Costs and Taxes
Founding a company always entails expense.
In order to help you improve your planning as you first start out on the path of founding your company, we have summarised the most important costs and taxes you can expect to face in Germany.
- Costs
Costs of founding a companyCosts will vary depending on the legal structure of your company. A GmbH – a type of limited liability company – is one of the most popular company structures in Germany, while also being one of the most cost-effective. You will need to keep the following points in mind when founding a GmbH:
- Initial capital: At least EUR 25,000, 50 per cent of which (EUR 12,500) must be deposited upon founding.
- Notary fees: Notarisation of the articles of association and entry into the commercial register.
- Consulting fees: Fees for solicitors, tax consultants or business consultants who support you in the process of founding your business.
- Registration fees: Costs for entering the company into the commercial register and officially registering the business with the trade office.
Note:
Make sure to budget for having foreign documents translated and certified, if necessary.Labour costsEmployees are a vital factor in a company’s success. The most important expenses in this area include:- Gross salaries: These depend strongly on employees’ qualifications and roles.
- For example: skilled employees in Düsseldorf earn gross salaries of between EUR 3,000 and EUR 5,000 per month, depending on the industry in question.
- Social insurance contributions: As an employer, you will pay approximately 21 per cent of your employees’ gross salary in contributions to pension, health, unemployment and long-term care insurance.
Hiring employees with the necessary language skills and market expertise can help you succeed in the German and European markets. They can serve as a go-between for your company and your customers or suppliers.- Channels: The Federal Employment Agency, staffing services or job listings in local media.
- Support: We would be happy to put you in touch with contacts at the Federal Employment Agency and other service providers.
Rental costsThe costs for renting office space or storage in Düsseldorf depend strongly on the location, size and facilities:- Offices in top locations: Higher prices, but prestigious locations for business partners.
- Alternative options:
- Business centres and co-working spaces: Flexible office solutions that are often furnished and come with additional services such as administrative staff and conference rooms. You can find an overview here.
- Advantages for start-ups: Lower initial investment and the opportunity to network and exchange experiences with other young companies.
Further information:
An overview of available office spaces and commercial premises is available on the website of the Office of Economic Development Düsseldorf. - Taxes relevant to companies
German tax law can be complex, but there are many organisations you can go to for assistance; they can ease your transition into the German market. The Federal Central Tax Office is a first port of call for all questions regarding investment in Germany.Once your company is founded, however, you should begin working with a tax consultant as soon as possible to ensure that you are meeting all your tax obligations and taking full advantage of any potential benefits.Two types of tax are particularly important for companies in Germany:Corporation tax (Körperschaftsteuer)
- Rate: 15% of the profits of the corporation (a GmbH, for example).
Note:
Only applies to corporations. Business partnerships are subject to income tax instead.Business tax (Gewerbesteuer)Business tax rates are set by municipalities, so they vary.- Examples:
- Düsseldorf: 15.4%
- Cologne: 16.6%
- Frankfurt: 16.1%
- Hamburg: 16.5%
- Munich: 17.2%
- Berlin: 14.4%