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Economic Development Dortmund
Branch Office
(„Niederlassung“)
Definitions
If you want to be active at another location, you do not have to setup
another business. You may well found a branch office. You have to distinguish
between two different types:
- the foundation of an independent branch office
and
- a dependent branch office (also called plant –
“Betriebsstätte”)
The main difference between an independent and a dependent branch office
is the degree of dependence on the parent company. While the plant is
completely dependent on the parent company in any matter, the independent
branch office has a certain independence (cf. § 13 ff., German Commercial
Code – “HGB”). An independent branch office can only
be founded by an enterprise led by business principles. Small trade enterprises
and partnerships at will (cf. “GbR”) can only found a plant.
Independent branch office
An independent branch office is characterised by a certain independence
of the parent enterprise. This independence is expressed by
- an own management
There is a branch manager who represents the branch office in business
on his own.
- an own capitalisation
The branch office possesses own working capital. A minimum amount is
not fixed.
- an own accounting
The branch office has an own accounting and prepares an own annual balance
sheet (“Jahresbilanz”)
Despite of its independence, the branch office stays a part of the parent
enterprise and is no separate legal person. Its inner constitution and
its business relationships are based on the legal form of the parent enterprise.
If the parent enterprise is a foreign company, German law is effective
for business relationships in Germany.
An independent branch office must be listed on the Register of Companies
where the branch office is located. You will find the necessary documents
and specifications in the checklist
Register of Companies.
The firm (= name of the enterprise) of the branch office must keep the
exact name of the parent enterprise including the legal form annex without
changes. An annex like “Branch Office Dortmund” (“Niederlassung
Dortmund”), for instance“, is permitted.
An independent branch office also has to announce its business at the
local business registration
office.
Plant (dependent branch office)
A plant is by no means independent of the parent enterprise. There is
no capital capitalisation, no independent business, no independent accounting.
The plant is only geographically, but by no means organisationally separated
from the parent company.
A plant will not be listed on the Register of Companies; it only has
to be announced at the local
business registration office.
Taxation of foreign parent companies
For foreign enterprises, first of all the question of assessed valuation
with regard to branch offices founded in Germany is important. Basically,
the business profits and revenues of the branch office are subject to
taxation in Germany.
The base for profit taxes (income
tax or corporation
tax) is the legal form of the parent company, i.e. a partnership or
a capital company (cf. legal forms).
In order to avoid having a double taxation of foreign enterprises (as
well in Germany as in their home country) the Federal Republic of Germany
has concluded so-called double tax agreements (“Doppelbesteuerungsabkommen”)
with many states. Nevertheless, the exact regulations are very different
and are thus not treated in detail here. You will find further information
including application forms on the Internet homepage of the Federal Finance
Office (
“Bundesamt für
Finanzen”).
Apart from that, branch offices of foreign enterprises have to pay sales
and business
taxes in Germany.
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Comparison of
legal forms
Corporation