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This type of legal form is often used by international businesses that have decided to set up a subsidiary in Germany; also local entrepreneurs choose this legal form for their small and medium businesses. It combines relatively few obligations with high flexibility to be set up in any sector of the economy. Limited Liability company is subject to corporate income tax, trade tax and solidarity surcharge. The minimum share capital for LLC is 25,000 EUR with at least 12,500 EUR being verifiably in the bank account at the time of the company registration. As the name of this legal form indicates, shareholders are liable only with the contributed capital not risking with their personal property. An LLC is generally managed as well as legally represented by the company's managing directors. Minimum one managing director has to be appointed for an LLC and he or she does not have to be neither a shareholder of the company nor a resident of Germany. Typically, shareholders are able to exercise direct influence on the company through binding instructions to the managing director. Before deciding if LLC is the most suitable legal form for your business, it should be kept in mind that this type of company's share cannot be offered for sale to the public. Meanwhile, also the administrative and financial inspections are less stringent in comparison to public limited companies. Mini-GmbH Another, highly similar legal form for businesses is called a mini-GmbH, which is basically the same as the regular LLC in terms of having limits on the shareholders' liability and no restrictions regarding a business it can undertake. Meanwhile it allows entrepreneurs to contribute less capital upon registration of the company in Germany, therefore risking with less funds at the beginning of operations. In fact, there is no minimum share capital required at all. Instead, 25% of the profits made by the company must be set aside in special reserves until the total amount of said reserves reaches 25,000 EUR. When this happens, the company is converted to regular LLC. Mini-GmbH allows young entrepreneurs to start their businesses with less capital at stake, therefore reducing their risk and decreasing the cost of capital until the business becomes successful and generates profits. German LLC taxation In general, taxes are enforced and administered by the local tax office. Local tax offices are usually responsible for administrating individual income tax, Corporate Income Tax (CIT) as well as Real Estate Transfer Tax (RETT) and Value Added Tax (VAT). While Trade Tax is based on the corporate taxes administered by local tax office, the enforcement of Trade Tax is under local municipalities' responsibility. German LLCs are generally subject to taxes explained below: Corporate Income Tax – levied on company's worldwide income, unless double tax treaty is in place. CIT rate is 15%, meanwhile a solidarity surcharge of 5.5% is levied on the amount of CIT. This results in aggregated tax rate of 15.825%; Trade Tax – levied by the municipality of the registered office of the business. Standard tax rate is 3.5%, while additional multiplier is supplemented in range of 200% to 500% and set by each municipality individually. This results in aggregated tax rate of 7% to 17.5%. Both taxes are assessed on an annual basis, however, companies are obliged to make prepayments of CIT and trade tax on a quarterly basis based on an estimated tax amount due of the current year. http://www.confiduss.com/en/jurisdictions/germany/business/company-formation/
