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Moving a Business from the USA to Germany

Moving a business to another country can be a daunting prospect, however, successful navigation of the risks involved can often create huge opportunities. The European market is enormous, and moving a company to Germany places you in a strong position at the heart of the continent. Bringing the right idea to Europe at the right time can result in you establishing a foothold in this lucrative market before your competitors have had a chance to respond. At Schlun & Elseven Rechtsanwälte, our aim is to be your reliable legal partner and to provide the support and guidance needed to negotiate German bureaucracy. With our counsel, your company will be established on solid ground and will have access to legal advice across all areas of German law

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Comprehensive legal advice when moving a business from the USA to Germany.

At Schlun & Elseven, our lawyers will provide you with ongoing, full-service support throughout.

Coming to Germany as an Entrepreneur or for Company Expansion

Moving your business from the USA to Germany may involve an entrepreneur looking to bring a business idea to the European market or may involve an established company expanding to the Europe. If you are focused on  expanding an existing business to Germany, it is important to know what the purpose of the German company will be.

If your company in Germany should have a degree of independence and be able to respond to developments in Germany without needing to wait for the main office, the subsidiary may the most suitable means of expansion. The subsidiary company is a legally independent company with its own legal personality, in which the parent company holds a majority stake. Subsidiaries are established according to the provisions of German company law. In this respect, the subsidiary company of a foreign parent company has a German legal form. However, these subsidiary companies have high bureaucratic burdens in establishing themselves and should be considered by companies looking for a long-term presence in Germany.

The permanent establishment (or “representative office”) is another model of expansion that is very different to the subsidiary company. The permanent establishment is dependent on the company headquarters abroad and may not run its operations under a different name to the main office. This company does not take part in business transactions independently and is, therefore, more suitable for those who are unsure about whether they want a long-term commitment to Germany.

The branch office is another means to consider. The branch office is between the two other forms of expansion models as while it does have its own legal personality it is also, to a certain extent ,dependent on the company of the head office. It is seen as a separate establishment from the company’s head office and can complete its own legal transactions for a temporary purpose – within the scope of the business activities of the head office. Despite this limited-commercial independence, the branch office does not have the status of a legal entity and, therefore, cannot itself be the carrier of rights and obligations.


Start-Ups, Entrepreneurs and Moving to Germany from the USA

With the Visa for Self-Employment, it is possible for entrepreneurs based in the USA to move to Germany to start a new business. This visa can be applied for under § 21 German Residence Act, and once granted, it provides the entrepreneur with an initial three year period to reside in Germany. However, should the business be successful and they want to remain longer in Germany, it is possible to move on to a permanent residence permit and, from there, to German citizenship by the process of naturalization. At Schlun & Elseven Rechtsanwälte, we regularly advise entrepreneurs concerning this particular visa and have helped many clients oversee their applications. To gain this visa, the entrepreneur must prepare a detailed business plan that demonstrates that the business plans to carry out the following requirements:

  • It must meet an economic interest or regional need,
  • the activity is expected to have positive effects on the economy,
  • the financing must be secured by equity capital or a loan commitment.

When making this assessment, the German authorities will examine and quiz the entrepreneur concerning their business plan. They will also evaluate the applicant/application based on some of the following criteria:

  • The relevant business experience of the applicant,
  • The amount to be invested in Germany,
  • The businesses’ impact on the employment and training situation,
  • The project’s contribution to innovation and research.

Should the applicant successfully gain the visa for self-employment, our corporate lawyers will be available to advise you regarding German law with start-up businesses if you go down this route. Our services for start-up companies demonstrate our full-service nature; as we provide legal support with trademarks, copyrights and other intellectual property, we carefully draft and analyse contracts, our certified employment law experts can advise you on the requirements of German employment law and our team also gives industry-specific insights to the German market.


Business Structure in Germany

To successfully tackle the German market, it is important to establish your company on a secure footing. German law provides for extensive options when it comes to partnership arrangements ranging from partnerships with unlimited liability, to those such as the GmbH & Co. KG whereby the role of the unlimited partner can be taken by a limited company. The GmbH business model is similar to the Ltd. company in the UK, whereby the company itself has its own distinct legal personality, and the entrepreneur and management are protected by limited liability. The German economy is filled with GmbHs as it is the model of choice for many small to medium enterprises. GmbHs provide companies with a certain credibility, in comparison to other business models, when negotiating with banks, suppliers, creditors and when looking for investment.

Setting up a GmbH consists of the following procedures:

  • Having the required share capital of EUR 25,000.00. This can be provided in cash or in-kind. When establishing the GmbH, an initial payment of half the amount is necessary for the GmbH to fulfil its legal requirements.
  • Drafting the articles of the association
  • Registration with the Commercial Register
  • Registration with the Trade Office.

Alternatively, a company can go down the route of the UG (Unternehmungsgesellschaft) or the Entrepreneurial Company. This model is similar to the GmbH but it is cheaper to establish as a UG company requires a share capital of only €1. It is provided for under § 5a Limited Liability Companies Act and this model was implemented to encourage start-up companies in Germany. The UG also provides its management with limited liability and the company with a distinct legal personality. However, it is often not seen as credible as GmbHs, and often UGs are eventually transformed into GmbHs once they have established themselves on the German market.


Employment Law Advice in Germany

Employees in Germany have extensive safeguards compared to those in the USA. Entrepreneurs coming from the USA to Germany need to be aware of the protections afforded to employees under German employment law. The minimum number of holidays for those working 5-days a week, for example, is 20 days, but often employees are given between 24-30 days. In Germany, the working week is defined as the 6 days from Monday to Saturday. Sunday is generally seen as a rest day, and the degree to which German shops close on Sundays can be a culture shock to American businesspeople.

When entering the German market, entrepreneurs should also be aware that working hours during normal workdays may not exceed eight hours. Therefore, 48 hours per week is generally seen as the maximum an employee can work. There are also extensive rules concerning pauses and breaks during the workday. For Start-Up companies, in particular, such restrictions and regulations may need to be integrated into their approach, as it is not uncommon in other areas for entrepreneurs to work far beyond the regular working hours. Long hours are often needed for the business to have a successful beginning. Knowing what is permitted and what can lead to legal difficulties is important when starting in Germany.

There are also strong protections against discrimination, unfair dismissal and employment regulations concerning instructions in the workplace and employment contracts, that business leaders should be aware of. At Schlun & Elseven Rechtsanwälte, our employment team consists of certified experts in employment law; Dr. Thomas Bichat and Mr. Jens Schmidt, and they are available to support you with matters of German employment law.

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