Under which legal form a foreign company is active in Germany is a central question which must be answered prior to entry into the market. It is essential from a legal standpoint which form is chosen, with which you would be most capable of realizing your company goals. This is equally valid for company issues.
You have a choice of various legal forms under which to lead your company: Subsidiary, Independent Branch, or Dependent Branch. For some companies, it is more effective to completely forgo independent activity in Germany and rather distribute through commercial agents, authorized dealers or franchisers.
A subsidiary is a separate legal entity of the parent company. A subsidiary may be established as an Incorporation (e.g.GmbH, Aktiengesellschaft), as well as a Partnership (Gesellschaft des bürgerlichen Rechts, Kommanitgesellschaft). The respective legal form of such a German subsidiary shall be founded exclusively based on the applicable German regulations. Determining which legal form is most favorable depends on the company objectives and can only be individually determined.
A legally established company in one EU member state may be active in another EU member state through a branch. This shall be applicable according to case law of the European Court of Justice, if the foreign company does not conduct any business activity in its own country. A branch is a spatially separated branch from the main business space, established for the longterm as an additional center point of the company, which must be registered in the German commercial register. An independent branch is legally and organizationally a part of the main branch and not an independent entity. It is subject legally to the corporate rules of the law governing the principle branch. The independent activities conducted by the branch are subject to German Law.
The dependent branch conducts business independently of the parent company. For example, it does not bare any of the company names of the parent company. Indeed such a permanent branch must be registered at the responsible authority, however it is not registered in the commercial register and only issues invoices under the parent company’s name.
Equally, even without establishing an independent or dependent branch, you may market your products in Germany. Independent activity of a foreign company in Germany is not required for the successful marketing of products, if you permit the marketing and distribution through a Commercial Agent, Franchiser or an Authorized Dealer.
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