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.
Here are 10 key aspects that international investors should carefully address after acquiring a German GmbH:
1. Check and Update the Company’s Registration Data
- Update the Commercial Register (Handelsregister) with the new shareholder(s) and new managing director(s).
- Ensure that the managing director(s) is/are properly registered and authorized to represent the GmbH.
2. Review and Adjust Accounting and Reporting Structures
- Verify whether the existing accounting system complies with German GAAP (HGB).
- If required, adjust the system to ensure accurate and audit-proof bookkeeping.
- Align internal reporting with the parent company’s reporting standards (e.g., IFRS, US-GAAP).
3. Ensure Proper Tax Registrations
- Check that the GmbH has valid tax numbers and a VAT ID.
- Notify the local tax office about any changes, especially regarding shareholders and managing directors.
4. Analyze Employment Contracts and Set Up Payroll Properly
- Review all existing employment contracts for compliance with German labor law.
- Implement a compliant payroll system if not already in place.
- Register for social security and wage tax obligations if employees are to be hired.
5. Verify Compliance with the Transparency Register (Transparenzregister)
- Report the new beneficial owners of the GmbH to the German Transparency Register.
- Non-compliance may result in significant fines.
6. Review and Implement Transfer Pricing Policies
- If the GmbH will engage in transactions with other group companies, transfer pricing rules must be applied.
- Prepare or update transfer pricing documentation in line with German and OECD standards.
- Review intercompany contracts and ensure proper invoicing.
7. Clarify Dividend, Loan, and Cash Management Procedures
- Define how profits will be distributed (dividends) or whether loans and financing agreements need to be structured between the GmbH and the parent company.
- Take into account German withholding tax rules for dividend payments.
8. Ensure VAT Compliance
- Check if the GmbH is properly registered for VAT.
- Review whether all supplies and services are correctly invoiced and reported.
- For trading or e-commerce companies: Ensure marketplace compliance and correct handling of VAT in cross-border transactions.
9. Evaluate the Tax Situation and Potential Risks
- Carry out a tax risk assessment (including reviewing past tax returns).
- Identify potential exposures, hidden liabilities, or open tax audits.
10. Engage Local Advisors for Ongoing Support
- Foreign investors are strongly advised to work with experienced German tax advisors, payroll specialists, and lawyers.
- Regular communication with local advisors helps ensure that the GmbH complies with all relevant legal and tax obligations from day one.
WW+KN — Your Trusted Partner After a GmbH Acquisition
At WW+KN, a Baker Tilly Company, we specialize in supporting foreign companies after acquiring German subsidiaries. Our services include:
- Accounting, payroll and tax compliance
- Transfer pricing documentation and advice
- Structuring of intercompany transactions
- Cooperation with legal experts from Baker Tilly for corporate and labor law matters
Important Note
This article provides general information only and does not constitute legal advice. For an individual assessment of your case, please consult a qualified advisor.
If you have any questions regarding the post-acquisition setup of a German GmbH, please feel free to contact us.
We are WW+KN, a Baker Tilly Company.
You can reach us at info@wwkn.de.
