The uncertainty surrounding Britain’s exit from the EU has created a major headache for businesses in Wales.
The countdown to Brexit is under way, but we still don’t know the terms of any trade deal with the 27 members of the EU. It’s difficult for businesses to plan for the future when they don’t know if they’ll be hit by tariffs.
So, an increasing number of UK companies are looking to create European subsidiaries to ensure they have a foothold in the EU whatever the outcome of Brexit negotiations.
For many, the obvious choice for a European base is Germany – the powerhouse economy of the EU.
British/German dual national Marc Jarrett, Managing Director of Emjay Consultancy Ltd, has historically focused on helping US firms expand into the UK.
Now, his company is focusing on helping both US and UK businesses establish themselves in Europe’s largest market, Germany.
“Of course, establishing a subsidiary overseas is nothing new,” he said.
“However, with the countdown clock ticking and the terms of any deal with the EU27 still unknown, an increasing number of UK companies are proactively pursuing this option as a form of hedge or insurance policy.
“This way, they can continue to trade freely within the EU without worrying about the ‘unknown unknowns’ that Brexit has created.
“Brexit came as a shock to most Germans. Many are Anglophiles at heart and would welcome the opportunity to continue working with British companies that elected not to leave the European Union after all.
“Germany has a business-friendly tax and legal system and its central location within Europe makes it the natural choice for British companies looking to establish a subsidiary or branch office on the continental mainland.”
MARC JARRETT’S GUIDE TO FORMING A GERMAN SUBSIDIARY
The most common legal company form is to establish a GmbH (Gesellschaft mit beschränkter Haftung) which is German for “company with limited liability”. The owners (Gesellschafter, also known as members) are not personally liable for the company’s debts. This is similar to a limited company in the UK.
A GmbH is formed in three stages:
- The founding association, which is regarded as a private partnership with full liability of the founding partners/members.
- The founded company (often styled as “GmbH I.G.”, with “I.G.” standing for in Gründung – literally “in the founding stages”, with the meaning of “registration pending”).
- The fully registered GmbH. Only the registration of the company in the Commercial Register (Handelsregister) provides the GmbH with its full legal status.
What do you Need?
Under German law, the GmbH must have a minimum founding capital, €12,500 of which must be raised before registering in the commercial register.
The company is run only by the managing directors (Geschäftsführer) who have an unrestricted proxy for the company and must be either a national of a European Union country or have a German work permit.
Shareholders, on the other hand, can be any UK entity, be it a person or a UK Limited company.
Other factors to bear in mind when establishing a presence in Germany include securing a business address, launching a German language website (local law dictates this must include an ‘impressum’ which outlines company details), appointing a good tax consultant, and hiring at least one German-speaking representative who can help during the formation period and possibly beyond.
Unlike in the UK, joining the local chambers of commerce is mandatory. However, doing so will allow members to grow their business contacts.
Social network XING is their LinkedIn, which is another useful way to engage with prospective customers or partners.
Emjay Consultancy Ltd helps with all the necessary aspects of establishing a presence in Germany including company formation, opening bank accounts, real and virtual offices, sourcing of staff, translation of website and marketing collateral into German. It has access to a network of professionals on the ground in Germany that can help with all aspects.
“We look forward to helping UK companies so that they can continue to do business in the epicentre of the world’s largest trading bloc and give them the edge over their competitors. We will be at their side to help them every step of the way,” Marc Jarrett said.