if you are a gewerblicher self-employed 0.23*0.1715 = 3.94% for the Gewerbesteuer, i.e.the part of Gewerbesteuer that you don't get back as an income tax credit).

For example, as a real freelancer (i.e. activity mentioned in §18 Absatz 1 Nr. 1 EStG), at a 70k€ profit, your tax burden would be around 30%.

If you are a gewerblicher self-employed (everybody, who is not a real freelancer)y your tax burden would be around 30% + 3.94% = around 34%.

 

594b9da3e241a_ekstDiagram(1).gif.e741341

 

If you have a company, you would end up paying:

  • alternative 1: 15.825% + 17.15% + 26.375% = 59.35%
  • alternative 2 (assuming your personal income tax rate is 30%, i.e. your profit around 70k€): 15.825% + 17.15% + 0.6*30%*1,055 = 51.965%

So, you see, not having a company means paying less tax.

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Hey @PandaMunich

 

Really incredible depth of information. I appreciate it greatly. You are awesome!

 

I will have to re-calc this again assuming dividends are distributed among me and non-working spouse plus not everything has to be distributed and could be re-invested. 

 

But thanks nevertheless! 

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If you're married, the Splittingtarif applies (the calculations above were for someone single, who is therefore taxed in the Grundtarif), and the taxation changes as following:

 

As a self-employed, you would have to tax your profit with your personal income tax rate, see green line below (plus, if you are a gewerblicher self-employed 0.23*0.1715 = 3.94% for the Gewerbesteuer, i.e.the part of Gewerbesteuer that you don't get back as an income tax credit).

For example, as a real freelancer (i.e. activity mentioned in §18 Absatz 1 Nr. 1 EStG), at a 70k€ profit, your tax burden would be around 20% if your spouse doesn't have any income of her/his own.

If you are a married, gewerblicher self-employed (everybody, who is not a real freelancer) your tax burden would be around 20% + 3.94% = around 24%.

 

594cead37c306_ekstDiagram(2).gif.9dd2e58

 

If you have a company, you would end up paying:

  • alternative 1: 15.825% + 17.15% + 26.375% = 59.35%
  • alternative 2 (assuming your personal income tax rate is 20%, i.e. your profit around 70k€ for someone married): 15.825% + 17.15% + 0.6*20%*1,055 = 45.635%
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On 22.6.2017, 10:53:16, IchBinJack said:

Can someone recommend English-speaking accountant/advisor that can streamline and assist with opening company in Germany? Ideally located in Munich area. 

 

These people are good and speak excellent English:

 

http://www.scur24.com/

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52 minutes ago, IchBinJack said:

plus not everything has to be distributed and could be re-invested

 

Just to be clear: an UG/GmbH pays Körperschaftsteuer+Soli 15.825% and Gewerbesteuer 17.15% (value for Munich), i.e. in total 32.975% on all its profit, regardless of whether said profit was distributed or not.

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2 hours ago, PandaMunich said:

 

Just to be clear: an UG/GmbH pays Körperschaftsteuer+Soli 15.825% and Gewerbesteuer 17.15% (value for Munich), i.e. in total 32.975% on all its profit, regardless of whether said profit was distributed or not.

 

Yes. Understood. This ain't Estonia after all. 

 

So in essence, setting up HQ in say Grunwald (~9% Gewerbesteuer), splitting dividends between self and spouse and not taking out all as income can create beneficial tax structure that is comparable with self-employed and gives the limited liability cover. 

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This was not an allusion to Estonia but to the fact that not too long ago, there were different Körperschaftsteuer tax rates for distributed and undistributed profit in Germany.

 

If you are married, you don't have to split dividends, the German taxation system doesn't care which spouse earns what, each of you is simply taxed as if each spouse had earned 50%*family_income.

 

You have to calculate it through, in some cases it's more advantageous to have yourself employed by your UG/GmbH than taking dividends, that way your salary is a business expense that lowers the profit. But you have to tax 100% of your salary, while with dividends it's only 60%.

 

********************************

 

If you have a company in Grünwald (Hebesatz 240% --> Gewerbesteuer 240%*3.5% = 8.4%), you would end up paying:

  • alternative 1: 15.825% + 8.4% + 26.375% = 50.6%
  • alternative 2 (assuming your personal income tax rate is 20%, i.e. your profit around 70k€ for someone married): 15.825% + 8.4% + 0.6*20%*1,055 = 36.885%

 

which is a bit more than 20% if you're simply self-employed (no matter whether real freelance or gewerblich) in Grünwald.

At Hebesätze up to 380%, you get all Gewerbesteuer back if you're a gewerblicher self-employed.

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Thanks @PandaMunich

 

It seems that freelancer can be cheaper than GmbH/UG. It does not solve the issue of limited liability and getting contracts for some (requirement of being GmbH, avoiding AUG etc).

 

So to original question, forming company in Munich and vicinity? Any recommendations? 

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You need to be GmbH to apply for  “Arbeitnehmerüberlassung” (AUG) which is required by some bigger companies. 

 

Firma.de might be cheap, but they have proved to be difficult to interact in English. 

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And it is your whole livelihood that it at stake due to contract/guarantees vs 25K in the company. Cheaper is relative measure. 

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3 hours ago, IchBinJack said:

You need to be GmbH to apply for  “Arbeitnehmerüberlassung” (AUG) which is required by some bigger companies.

 

So you want to open a Zeitarbeitsfirma?

Who told you that you have to be a GmbH for that?

Please read here, you can also just be a "natürliche Person": https://www.smartsteuer.de/online/lexikon/a/arbeitnehmerueberlassung-lexikon-des-steuerrechts/

and here the law governing Arbeitnehmerüberlassungen, look at §3 (4) AÜG, you just have to be an EU citzen: https://www.gesetze-im-internet.de/a_g/BJNR113930972.html

 

3 hours ago, IchBinJack said:

Firma.de might be cheap, but they have proved to be difficult to interact in English. 

 

Nobody will interact with you in English.

The Notar who will create the GmbH will - like all people of his qualification, since only the very best law students are allowed to become a Notar in Bavaria - know English very well.

 

But the law obliges them to work only in German, and to refuse to work with you if you don't bring along an interpreter, who will translate, so that you actually understand everything.

 

2 hours ago, IchBinJack said:

And it is your whole livelihood that it at stake due to contract/guarantees vs 25K in the company. Cheaper is relative measure. 

 

You seem to have a great belief in limited liability.

I suggest that you first consult a specialised lawyer, a "Fachanwalt für Handels- und Gesellschaftsrecht" and ask him/her to explain to you, just how far the limitation of liability reaches for a Geschäftsführer who also owns the GmbH.

You may be disappointed.

 

You can find such a "Fachanwalt für Handels- und Gesellschaftsrecht" lawyer here (specify "Englisch" in the Fremdsprachen drop-down menu): https://anwaltauskunft.de/anwaltssuche/erweitert/

A first consultation will cost up to 190€ + 19% VAT, this fee is set down by law: https://www.gesetze-im-internet.de/rvg/__34.html

 

For example, you will always be in hock for any taxes your GmbH owes, the Finanzamt will simply issue a Haftungsbescheid and then you - personally - have to pay: http://www.schwerd.info/steuerrecht/haftung-und-haftungsbescheid/215/

For further pitfalls, please read: https://www.gruenderszene.de/allgemein/geschaftsfuehrer-haftung-gmbh

 

If after that consultation you still want to open a GmbH, you will at least do so fully informed about all it entails.

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On 23/06/2017, 22:37:24, IchBinJack said:

You need to be GmbH to apply for  “Arbeitnehmerüberlassung” (AUG) which is required by some bigger companies. 

 

Firma.de might be cheap, but they have proved to be difficult to interact in English. 

 

Hi Jack, this is Chris and I am one of the MDs at firma.de. My apologies that it was difficult to interact with us English. If you can spare some minutes I would love chat with you about your experience. 

 

I just chimed in, because on +4961117207833 an english speaking agent should pick up the phone =) Quite a substantial part of our business is helping non-german speaking clients to form UGs / GmbHs in Germany. 

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