Non-EU Company Formation in Germany

Ownership vs relocation vs visa: the line to get right

This is the distinction competitors blur, and getting it right saves a great deal of needless worry. Owning and directing a German company from abroad requires no residence permit. A §21 AufenthG permit only enters the picture when you physically relocate to Germany to run the business on the ground.

The reason a passive or remote owner sits entirely outside §21 is that holding shares is not, in law, self-employment. The IHK Frankfurt am Main is explicit that "a mere capital holding in enterprises is not to be classified as employment for a gain" (the point is made in the context of silent and limited partners). The IHK also notes that its own economic comment in such procedures "merely has an internal character" and that the foreigners' authority "is not bound" by it. The takeaway is direct: if you own and direct your German GmbH from outside Germany, you are not engaged in self-employment in Germany, and §21 does not apply to you. For the broader foreign-founder context, including the EU/EEA position, see our broader foreign-founder guide.

The §21 AufenthG self-employment residence permit (if you relocate)

If, by contrast, you intend to move to Germany and run the business yourself, then §21 AufenthG is the relevant route. It is the residence permit a third-country national needs to reside in Germany for self-employed activity.

Section 21(1) sets three core conditions: that "there is an economic interest or regional requirement for the start of the independent activity"; that "the activity gives rise to the expectation of positive effects on the economy"; and that "the financing of the project has been secured by equity or by a loan assurance." In assessing the application, the authority looks at the viability of the business idea, the founder's entrepreneurial experience, the amount of capital invested, the effect on employment and training, and the contribution to innovation and research (§21(1) sentence 2 AufenthG). The permit is granted for at most three years (§21(4) AufenthG).

Two refinements are worth knowing. Under §21(5), liberal-profession freelancers (Freiberufler) can be granted the permit without the economic-interest test that applies to commercial business owners. Under §21(3), applicants older than 45 should be granted the permit only if they have adequate old-age provision. For a §21 application based on a GmbH or UG, the documents usually include the certificate of incorporation, the articles of association, the managing director's contract, a Handelsregister excerpt or notarial registration, and a business plan.

Signing without flying to Germany: notary & power of attorney

Forming a corporation in Germany (a GmbH, UG or AG) requires the articles to be notarised, after which the notary files the registration electronically with the Handelsregister. The notary requirement is fixed; the travel is not.

Online video notarisation of a GmbH has been possible since 2022, which can remove the need to travel for those who can meet its identity-verification conditions. The more universal remote route, and the one most non-resident founders use, is a power of attorney: a representative signs before the German notary on your behalf, and the power of attorney must itself be notarised or notarially certified (§2(2) GmbHG). On the day, those attending need only valid identification (identity card or passport) and any powers of attorney for absent founders. In short: a passport plus a properly notarised POA is enough to be formed without setting foot in Germany. To go deeper on the entity itself, see how to form a German GmbH.

Apostille vs legalisation: your foreign documents

Whichever signing route you use, your foreign documents usually have to be authenticated before a German notary or authority will accept them, and the method depends on the issuing country.

The Federal Foreign Office defines the simpler route: "an Apostille is the confirmation of the authenticity of a public document and is only conferred by a designated authority of the country which issued the document," adding that "the German Missions cannot issue Apostilles." An apostille is the simplified, standardised method available between Hague Apostille Convention member states. Where a document comes from a country outside that Convention, you need legalisation instead: the more complex, multi-step consular process. In practice, notarised documents such as a power of attorney must carry an apostille or legalisation and be submitted with a certified translation. There are exceptions: with some countries (for example France, Italy and Belgium) documents need neither apostille nor legalisation under bilateral arrangements. So "just get an apostille" is not safe blanket advice; the right step depends on where the document was issued. A registered German address is a related practical piece of the same setup.

The non-resident bank-account hurdle (the real bottleneck)

This is where non-EU formations most often stall, and it is worth being candid about. For a GmbH or UG you must deposit the share capital into a dedicated German business account before the registration can be finalised. The bank's deposit slip is given to the notary, who certifies it and forwards it to the commercial register. Until the account exists and the capital is in it, the Handelsregister entry cannot complete; the account is on the critical path.

For a non-resident, opening that account is the hardest step. Traditional German banks require in-person identification and face-to-face verification, particularly when opening a business bank account in Germany as a non-resident founder, along with notarised and apostilled documents and source-of-funds explanations for all ultimate beneficial owners (UBOs). Many banks prefer at least one managing director with a German address, and many restrict onboarding when directors or shareholders are based outside Germany or the EU; some will decline cross-border cases outright. For these reasons, electronic money institutions (EMIs) are often the preferred faster fallback to get an account in place. Set expectations here early; for the full treatment, see our guide to opening a business bank account in Germany as a non-resident.

GmbH vs branch for a non-EU company

A non-EU company has a structural choice: form a German subsidiary (a GmbH) or register a branch of the foreign parent.

A GmbH is a separate German legal entity that ring-fences liability inside the German company. A branch keeps the German activity as part of the foreign parent. There are two branch types. An autonomous branch requires the foreign company to be entered in a foreign commercial register, a German notary, and head-office documentation. A dependent branch requires only registration with the local trade office. The tax consequence is important: branches are permanent establishments and are taxed on the income attributable to their German operations, which is a different position from a stand-alone GmbH, as the next section explains.

How a non-EU-owned German GmbH is taxed

Tax outcome turns first on the unlimited-versus-limited distinction. Corporations with a registered seat or place of management in Germany are subject to unlimited tax liability (§1 KStG), meaning their worldwide income is taxed in Germany. Non-resident corporations, by contrast, are only taxed on their German-source income (limited tax liability, §2 KStG). So a German-seated GmbH is taxed on its worldwide profit; a foreign company operating only a German branch or permanent establishment is taxed only on what that German operation earns.

On the rates, corporation tax is levied at a uniform 15% and is then subject to a 5.5% solidarity surcharge, giving a total of 15.825%. On top of that comes trade tax: a uniform 3.5% base rate multiplied by the municipal multiplier (Hebesatz, roughly 250% to 580%), which works out to effective trade tax of roughly 8.75% to 20.3%. Combined, the corporate burden is about 30% at a 410% Hebesatz and about 33% at 490%. Corporation-tax cuts are legislated to phase in (§23 KStG): 14% (2028), 13% (2029), 12% (2030), 11% (2031) and 10% (2032 onward), each still plus the solidarity surcharge. For permanent establishments, branches are taxed on their German-attributable income, and most double taxation treaties exempt that income from tax in the parent's home country.

A note on substance. Because a German-seated GmbH has unlimited tax liability and pays trade tax, non-EU owners need to plan where the company is managed from, whether the parent creates a permanent establishment, and how controlled-foreign-company and anti-avoidance rules at home treat the German profit. These questions turn on the facts of each structure. For the rate detail, see our German corporate tax and trade tax detail.

Local director & representation support

For non-resident founders, local representation and managing-director support can be a useful operational option, for example to provide a German point of contact or to help meet the practical demands of running the entity. It is exactly that: operational support. It is not a way to manufacture §21 substance or to get around the rule that a managing director must genuinely be able to perform the role. We only ever offer it on that compliant basis. If a German-based point of contact would help, see our local managing-director support.