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The GmbH (Gesellschaft mit beschränkter Haftung) is the most common legal form for companies in Germany. It is especially popular among foreign investors due to its limited liability and flexibility. However, the incorporation process in Germany is highly formalized and involves notarial, tax, and regulatory steps.

Acquiring a German GmbH is a common way for foreign companies and investors to enter the German market. However, after the successful signing and closing of the deal, the real work often begins. German compliance, accounting, payroll, and tax rules are highly regulated, and foreign investors frequently underestimate the complexity.

After acquiring a German GmbH, many foreign companies are faced with the challenge of setting up proper accounting, payroll, and tax compliance structures according to German regulations. Unlike in many other jurisdictions, Germany has complex and formalized rules for bookkeeping, tax filings, and employment, which often differ significantly from international or group-wide standards.

Germany is one of the most attractive and stable business locations in Europe. Many foreign companies and corporate groups choose to establish a subsidiary in Germany, most commonly in the legal form of a GmbH (limited liability company). However, setting up and operating a German subsidiary involves several legal, tax, and administrative steps that must be carefully planned.

Germany imposes inheritance tax (Erbschaftsteuer) and gift tax (Schenkungsteuer) on the transfer of assets, both through death and inter vivos gifts. Beneficiaries and donors with connections to Germany are often required to file a tax return and, in many cases, pay inheritance or gift tax.

The Federal Fiscal Court of Germany (BFH) has ruled that hotels, parking garages, and other lodging businesses are classified as harmful administrative assets under inheritance tax law. This decision has significant implications for entrepreneurs wishing to pass down such businesses to heirs while benefiting from inheritance tax privileges.

A permanent establishment for construction and assembly activities in Germany is typically defined under Article 5 of applicable Double Taxation Agreements (DTA) and the German tax code (§ 12 AO – Abgabenordnung).

When foreign companies engage in business activities in Germany, it is crucial to understand when these activities constitute a Permanent Establishment (PE) under the applicable Double Taxation Agreements (DTAs). Recognizing the formation of a PE is essential, as it triggers specific tax obligations and compliance requirements.
This article provides an overview of the criteria for establishing a PE in Germany, with examples from various DTAs, and outlines the associated responsibilities for foreign enterprises.

When transferring real estate in Germany through inheritance or gifts, determining the property’s value is a critical step for calculating inheritance tax (Erbschaftsteuer) or gift tax (Schenkungsteuer). The valuation process is regulated by the German Valuation Act (Bewertungsgesetz, BewG), specifically §§ 157–198 BewG, and ensures a fair market value is determined for tax purposes.