Duties: What does a tax consultant

Before we go into the matter of tax advisors in detail here, on the special tasks, risks in the selection of tax advisors, as well as tips and the “daily” work with the tax advisor. First, a very general look at the core areas that tax firms cover. This includes accounting, financial accounting, all payroll accounting and payroll for employees, plus other tasks.

What does a tax accountant do simply explained?

7 typical tasks of tax consultants in companies:

1. Advice on tax preparation and structuring
2. Bookkeeping and financial accounting
3. Payroll accounting and payroll
4. Profit and Loss Account (EÜR)
5. Tax returns (much more on this later)
6. Audits of tax assessments
7. Representation vis-à-vis tax office and court

Compare tax accountants: The 3 biggest risks

Are you looking for a good tax consultant nearby? In fact, the choice of tax advisor has long-term effects, because the collaboration is very intense.

Intensive, regular cooperation

After you sign, you are bound to the tax office in financial and tax aspects, from levies to queries, almost every week. Likewise for the payrolls, the advance VAT returns and, of course, for questions about tax structuring. The cooperation is therefore intensive, especially with small companies, self-employed and companies in growth, where many tasks are still done by the management itself.

Accordingly, a change of tax firm is not possible overnight. Companies are very closely intertwined with their tax advisor, through regular and intensive cooperation.

Monthly cost load

Tax accountants do not work for free, accordingly, your business will incur monthly costs.

1. Management costs
2. Cost per employee
3. Additional costs for consulting, testing, etc.

So, the tax consultant costs, more about this later, consist of 3 parts. First, the monthly accounting, it is charged according to the official fee table (later under “Costs”). This means for you, the higher your turnover in the company is, the more may be charged by your tax consultant. In addition, there are costs for the payroll of your employees in the second step. Each employee is charged extra. In the third step comes all that is apart from accounting and employees: additional questions, audits, documents, even the annual financial statement, all this costs money and by time. The hourly rates of your tax advisor, but also of the employees, are also on the invoice at the end of the month.

Losing money due to insufficient advice: training and motivation

The training to become a tax consultant is done relatively quickly, a course with about 200 hours, in the full-time seminar 2 to 4 months. After that comes an exam. This means that many tax consultants learn standards, not tax design.

Many tax advisors are therefore rather tax auditors

You take over the account assignment, bill employees properly and carry out the annual financial statement correctly. The question: Is that enough? Depending on the company, goals and scaling, a tax consultant should possibly bring more.

Lack of advice involves 2 risk factors, on the one hand losses due to missed advice (tax tips, structuring options) and at the same time risks due to too much advice (cost-benefit factor). Because, as you have learned, every additional minute is billed. Suddenly the monthly costs are no longer 400 Euro, 500 Euro or 800 Euro, suddenly there are 4,200 Euro on the bill for the current month, due to the many consultations and work paths (procurement of documents by employees up to examinations and the consulting time itself).

Especially for companies at the beginning, this can be a cost trap if the tax firm is not absolutely reputable. Until owners and managers notice this mistake, as I said, we are talking about small companies, years can pass. Then the costs have already exploded.

Paying tax means losing profits

Did you know? For many companies:

Taxes are the largest cost factor in the company

Speaking of which, what is actually your biggest, monthly expense (once you’re in the 5/6 figures)? Rent? Staff? For the majority of businesses, taxes are actually the biggest cost factor, looking at business tax, capital gains tax, etc. Accordingly, the quality of the advice you get from your tax advisor makes a lot of difference.

The following calculation example is intended to show how costs add up, also through overpaid taxes and through follow-up costs, since the missing money cannot be reinvested to generate more money.

Calculation example: costs and lack of reinvestment

Already 200 euros of additional losses due to lack of advice become 2,400 euros a year. To the losses, by too much taxes, come the costs for the tax consultant (additional services for advice). Even at 1 hour per month, say at a rate of 120 euros, you are again at 1,440 euros. Monthly 320 euros that can not be reinvested, so bring further follow-up costs: You are missing money for investments at the beginning. Every euro that is missing cannot be doubled by wise investments.

Even if after 3, 4 years you realize that the work is not good, how will you check after the fact, which bill was justified, which were not? So do without it and just change the tax advisor.

Keep this in mind if you want to hire a tax professional.

Checklist of the 3 biggest risks

Summarizing 3 risks once again:

• Intensive, regular cooperation; commitment and time for change
• Amount of monthly and additional costs
• In the long term: lose money (pay too much tax, plus costs for tax advisor, lack of reinvestment) due to lack of quality/quantity advice

Remember for the future, tax planning is often in your hands!

Find a tax accountant: The 3 best tips

After the dangers of choosing a tax advisor, now straight to the tips on how to find a good tax advisor.

Advertisements in search results on Google & Co.

First of all, the most important tip: Do not click on the advertisement! You are on the Internet looking for a tax consultant in Berlin-Mitte, Cologne or Hamburg and do it like 92% of the people, you type in your request in one of the popular search engines.

The first places in search engines are always paid ads, disguised as search results. The only indication of this is the small word “Ad”, sometimes “Sponsored”. These ad spots are extremely popular! Why? Almost every click here. From my experience, go directly to page two of the search results, here you will find fewer ads for one thing and also not the companies or tax offices that spend a lot of money on marketing.

Because, who pays the money for the marketing budgets? You, the client of the tax advisor.

Ratings on online portals

Besides search engines, comparison portals, online magazines and other online sources for recommendations are also popular. Pay attention to qualitatively and quantitatively meaningful opinions. So compare the number of reviews, because only one rating is not meaningful, sometimes even bought.

• More than 5-10 reviews
• Ratings with meaningful content

Recommendations from experienced self-employed people

Should you know other entrepreneurs, trust their experience and opinions.

Importantly, these people should be entrepreneurs, not private individuals. After all, the matter, tax advisor for companies, is different than for private individuals and their wages or salaries. But also remember that the contact has been working with the tax advisor for some time, ideally the experience should be longer than three, four years. If you ask entrepreneur friends who have just started their own business and have only been with a tax firm for a few months, the experience may be too short term.

So tax advisor tips are best from contacts who have been running a successful business themselves for more than five or ten years.

These 3 little tips sound simple, but are very effective in finding a good tax accountant near you. Law firms that are reputable, don’t incur unnecessary costs (marketing) and do solid work. Let’s recap these 3 simple tips.

Checklist: Tax consultant in the vicinity, 3 tips

3 Tips from the field, find a tax advisor:

1. Do not click on the advertisement in the search results (go directly to page 2)
2. Rating on online portals (more than 5 opinions)
3. Experiences and recommendations from successful entrepreneurs

Now that you’ve learned a lot, about the risks and dangers of being tied to an accountant, as well as tips on how to find a good accountant, including online, let’s get back to the more specific tasks your accountant performs for your business.

Tasks: Tax structuring, tax returns, wages, balance sheet & co.

If you have found a good tax advisor, then from now on it is mainly about these issues:

• Advice on tax preparation and structuring
• Tax returns (monthly filings and annual evaluations)
• Wages and salaries for employees
• Annual accounts

Advice on tax preparation and structuring

If you want to run a restaurant in the future, a small business with two, three employees, then monthly financial statements, annual financial statements are the A&O for you. But if you want to grow as a company, then the tax structure, or tax avoidance is one of the most important factors in choosing the right tax advisor for your company.

Tax advisors need to know the basics, as well as new tax legislation and, above all, ways to avoid taxes.

We do not want to delve too deeply into the subject of tax avoidance at this point. After all, there are experts for that! But it is important to emphasize, as mentioned before, taxes are, for the majority of businesses, the biggest cost, every month, every year. It gets even better:

Every euro that is not spent on taxes can be reinvested by you and thus generates a further return for you.

However, in the process of growth there are also changes in the legal form of enterprises. Considering a possible sequence, this development of the company could include the following stages:

• Sole proprietorship
• Limited liability company
• Ltd
• Stock corporation (AG)
• Holding (with subsidiaries)

Thus, tax consultants also help with the change of the individual legal forms of companies. Tax structuring has so many facets, each of which takes effect individually, depending on the company and its activities. With the three practical tips (above) to find a tax consultant, you can find such tax firms in any city, even in your district.

In everyday life, however, the tasks of a tax advisor for companies do not lie in the provision of advice, but in the processing of tax matters.

Processing of tax matters

Now we come to the central core of the work of a tax advisor, simply put: accounting. The processing of tax matters is pretty much the regular standard task of any tax office. In doing so, law firms evaluate the current previous month. If all queries are clarified, the preliminary returns, the evaluations, wages and other information, following the preparation, are transmitted directly to the tax office.

So every month the tax returns come in. Depending on the company’s structure, these include the wage tax return, the capital gains tax return and, for the majority of companies, the standard advance return for turnover tax.

Then every year comes the preparation of the various tax returns, depending on the business model and construct. The typical standards of the annual financial statements include, for example, the income tax return, the corporate income tax return, as well as the business tax returns, which in turn bring you to the realization: Taxes are the biggest cost in business!

After that, the tax firm prepares the balance sheets. Balance sheets are the annual evaluations, they are not only transmitted to the tax office, but also to the Federal Gazette. Here the balance sheet of your company, insofar as you are not a sole proprietorship, GbR, or similar, is available for everyone to see.

Checklist: 6 Tasks Areas

Let’s summarize the processing of tax matters once again:

1. Payroll accounting
2. Tax returns / this includes wage tax return, capital gains tax return and advance return for turnover tax
3. Preparation of tax returns / this includes income tax returns, corporate tax returns, trade tax returns, annual VAT returns as well as inheritance tax returns and also gift tax returns for wealthy persons
4. Bookkeeping / this includes setting up the bookkeeping, creating a chart of accounts, bookkeeping itself, but also the account assignment of the documents
5. Preparation of financial statements / this includes the simple income statement, opening balance sheet, annual financial statements, interim financial statements, liquidation balance sheet and the corresponding explanatory reports
6. Applications

For the sake of completeness, tax advisors Hessen, of course, not only in the establishment of the company, but also in the liquidation, should something go wrong.

Assistance in insolvency matters

For the sake of completeness, here is a reference to the assistance in insolvency, which is also given by tax advisors. Companies fail, accordingly, it also needs people who take over the liquidation. Accordingly, the tasks of a tax advisor also include assistance in insolvency.

Read more on the topic here:

• Insolvency

Do I need to hire a tax advisor?

No, hiring a tax advisor is not mandatory, no matter what form of business you have chosen.

Cooperation with the tax consultant: Your tasks

You have now learned a lot about the tasks of a tax advisor, the various financial statements, monthly filing and annual balance sheets. But what does the cooperation with a tax advisor look like in practice?

Practical experience: For whom useful?

First of all, for whom are the following experiences useful? The following areas of collaboration apply more to sole traders, UGs (limited liability), GmbHs, under 10 employees. All businesses under 10 employees are considered small businesses. Then it starts with the SMEs (small and medium-sized enterprises), they have 10 to 250 employees. Here, of course, you are set up quite differently from a tax point of view than when you set up your business.

This area is explicitly not about tax structuring, but about daily cooperation with the law firm. From wages, their billing and calculation for health insurance, the monthly VAT advance return, business tax, as well as the annual financial statements, which will always come back to you. By the way, the annual accounts are not included in the additional costs, but are charged extra by the tax consultant, as described briefly above. But more about that in a moment.

If you own or are building a business that stays under 10, maybe 20 employees, these are the standard processes you will face when working with your tax professional. The following section should give you an overview!

Wages, registration, health insurance, etc.: Levy and appointment

The most important thing in any company is:

Good teamwork!

Only through good, i.e. motivated and trained employees, good results are guaranteed, this is true for 99% of companies. Even if the owners are “strange characters”, employees come first! Accordingly, wages, the registrations of the times with the tax advisor, as well as the calculation of the health insurance are a task, is always an interaction, from the information you give the tax advisor and what she or he makes of it.

What is your job?

You must ensure that wage data is available on time by the 15th of each month.

Not all employees in the company have a fixed number of hours. So now some may ask, how am I supposed to know exactly how many hours employee XY will work? If the hours are flexible, you will need to estimate the number of hours. In the following month, any absences will be compensated again.

Cost factor health insurance – A short excursus

But health insurance is also a big cost factor that is often overlooked by founders. Calculate with costs of 800 to 1500 euros per month per employee alone. Calculated over the year, this is a factor that is easily overlooked when extrapolating and calculating, because health insurance is not part of the salary paid, it is collected separately. 800 Euro in the month alone are a cost factor of 9,600 Euro calculated over the year. Anyone who founds a GmbH with 25,000 in start-up capital will quickly reach a critical point.

Here’s a little example:

• Salary (transfer): 1.500 €
• Health insurance: 700 €
• Settlement tax consultant: 15 €
• Total costs: 2.225 €
• Unconscious costs: + 32,6 %.

The gap between the €1,500 in thought and the €2,225 actually paid is a whopping €725, or +32.6%. So always remember that the cost of wages and salaries ultimately includes not only the actual payment to the employee, but also the health insurance and wage costs that have to be paid additionally for each individual employee.

This calculation error is multiplied with each individual employee. If, for example, you hire 5 employees through an investment or a loan, right at the start of the company, and do not take into account the costs for health insurance and payroll, you will have a monthly deficit of 3,575 euros in the calculation example. With a loan or investment of 50,000 euros, 5 employees are a huge cost. After a period of 6 months, the sudden, supposed loss (which you did not have in mind), amounts to 21,450 euros.

Finance is the number one reason businesses fail.

Therefore, it is important: you must take an interest in taxes and duties yourself.

Do not leave the work (only) to your tax advisor!

However, there are also potential savings for employees that should be communicated by the tax advisor. For example, if special services are provided for employees, such as the assumption of costs for train tickets that would otherwise be purchased by the employee himself for the way to work. Many aspects that need to be considered by a good tax office.

Important for you, is the submission of the wage data, punctually to the 15th of the current month. For employees who do not have fixed times, the expected working time must be estimated.

• Submission of wage data by the 15th of the month
• Submission of actual and estimated working times (depending on employee type)

Monthly taxes: sales tax, trade tax, etc.

Besides employee wages, however, there is a lot more for you and the tax preparer to take care of.

The regular tasks also include the monthly tax (pre-)registrations. Here, the focus is primarily on sales tax, as well as trade tax, if we are talking about regular companies such as a GmbH or an AG.

If there is one continuous factor that plays a role in your business life almost every day, it is accounting. Whether receipts from purchases, incoming invoices from suppliers, outgoing invoices for customers, all account activity is meticulously recorded, documented and archived in accounting.

Golden rule in accounting

For those who have not had any contact with the subject themselves, in quite simply explained:

Each posting a document

This is the classic golden rule in accounting. Means, every single transaction, whether with physical cash or digital transactions, must be justified by a receipt. Depending on whether it is an incoming payment, an outgoing payment, or even just a movement from account to account.

• Incoming invoices
• Outgoing invoices
• Account-to-Account
• Other such as interest

Today, much of the accounting is done through digital systems, accounting software. In the past, there were still classic folders, simply put, each month has a folder. Here the account statements are filed and behind each individual account sheet, the receipts are filed collectively. In this way, all transactions are transparently traceable, for example for one of the most important actors, the tax office. But also for yourself, a neat, orderly bookkeeping is very important, after all, you get only so key figures about your company.

Accounting in the past: folders, bank statements and invoices in chronological order.

In simply explained, that was already a lot of the bookkeeping that goes on in regular businesses.

The monthly accounts must be submitted to the tax office by the 10th of the following month at the latest.

Accordingly, you should plan your financial accounting so that they are ready directly at the turn of the month (1st, 2nd, 3rd). This way, your tax office has enough time to process them and you also have time to answer queries without time pressure.

Tip! If you are late with the accounting, communicate with the tax advisor or the tax office – communication is a very, very effective means in all tax matters.

As soon as there is sufficient turnover, trade tax also becomes an issue for you and your tax advisor. The trade tax is automatically calculated by the tax office. Small companies pay it at the end of the year, companies with the appropriate turnover and history pay monthly, so to speak in advance, so that at the end of the year there is no large tax bill for the company.

Once again summarized the most important tasks:

• Each posting a document
• Accounting almost 1 calendar month economically together
• Submission no later than the 10th of the following month (tax office)

Sales tax regulations: Domestic and foreign

Calculations at home are still easy to organize, as soon as it goes abroad, many have big question marks themselves. Honestly, from my experience, when I first faced the issue, my head exploded. All that came from the accountant was a 15 minute explanation. My simple question: when do I charge sales tax, when not?

Tip. From this question you can quickly see whether a tax advisor can explain facts easily or not. If someone starts to give you long monologues about the “EU joint business…” – do not hire him or her.

Here is the simple answer to the sales tax regulations for domestic and foreign invoices.

For transactions between companies (in Germany):

• Invoicing and invoice recipient in Germany: VAT
• If the invoice recipient is located abroad (EU Schengen area): no sales tax
• If the invoice recipient is located in a third country (outside the EU): no sales tax

There are a few special rules:

• Private customers (B2C) always pay sales tax ( value added tax for private individuals)
• Companies under the small business regulation are exempt from turnover tax

For the sake of completeness, here is a list of the European countries that currently (as of 2021/06) belong to the European Union, or more precisely the Schengen area.

• Schengen States: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland.

Source: Federal Foreign Office, Article Schengen States

Annual taxes: annual accounts and example of VAT declaration

At the end of the year, depending on the legal form and company structure, financial statements are sent to the tax office. For almost all companies, this includes, for example, the sales tax return (except for small businesses that are exempt from sales tax [Ust.]). The sales tax return almost once again summarizes all tax transactions that are related to sales tax.

Tip for the monthly sales tax! Especially the sales tax is an important item that must be paid monthly, safely. With many bills there are margins, not with the tax office. Do not pay bills with it.

If the sales tax is not paid, the business account is seized. If you only have one business account at the beginning, you will quickly get into payment difficulties. Because, until the amount has not been cleared, you no longer have access to the account. Therefore, very important: the monthly accounting and the annual closing of the sales tax.

The VAT return is prepared by the tax office. In addition, the annual financial statement is obligatory for all companies.

The annual financial statement is also important. It summarizes everything once again, clearly. While you and your employees still have many tasks of your own in accounting, the annual financial statement is almost completely prepared by the tax advisor. You may only have to answer a few questions about individual transactions in advance. When the annual financial statement has been prepared by the tax consultant, you receive an evaluation and still have to sign it. The submission usually does not happen at the turn of the year, but is tax-efficient, on time, at the latest before the submission deadline.

For completeness: Small businesses and freelancers usually prepare a short EÜR (income surplus account).

Annual accounts: Content

You will then find the following information in the annual financial statements:

• Balance
• Profit and loss account
• Appendix
• Management Report
• Statement of changes in equity; segment reporting (only in connection with consolidated financial statements)

Deadline: Own production / tax consultant

When must the annual financial statements be submitted? The deadline for submitting the annual financial statements to the tax office is currently 31 July. If you are assisted by a tax advisor, the deadline is significantly longer, extended to 28 or 29 February of the following year.

• Own production: 31.07.
• Preparation by tax consultant: 28. or 29.02. (following year)

Costs: How much does a tax consultant cost?

How much does a tax consultant cost? This question can only be answered in part. Tax consultants charge according to the fee table, but they also have room for manoeuvre here. The fee table only covers standard services, i.e. monthly bookkeeping. Even the annual accounts cost extra. Every minute of consultation costs extra. Every time you get documents, records or figures, it costs extra.

For a first, rough overview, this simplified fee table will help you. It should make clear to you that tax advisors charge according to the turnover of the company. Of course, you also have a certain margin on this fee regulation, but the fee table is good for orientation.

Fee table

This is how much a tax consultant costs, with a turnover of 100,000 euros, for balance sheets, EÜR, income tax returns & Co.

Source: fivmagazine.de, tax consultant costs

Last but not least, we have a few typical questions and answers founders have if you haven’t had any experience with tax advisors.

Questions and answers: Tax consultant

Every year tens of thousands of businesses start. Restaurant, fashion boutique, media agency to app or online platform. They all have questions, even founders in real estate. Starting from: “Where do I find a good tax advisor?” to.

Where can I find a good tax advisor? Lists

As described above, there are mainly 3 tips that help to find a good and reputable tax advisor. You will usually get the very best recommendations from well-known business owners who have been in business for years themselves and have a good, commercial understanding. If they are happy with a tax accountant over a long period of time, then they are likely to be a recommendation for your business.

If you don’t have any direct contacts with contractors then you should start your search on the internet, again there are two good tips. One, don’t click on ads in the search results and two, read through reviews and make sure the company has not just 1, 2 or 3 reviews but ideally 10, 20 or even 30 depending on the size of the city.

Find a tax advisor! 3 tips summarized:

• Do not click on the advertisement in the search results (go directly to page 2)
• Rating on online portals (more than 5 opinions)
• Experiences and recommendations from successful entrepreneurs

Should you want direct recommendations now, read more here! Good tax advisor recommendations from Bavaria, over North Rhine-Westphalia to Berlin and Hamburg. With over 30 cities and all free of charge:

• Tax consultants in the vic inity (fivmagazine.de)

How much should a tax consultant cost? Comparison offers

We have already explained the most important aspects of tax advisor costs above.

If you do not yet have a tax advisor and are currently searching, you should proceed as with other service providers, get comparison quotes. This way you can estimate the costs and compare them with other tax consultants. For example, if you have found a few good adresses in their city through the 3 tips to find a tax advisor, get a quote from each of them. This will help you find the best consultant.

What does tax consultant mean in English?

In English, a tax consultant is referred to as a “tax consultant”.

What does it cost to file an income tax return with a tax advisor?

If you earn money, you have to pay income tax (minus the exemption amount). One of the first questions asked by founders: What does an income tax return cost with a tax advisor? As seen above in the table of fees, the tax return costs between 142 and 853 euros.

When is a tax consultant worthwhile?

This in turn leads us to the question: can I do my tax return myself? As learned above, hiring a tax advisor is not mandatory. Therefore, the question of when it is worth hiring a tax advisor cannot be answered in a general way. Simply put, if you have commercial knowledge and interest, you can do your tax return yourself. However, you run the risk of not taking advantage of tax benefits, for example in the case of tax allowances. It is therefore recommended at most for small businesses and sole proprietorships. For any business forms apart, whether GbR, UG, GmbH, you should work with a tax advisor. Finally, it also goes well verification of the data to the tax office.

Setting up a company, legal forms and taxes

Learn even more about taxes, legal forms and the first years of setting up a company here.

Form a company

Founding a company – You want to found your first company? Requirements for you as a founder, share capital, shareholder agreements, costs for the foundation, legal forms and checklists. This sounds complicated for beginners, but it is actually quite simple. The process of founding a company is usually relatively the same. I have summarized the foundation here once in simple steps, for you. Learn how to start your own business. After the great guide to all legal forms or types of companies, today a detailed look at the establishment of a (real estate) company for beginners.

• Form a company

Legal forms in Germany

Legal forms in Germany – What types of company are there? If you want to start your first company, then choosing the legal form is one of the first steps in the process of setting up a company. Whether it is a special real estate company or founding a startup, here I have summarized all types of companies in Germany for you. In this list of companies you will find explanations, advantages, disadvantages, costs, the process with checklists and requirements, for each type of company. In addition, especially for real estate owners, as an extra: real estate GmbH (asset managing GmbH) and family foundation with tax advantages. All legal forms in one list!

• Legal forms in Germany

Taxes in Germany

Taxes in Germany – Corporation Tax (KSt), Income Tax (ESt), Capital Gains Tax (KapESt), Value Added Tax (USt), Trade Tax (GewSt) – who pays what? In this overview of the different types of taxes / tax forms in Germany, you will find relevant taxes for you as an individual and for your company, depending on which legal form you have chosen. In addition, after the tax list: How does the tax cycle work around monthly financial statements, annual financial statements and balance sheets? A little insight for those who are starting their first company and are looking for a good nor a good tax advisor. What taxes are there? Simple explanations, definitions, an insight into taxes.

• Taxes in Germany

US taxes

USA – What taxes do you have to pay when you buy a house in USA? Below you will find a list of all the types of taxes you have to pay, how much they are, where you can read more about them and what they are used for. Everything you need to know about taxes related to buying a property, be it your home or a vacation home. We answer the questions, what are “transfer taxes”? How much is property tax when you buy a property? Here are the answers.

• US taxes

Societas Europaea (SE) – Forms of incorporation, legal basis & Co

In the German-speaking world, the Societas Europaea – or SE for short – can also be found under the names European Company, European Stock Corporation or casually: Europa AG and describes in the legal sense a corporation and thus a legal entity with its own legal personality. As its German name suggests, the chapter of this corporate legal form is divided into shares. The legal introduction of the Societas Europaea as a transnational legal form came in 2004 within the framework of the so-called Law on the Introduction of the European Company – abbreviated: SEEG.

The background to the introduction of the Societas Europaea is, on the one hand, the possibility of merging companies from different EU member states or establishing a holding company. On the other hand, the aim of the SE was to establish joint subsidiaries between economically active companies and legal entities from different countries of origin in the EU by subscribing to shares.

Other typical corporations in Germany:

• Stock corporation (AG)
• Partnership limited by shares (KGaA)
• Entrepreneurial company / UG (limited liability)
• Limited liability company (GmbH)

Primary formation of an SE – merger, conversion, holding, subsidiary

A European Company is not founded “just like that” out of thin air. The formation process is – as already mentioned – bound to certain requirements… moreover, the Societas Europaea can only arise from certain situations. According to the numerus clausus of the forms of formation mentioned in the Societas Europaea Regulation – in short: SE Regulation – the formation of a Societas Europaea can primarily take place in four different ways: by merger, by transformation, by formation of a holding company or by formation of a subsidiary.

• Merger for inclusion/start-up
• Conversion foundation
• European holding company (Holding-SE)
• European subsidiary (subsidiary-SE)

Secondarily, it is possible to establish a European Subsidiary through a parent SE. However, the SE Regulation does not provide for the formation by natural persons or a spin-off from existing companies under national law.

Option 1 – Merger for incorporation or for new incorporation: 2+ public limited companies

You can form a European Company classically by merging – that is: merging – several existing companies. For the formation, at least two national public limited companies are required, which have a so-called cross-border European element. In a nutshell: the companies must either come from different member states of the European Union or, if their respective registered offices are in the same country, they must have had subsidiaries in other EU countries for at least two years. The latter is also referred to as a multi-country relationship.

The merger can be established either for the purpose of absorption or for the purpose of new formation. In the former case, the acquiring company takes the legal form of an SE, while the transferring company is absorbed into the SE at the time the merger takes effect. A new formation means that both merging companies cease to exist as soon as the merger becomes effective. The new legal entity can then also be established in a third EU country, since the multi-nationality requirement is already covered by the registered offices of the two founding companies. In this case, the merger is also referred to as a third-country merger.

How exactly does the merger of two public limited companies into one Societas Europaea work?

In the case of a merger, two legally independent companies come together and thus form a single entity in both an economic and a legal sense. For this purpose, at least one company must cede its legal independence, which is why the merger represents a typical form of corporate takeover. The purchase price for the takeover of the company can be paid elegantly in shares of the acquiring company.

The merger between companies is legally subject to the so-called Merger Directive 90/434/EEC as well as the European Merger Directive 2005/56/EC. Within Germany, the German Transformation Act (Umwandlungsgesetz, UmwG) also applies, while antitrust law is governed by the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkung, GWB), which, however, only uses the term “merger” for mergers.

Variant 2 – Conversion foundation: Joint stock company + foreign subsidiary

Ultimately, a stock corporation existing at the national level can also be converted into a transnational stock corporation – i.e. an AG into an SE – provided that the stock corporation has maintained a subsidiary or branch in another EU country for at least two years. A conversion to a Societas Europaea is comparable in nature to a change of legal form under the German Transformation Act (Umwandlungsgesetz, UmwG).

However, in contrast to the change of the legal form, the Societas Europaea Regulation – in short: SE Regulation – provides for the preparation of a conversion plan, whereby it is unclear which legal basis must be used with regard to the scope and, above all, also the content of this plan. A transfer of the previous registered office of the national stock corporation is in principle not permissible on the occasion of the conversion into a Europa AG.

Reverse conversion: Europa AG into conventional AG

The conversion of a conventional public limited company into a Societas Europaea is no problem if all the necessary requirements are met in advance. But what about the reverse case? Can you reverse the conversion and turn your Europa AG back into a normal public limited company on a national level? In fact, it is possible to convert an existing European Company into a classic AG. Provided that the Europa AG has existed in its European legal form for at least two years, a conversion plan can be drawn up to return the company to its original form. However, the approval of the general meeting is mandatory.

You can find out more about the national public limited company (AG) here:

• Stock corporation (AG)

Variant 3 – European holding company/SE: 2+ public limited companies/GmbHs

Alternatively, two or more companies from different EU member states may form a European Holding or Holding-SE together. This applies to any combination of stock corporations (AG) and limited liability companies (GmbH), whereby at least two of the companies must be from different EU countries. Alternatively, two or more participating corporations from the same member state each maintain a subsidiary or branch in another EU country for a minimum of two years and thus satisfy the multiple nationality requirement.

In concrete terms, the participation of companies in a holding SE means an exchange of shares: the companies buy shares in the European holding company and in return contribute their existing company shares, whereby their shares in the holding company must thereby convey more than 50 percent of all voting rights of the respective founding company.

You can find out more about national public limited companies (AG) and limited liability companies (GmbH) here:

• Stock corporation (AG)
• Limited liability company (GmbH)

How exactly does the formation of a European holding company work?

A holding company – short for: Holding company, holding organization or umbrella company – is created when several companies are hierarchically structured in a certain way and therefore does not describe a legal form in its own right, but rather a form of structuring companies that are related to each other. The individual companies hold shares in each other, which creates an economic dependency. Central tasks are usually performed by the parent company, which is at the top of the hierarchy of the holding structure.

Similar to the formation of a partnership under civil law (GbR), holding companies are formed for a specific operational purpose, in this case the holding of equity investments or company participations in other companies. As a holding company, you therefore organise the acquisition and management of shareholdings and thus form the capital provider or shareholder through which the subordinate companies finance their equity.

You can find out more about civil law partnerships (GbR) here:

• Civil law partnership (GbR)

Variant 4 – European Subsidiary/Subsidiary-SE: 2+ legal entities

Legal entities – companies, firms, etc. – may also jointly form a European Subsidiary or Subsidiary-SE. This is possible provided that at least two legal entities are governed by the law of different EU countries or at least two of the legal entities involved have maintained a subsidiary or branch in another EU country for a period of two or more years at the time the formation becomes effective.

This flexibility makes it possible for both civil law companies and commercial law companies – including for-profit cooperatives – to establish a joint subsidiary SE. Furthermore, legal entities under public and private law – irrespective of profit-making purposes – can establish an SE subsidiary if at least two of the founding companies originate from different EU countries or meet the multiple nationality requirement via subsidiaries or branches in other EU member states.

In addition to the option of also involving companies without limited liability in the formation process, probably the most decisive difference to the formation of a holding SE is that the individual companies do not form a joint SE umbrella company, but rather a joint subsidiary in the legal form of an SE.

How exactly does the formation of a European Subsidiary work?

In general, a subsidiary is a corporation that is directly dependent on its parent company. A parent company is in turn defined as a corporation that owns the majority of shares in other companies. The establishment of a parent company with subsidiaries offers the advantage that different business areas can be managed by different companies and individual areas of activity can be clearly and transparently distinguished from one another.

If the parent company establishes its own subsidiaries, this is referred to as affiliation: a term that originates from Middle Latin and can be translated as adoption – i.e. adoption as one’s own child – or takeover in the sense of appropriation. If external companies are acquired on the basis of synergy potential or potential increase in market power and subordinated to the parent company, this procedure is referred to as affiliation. In Germany, the formation procedure of a subsidiary SE is largely subject to German stock corporation law; in other countries, the respective national legal bases apply.

Secondary establishment of SE subsidiary: SE by SE

A Societas Europaea can indeed also come into being as a result of a one-man formation, namely SE by SE. This is of particular interest to providers of shelf companies where multi-nationality is not or only insufficiently present. Moreover, the shares of a shelf SE can also be acquired by natural persons. As with the subsidiary SE, the formation procedure of an SE subsidiary is also subject to the national law of the country in which the company has its registered office. Thus, for the formation of an SE subsidiary in Germany, the information in the German Stock Corporation Act must be followed.

The SE is formed by establishing an SE subsidiary through an existing European company, which then acts as the parent SE. As the establishing SE itself already has a cross-border European element, the multi-nationality requirement generally does not apply to the subsidiary, which in a sense “inherits” the multi-nationality. At the same time, there is no need for the involvement of other companies in the secondary formation.

Legal basis: directives, regulations & laws

Since the Societas Europaea is a legal form under European law, various EU and national legal bases must be taken into account. Primarily, there is Regulation (EC) No. 2157/2001, also known as the Societas Europaea Regulation (SE Regulation), which takes over the introduction of the new legal form and creates a common legal framework between the EU member states and the countries of the European Economic Area (EEA). With regard to employee involvement, Directive 2001/86/EC was introduced as a complementary measure to ensure that the regulations and practices in place prior to the establishment of the SE do not simply disappear.

• CouncilRegulation (EC) No 2157/2001 of 8 October2001 on the Statute for a European company (SE)
• CouncilDirective 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees

Based on the Treaty establishing the European Community, Regulation (EC) No. 1435/2003 was introduced, which enables and organises the establishment of European Cooperatives – in short: SCEs. In the course of this, Directive 2003/72/EC was introduced, which regulates employee participation in European cooperatives.

• CouncilRegulation (EC) No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE)
• CouncilDirective 2003/72/EC of 22 July 2003 supplementing the Statute for a European Cooperative Society with regard to the involvement of employees

As a result of the COVID 19 outbreak, a new regulation was introduced in 2020, under which the general meeting of a European Company or general meeting of a European Cooperative Society required for 2020 can be postponed until the end of the year, taking into account exit restrictions and social distancing measures.

• CouncilRegulation (EU) 2020/699 of 25 May 2020 on temporary measures in respect of general meetings of European companies (SEs) and general meetings of European cooperative societies (SCEs) (Text with EEA relevance).

In addition to the ordinances and directives already mentioned, there are also some at national level in Germany:

• Law on the Introduction of the European Company (SEEG) of 22 December 2004
• Law on the Implementation of CouncilRegulation (EC) No. 2157/2001 of 8 October 2001 on the Statute for a European company (SE) (SE Implementation Act – SEAG) of 22 December 2004
• Law on the Involvement of Employees in a European Company (SE Employee Involvement Act – SEBG) of December 22, 2004
• German Stock Corporation Act (AktG) of 6 September 1965
• Commercial Code (HGB) of 10 May 1897

Measures for SMEs – Societas Privata Europaea & Societas Unius Persona

Capital companies for small and medium-sized enterprises – in short: SMEs – were also provided with a largely uniform European legal form, namely the Societas Privata Europaea – in short: SPE; with German name: European Private Company. A first draft for the introduction of such a company was initiated in 2009, but ultimately failed just a few years due to ongoing criticism from other EU member states regarding its design.

As an alternative measure, the project to create a so-called Societas Unius Persona – in short: SUP; with German name: Europäische Einpersonengesellschaft – was launched. This European variant of a conventional limited liability company (GmbH) pursues the goal of enabling single-member companies with legal capacity to act for cross-border business activities, which can be organised and managed by a single managing partner. As with the national Unternehmergesellschaft (haftungsbeschränkt), a single symbolic euro is to be set as the minimum capital. The concept of the SUP has also met with widespread criticism so far, which is why it is currently not foreseeable whether and when the Societas Unius Persona will be available as a company form.

Legal form variant SE & Co KGaA – KGaA with general partner SE

Sometimes the Societas Europaea also appears in combination with a partnership limited by shares (KGaA). Family businesses, for example, occasionally organise themselves as Societas Europaea & Compagnie Kommanditgesellschaft auf Aktien – in short: SE & Co KGaA. In this case, they form a stock corporation in the legal sense – however, the general partner as personally liable shareholder is not just any natural person, but specifically a Societas Europaea (SE). If the general partner is embodied by an AG, one speaks instead of an AG & Co KGaA, in the case of a general partner GmbH of a GmbH & Co KGaA.

• AG & Co KGaA – see stock corporation (AG)
• GmbH & Co KGaA – see limited liability company (GmbH)

Companies operating under the legal form variant of the SE & Co KGaA have only existed since the end of the 1990s, after open legal questions were clearly explained by a court ruling of the Federal Supreme Court (BGF). The well-known health care group Fresenius SE & Co KGaA, which is one of the largest private hospital operators in Germany, has decided to establish an SE & Co KGaA, as have many other companies from a wide range of industries: Sound carriers and multimedia products, outdoor advertising, plant breeding and biotechnology, pump technology as well as thermal insulation composite systems, to name but a few.

Examples of SE & Co KGaA companies:

• AURELIUS Equity Opportunities SE & Co. KGaA
• Edel SE & Co. KGaA
• Fresenius SE & Co. KGaA
• KWS SAAT SE & Co. KGaA
• KSB SE & Co. KGaA
• Mutares SE & Co. KGaA
• Sto SE & Co. KGaA
• Ströer SE & Co. KGaA

CEWE Stiftung & Co. KGaA is a special case: In this company, the general partner is embodied by a foundation. In principle, the partnership limited by shares is possible in all conceivable combinations, as GUB Investment Trust KGaA points out as an example.

Continue reading here on the topic of setting up a family foundation:

• Establish a family foundation

SE formation in detail – registered office, company name, management & Co.

You would like to set up a European Company and become active in the Single Market in an uncomplicated way? To do this, your company must first meet a few requirements: Here you can find out everything you need to know about multi-nationality, minimum capital, co-determination and more, so that you can set up your European Company in a correct and informed manner. First things first: Your company must be a legal entity and have its own legal personality. In addition to the status as a legal entity, the so-called multi-nationality principle must also be complied with and a cross-border European element must be demonstrated.

Further regulations concern the company’s registered office and head office, the minimum capital required, the proper company name and registration, the management and company bodies and, last but not least, the accounting requirements and the right of co-determination of the workforce.

• Principle of multiple nationality
• Registered office & head office
• Minimum capital
• Company name & registration
• Management & corporate bodies
• Accounting
• Co-determination rights of the workforce

Multi-nationality principle as a cross-border element

The multi-nationality principle requires that at least two of all participating founding companies of a Societas Europaea have a cross-border, European element. In plain language, this means that at least two companies must be governed by the laws of different EU member states or, alternatively, must be able to prove a cross-border element through a subsidiary or branch that has been maintained in another EU country for two or more years.

Registered office & head office of a European company

The registered office and the head office of your company must be located in the same EU member state for the formation of a European Company. The choice of the country of incorporation is of decisive importance, since in addition to EU law, the respective applicable national law forms the legal basis of the European Company. In principle, it is possible to subsequently relocate the company’s registered office and head office to another EU member state, should the situation require it or should the company gain advantages as a result. The Association of German Chambers of Industry and Commerce (DIHK) describes this advantage as follows:

“Figuratively speaking: Europa AG is a legal form that comes in 25 colors. The choice of the domicile of the Europa AG therefore opens up interesting design possibilities.”

Some countries have stricter requirements for the formation of a European Company: for example, the member states Bulgaria, Denmark, France, Greece, Latvia, Austria and the Czech Republic require that the registered office and the head office of the company have the same address.

Financing of an SE: 120,000 euros minimum capital

Another requirement concerns the minimum capital required: For a European Company with its registered office and head office in Germany, for example, you need at least 120,000 euros, i.e. more than twice as much as the share capital of 50,000 euros required for a conventional German public limited company. The capital requirement – as well as the other requirements – may vary in the different EU member states. A higher subscribed capital can in principle be agreed in the articles of association.

As a rule, the minimum capital of a Europa AG should be denominated in euros. If the official national currency for a country of domicile is not the euro, the company may request that its annual financial statements and consolidated financial statements be prepared and published in its own national currency.

• Minimum capital: 120,000 euros (Germany)

Europa AG as a trademark: Company name & registration

The company name includes the legal form suffix “SE”, which either precedes the company name as a prefix or follows it as a suffix. Registration is mandatory in the register of the country of incorporation – in Germany, therefore, in the commercial register – and is also published in the Official Journal of the European Communities. If the registered office is moved to another EU member state at a later date, the registration of the Europa AG can be adjusted easily and without complications.

The existing Societas Europaea does not have to be dissolved for this reason and does not need to be re-established at its new location. Only an entry is made in the register there and a notification is sent to the original EU country, whereupon the latter makes a deletion of the entry in its own register. All entries and deletions in the registers of the various EU member states are listed in parallel in the Official Journal of the European Communities.

Structure of an SE: Management & Corporate Bodies

With regard to management, a distinction is made between a dualistic and a monistic system – the new German two-tier/one-tier model. They differ primarily in the different type and number of SE bodies that are appointed in the company. However, the term of office for the members of the appointed bodies is a maximum of six years in both cases, although reappointment is not ruled out.

• Dualistic system
• Monistic system

Dualistic system (two-tier model)

The structure of the German supervisory board constitution serves as the basis for the dualistic system, which is sometimes also referred to as the two-tier model. It represents the traditional division of management into three bodies, according to which, in addition to the general meeting, the supervisory board is appointed as a control body and the management board as a management body.

If the Europa AG has a share capital of more than three million euros, at least two persons must be appointed to the management board. Smaller European stock corporations may limit the executive board to only one person in accordance with the articles of association, provided that the company is not a co-determined company. Supervision of the management body is the responsibility of the supervisory board, the size of which is directly conditioned by the amount of share capital. In the case of a co-determined Societas Europaea, the supervisory board members must also be representatives of the shareholders and representatives of the employee workforce.

Monistic system (one-tier model)

The so-called one-tier model, on the other hand, is based on the Anglo-American board system. It stands for a monistic system, according to which only a single-member board of directors is appointed in addition to the general meeting, which is composed of the shareholders of the stock corporation.

In principle, three members of the Board of Directors are provided for, one of whom must be an executive director. However, it is possible to appoint a different number of persons to the board of directors, with the maximum number of members permitted being related to the company’s share capital, and European public limited companies with a share capital of more than three million euros being allowed by law to appoint no fewer than three members.

Within Germany, monistic Societas Europaea also demand that the participation of employee representatives on the board be as high as would be required for the traditionally dualistic supervisory board.

Accounting rules

With regard to accounting, the European Company is subject to the laws of the country in which the registered office and head office of the company are located – in a form that is largely standardised under European law. Apart from taxation and accounting, it is obliged to adopt the annual financial statements together with the notes and the balance sheet, profit and loss account (P&L) as well as to prepare the report on the course of business and the situation of the company.

• Annual accounts
  • Balance
  • Profit and loss account
  • Notes to the financial statements
  • Report on the course of business and the situation of the company

Co-determination rights for SE employees

Since the European Union has not formulated any legal formulation of co-determination in a European Company, there is either a binding agreement between the employer and employee sides or the valid co-determination right for the company is determined depending on the form of formation of the Europa AG. You can find out more about the individual forms of formation below.

Special negotiating body: employers & employees

In principle, it is possible for employers and employees to set up a so-called “special negotiating body”, where they can jointly reach a suitable agreement on corporate co-determination and set this down in writing. The members of the body are elected secretly and directly on the basis of a certain country key and are limited to a maximum of 40 members.

The “special negotiating body” must be established within ten weeks of the announcement by the company’s management of the planned formation of a European Company. A decision must be taken within six months – or within twelve months in the case of a request for an extension of the deadline.

Negotiations on employee participation

The “special negotiating body” can decide on employee participation in Europa AG, whereby a qualified majority decision must be reached for this. Agreements leading to a reduction in co-determination require a two-thirds majority representing at least two-thirds of the employees in two or more EU countries. However, this only applies under special conditions:

The special majority in favor of a reduction of the right of co-determination only applies if, in the case of a merger, at least 25 percent of the total workforce or, in the case of the formation of a holding SE or subsidiary SE, at least half of the total workforce is subject to co-determination. In the case of the formation of an SE by way of conversion, in principle, no reduction of the right of co-determination can be resolved.

• Merger: at least 25 % AN representation
• Holding/subsidiary: at least 50 % employee representation
• Conversion: no reduction possible

Termination of ongoing negotiations & waiver decision

In the case of a two-thirds majority, however, it can also be decided to break off ongoing negotiations or not to enter into negotiations at all. In this case, the Europa AG is registered without a co-determination model. In the case of the transformation of corporate form, however, which is based on a stock corporation with co-determination, such waiver resolution is generally excluded.

Failure of negotiations & standard rules

If agreement cannot be reached between the employer and employee sides, the negotiations fail and the standard rules automatically apply. The aim is to safeguard the existing co-determination rights of the workforce from the time the Europa AG is entered in the national register. Depending on the form of incorporation, corporate co-determination is absorbed differently:

In the case of formation by transformation, the existing co-determination rights of the national AG are continued. In the case of the other forms of formation, the highest standard of participation of a founding company can be transferred to the European Company – but only if in the relevant company, prior to the registration of the Societas Europaea in the national register, regulations on participation were already effective which cover a certain percentage of all employees. In the case of a merger formation, a coverage of 25 percent is required, in the case of SE holding companies and SE subsidiaries even twice as much.

• Conversion: Transfer of the previous right of co-determination
• Merger: 25 % of total workforce covered
• Holding/subsidiary: 50 % of total workforce covered

Advantages of Europa AG – Uniform, international & flexible

The European Company is a relatively new legal form of enterprise and can only be established in accordance with European regulations since 8 October 2004. It is therefore not very widespread and, in the view of many entrepreneurs, has yet to prove itself. However, especially with regard to the transnational business transactions of large companies, the Societas Europaea already offers a number of advantages that have a significant impact on cross-border cooperation between different EU member states and countries of the European Economic Area (EEA).

• Uniform set of rules
• International reputation
• Strengthening co-determination rights for employees
• Cross-border merger
• Flexible relocation
• Streamlined administrative structure
• Cost reduction through branch offices
• Establishment of SE subsidiaries

Uniform set of rules in EU & EEA

A uniform set of rules in favour of cross-border cooperation between several European countries is characteristic of the European Company. By establishing a Societas Europaea, you can do business under a trading name that is effective in all EU Member States and EEA countries, and you do not need to set up a large number of subsidiaries to your company in order to develop an effective international business network.

International reputation & strengthening of employee co-determination

Another plus point is that the name Societas Europaea expresses the internationality of your company and generates public prestige. Last but not least, the establishment of a European Company also has a positive effect on the company’s employees: The EU-wide uniform regulations create a personnel policy framework that strengthens the co-determination of your employees if they work for your company in several countries.

Europe-wide merger formation for AGs

The merger form of incorporation allows entrepreneurs for the first time to merge their public limited company with a public limited company from another EU Member State. The granting of cross-border mergers for all corporations is currently under discussion and could offer an attractive alternative for national public limited companies, limited liability companies and other corporations that conduct business across borders but do not want to give up their legal form in favour of a European Company.

Flexible relocation of the registered office

The flexible and uncomplicated relocation of the registered office is another decisive advantage of the Societas Europaea: although the SE registered office and the head office must initially be located in the same EU member state… the registered office of your company can later be easily relocated to another EU country. In this way, you can react flexibly to changes in the market and make clever use of the European competition between legal systems.

Streamlined administrative structure

In the case of the Europa AG, it is possible to choose between two tried and tested management models: the dualistic system, as is customary in this country, and the monistic system based on the Anglo-American model. In this way, European public limited companies with their registered office in Germany can nevertheless take advantage of a streamlined administrative structure, which makes a uniform form of management possible, especially for multinational corporations.

Branch & SE Subsidiaries

Instead of subsidiaries, a Societas Europaea can also maintain branches throughout Europe, which can mean a significant reduction in costs with regard to the administrative and management apparatus. Should the establishment of subsidiaries prove to be useful at a later date, you as the owner can also establish them in the legal form of a Societas Europaea.

Taxes for Europa AG shareholders: corporate income tax, trade tax, VAT, capital tax & income tax

In all countries of the European Economic Area (EEA), Europa AG is subject to the regulations applicable there with regard to the taxes and fees incurred. Accordingly, no special regulations are provided for current taxation. For permanent establishments and branches in other EU member states, it is subject to limited tax liability and must comply with the regulations applicable there. This concerns, among other things, the determination of profits for tax purposes.

In Germany, stock corporations are usually subject to corporate income tax and trade tax. In addition, sales tax is payable on the performance of non-exempt transactions. Profit distributions to the shareholders of an AG are generally subject to capital gains tax, whereas natural persons in the company must pay income tax. Wage payments to the workforce – for example, the remuneration of members of the management board – are subject to wage tax.

• Corporate income tax (KSt)
• Trade tax (GewSt)
• Value added tax (VAT)
• Capital gains tax (KapESt)
• Income tax (ESt)
• Wage tax (LSt)

You can find out what taxes you can expect with a real estate corporation here:

• Save taxes on real estate

Double Taxation Agreements (DTAs) – Germany, EU & EEA

Between Germany and the other member states of the European Union (EU) and the European Economic Area (EEA), the so-called double taxation agreement – in short: DTA – applies. This agreement ensures that double taxation of income earned abroad can be avoided by granting one participating state the right to tax and, in parallel, denying or at least limiting the right of the other state to tax. The concept of this is sometimes also referred to as the barrier effect or barrier function.

Model agreement OECD-MA & OECD transfer pricing guidelines

An example of this is the model convention of the internationally active Organisation for Economic Co-operation and Development (OECD), whose Model Tax Convention on Income and on Capital (OECD-MA) is recognised worldwide and serves as the basis for over 3,000 intergovernmental double taxation agreements.

The OECD also adresses the well-known problem of transfer pricing when maintaining foreign permanent establishments. The prestigious organisation publishes regular transfer pricing guidelines for multinational companies and tax administrations in order to ensure a proper deferral of profits to the parent SE. They can serve as a guideline for cross-border companies to set the agreed prices at an arm’s length level in accordance with the arm’s length principle.

Parent-subsidiary directive: taxation of dividend payments

By revising the outdated Directive 90/435/EEC – the so-called Parent-Subsidiary Directive – and introducing Directive 2003/123/EC, it was possible to eliminate the previously existing double tax burden on dividend payments. According to the new regulations, the full tax revenue of the subsidiary is due to the member state in which the subsidiary is domiciled. However, capital gains tax (KapSt) may not be levied there in context.

The parent company may use either the exemption method or the imputation method to avoid double taxation.

• CouncilDirective of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (90/435/EEC)
• CouncilDirective 2003/123/EC of 22 December 2003 amending Directive 90/435/EEC on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States

Merger Directive: taxation of cross-border changes of ownership

Under certain circumstances, a European Company with cross-border incorporation can be managed without affecting profit or loss and be exempted from the taxation of hidden reserves. It then falls within the scope of Directive 90/434/EEC – the so-called Merger Directive – which was later modified by Directive 2005/19/EC. Over the years, the Merger Directive has repeatedly undergone minor amendments, so that the substantive aspects are nowadays also applicable to a cross-border transfer of the registered office, the conversion of permanent establishments into subsidiaries and spin-offs from the parent company.

In Germany, the EC Directive was initially implemented in the Reorganisation Tax Act (UmwStG) and later also in the Act on Tax Measures Accompanying the Introduction of the European Company and on the Amendment of Other Tax Regulations (SEStEG).

• CouncilDirective of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States (90/434/EEC)
• CouncilDirective 2005/19/EC of 17 February 2005 amending Directive 90/434/EEC on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States

Societas Europaea (SE) – For whom is it worthwhile?

The Societas Europaea is particularly suitable for large public limited companies with cross-border business within the European Union and the European Economic Area. For those who are not deterred by the considerable minimum capital of 120,000 euros, there are many opportunities to become active transnationally and to realize their entrepreneurial goals with reduced effort and cost savings. Cross-border mobility enables you to set up your company in accordance with the legal system that suits you best and, if necessary, to flexibly relocate your registered office and head office to another EU country.

For whom exactly is the European Company worthwhile? Large international companies and fast-growing companies with an IPO can particularly benefit from the advantages of a European Company and strengthen their external image, because the Europa AG enjoys a high reputation and respect throughout Europe. Even if you are dissatisfied with the typical German management model and the rigid structure of your public limited company, the conversion formation of a Societas Europaea can be particularly attractive for you, because here you can switch to a monistic system and streamline the corporate bodies.

Alternatives to the Societas Europaea (SE): Legal forms in Germany

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

Company types in detail:

• Sole proprietorship
• Registered businessman / registered businesswoman (e. K.)
• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)
• Entrepreneurial company (UG)
• GmbH: Limited liability company
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Real estate stock corporation (REIT-AG)
• Societas Europaea (SE)
• Foundation / Family Foundation

The right property abroad: Paris, Alsace or Côte d’Azur?

The decision has been made and you have decided to buy a property abroad in France? Then be sure to read this article, because we offer you helpful tips. In order for your search to be successful, you first need to discover the right online portal for you. Although many online portals have the same basic structure, different filter functions and the focus on the country France can make a difference for the selection.

The most beautiful residential areas France

As everyone knows, France has various charming cities and Mediterranean beaches. No wonder that many do not immediately know where to start looking for a property abroad in France. While there are various beautiful places to live, not all places to live will satisfy your desires. For this reason, we have picked out 5 different places to live in France to help you make your choice.

Investing in real estate: France

Living and working abroad is a very memorable experience, professionally, personally, culturally and of course financially. In this free guide, you’ll get investment tips for all the major cities in Europe, America and Asia, from New York to London to Paris.

• Investing abroad: Real estate (external)

Toulouse: The pink city

Toulouse is located in the southwest of France and is the fourth largest city. In Toulouse there are very many buildings that are made of red bricks and for this reason it is often called the “pink city”. Not only is it often very windy here, but there is also no shortage of tourists as there are many places of interest. Toulouse is also a good starting point for those who want to make a career. That is why there are also countless students.

Toulouse city video with resident

Map & Location

Paris: City of Love

The city of love. Just about everyone wants to have been there at least once in their life. You’ve already been there, fallen in love with the city and are now considering buying a property abroad in Paris? One thing should be clear to you right from the start, especially with this city: Paris is very expensive. But Paris is not for nothing one of the most famous cities in Europe. Here you will not only find good French cuisine, but also culture and art play a significant role. No wonder that the city seems very crowded. However, you still have the choice whether you want to live directly in the hectic city or in the somewhat quieter surrounding countryside. While the surrounding countryside is more often chosen by families, students often like to choose the city centre.

Paris from above: Video

Paris Map & Location

Eifel Tower 360°: International Relevance & Landmark

Nice: Port city

The port city of Nice is particularly popular and there is often a lot going on here as well, because there is a large shopping mile and the nightlife is not neglected either. Families therefore like to choose residential areas that are a little further away from the centre. If you are interested in what sights Nice has to offer, you will mostly come across museums and famous old buildings. Should you decide to buy an overseas property in Nice, you will benefit from plenty of sun and beach. Here you have the opportunity to unwind and enjoy the good weather.

Video

Map & Location in France

360° harbour view

Bordeaux: City on the Atlantic

Bordeaux is a very popular city to live in – but why? Quite simply, this city fulfils all wishes. On the one hand you have the city life and many career opportunities and on the other hand it is not far to the sea. So, should you buy a property abroad in the middle of Bordeaux and have too much of the hectic city life in between, you can just grab your car or bike and be at the sea in not too long.

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Bordeaux: Map & Location

Lyon: Little Paris

The city of Lyon is often known as “Little Paris”. Students are especially drawn to this city, as there are countless universities here. The advantage of Lyon? Compared to other cities, such as Paris, it is much cheaper here. Lyon has a lot to offer. Besides shopping and nightlife, there is also a charming old town and great French cuisine. Since it is only “little Paris”, people here are less stressed and hectic and thus often more open to be found. If you are interested in a property in Paris, but find it too expensive, or if the hectic pace of life makes you doubtful in the long run, Lyon could be the perfect alternative for you.

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Map & location: Lyon

Monaco and Monte-Carlo: principality

If you like the French Mediterranean coast, you’ll love the Principality of Monaco. As in many exclusive places in this world, it is not so easy to buy a property in Monaco. Those who are often in Kitzbühel in winter, for example, know that one has to live in Kitzbühel for 5 years in order to be allowed to buy a property or a plot of land. But why does a city council do such a thing? It is mainly to protect the residents, because the more “speculators” come to such a relatively small town or principality, the greater the vacancy of properties. Used once a year as a holiday home or never if the property is considered a pure speculative investment. But Monaco also wants to protect itself from this by such regulations. Accordingly, there are laws that clearly regulate the acquisition of real estate and land.

• Buy property Monaco

House & Apartment for sale in France

From the valuation to the speculation tax. In this guide you will find all the important factors simply explained. Learn step by step the procedure in the apartment sale to be able to answer the question: Selling with or without an estate agent? The private sale of real estate involves many risks and sources of error, starting with the apartment valuation to the offer price to the individual marketing, from “advertising” to internal customer network and off market real estate sales.

• Sell apartment
• Sell house
• Sell land
• Sell property

Buying: Portals for cheap real estate

Real EstateScout24

Everyone knowsImmobilienScout24. This real estate website brokers properties all over the world. Here you will not only find properties for sale, but also if you are looking for a property that is rented, you are exactly right here. If you are looking for a property on ImmobilienScout24, you will benefit from a clear presentation and also the popularity of this portal.

Green-Acres.com

This online portal focuses on France, Portugal, Spain, Italy and Greece. This could be the right place for you if you are already sure that you want to buy a property abroad, but still doubt whether France is the right country. You have the possibility to make comparisons, which can concern the price, the area or also the location.

Franimo

As the name“Franimo” suggests, this online portal focuses solely on France. Accordingly, this website has a lot of properties for different places in France to offer. If you haven’t found a favourite place in France for yourself yet, you can read our place recommendations further down in the article beforehand.

AuSud

The online portal“auSud” also only deals with the country of France. The most important information about a property is clearly presented here in a table and there is also a small description of the property. You can specify the price range from the outset and also the location.

Immowelt

The portal Immowelt mediates real estate all over the world and for this reason also has a large offer for France. Sellers have the opportunity to create clear advertisements for their properties. The contact is usually directly under the ad and you have the opportunity to immediately contact the seller.

Buying property abroad: Tips

• New York, LA, London & Co: Luxury Real Estate
• Real estate agent
• Buy a holiday home
• Foreign property Italy
• Foreign property Spain
• Foreign property Mallorca
• Luxury Real Estate Mallorca
• Off market – especially in hot real estate markets

Sun, warmth & good mood: Life in Italy

You need a break from the daily grind in Germany? What is nicer than having the opportunity to escape for a few weeks in your property abroad in Italy? Nothing at all. If it is financially possible for you, a property abroad is a great investment. Here we have a few examples of beautiful places in Italy and show you examples of beautiful properties that are available there.

Lake Garda: life on the lake

Lake Garda is one of the most popular destinations in Italy. Not entirely improbable is the thought for holidaymakers who visit the same holiday destination in Italy every year to buy their own small holiday home here. They save not only the search for a suitable accommodation and have to worry whether this is then also available at the planned time, they also save a lot of money. Nevertheless, you should consider that a foreign property requires a certain care. At this point you should weigh up whether the purchase is worthwhile for you.

Lake Garda Map & Location in Italy

Ambience and view

Sardinia: Italian Mediterranean Island

The Italian Mediterranean island of Sardinia is also an extremely popular destination in Italy. No wonder, because here there are incredibly many sandy beaches and also the landscape is ideal for hiking. The villa from this video is for most people not a foreign property in question, but it is interesting to see how beautiful life can be in Sardinia. It is possible to find your dream property here. Use the best for a suitable real estate portal.

Sardinia Map & Location in Italy

South Tyrol: The natural paradise

South Tyrol is the northernmost province of Italy. This holiday resort convinces the holidaymakers by the fabulous nature. Here you can experience a combination of wine landscapes and the Alps. Especially those who want to switch off from the big city stress in a more rural way of life are exactly right here. The landscapes are ideal for hiking. If you are enthusiastic about South Tyrol and want to invest in a foreign property, the most diverse portals are suitable for a successful search.

South Tyrol Map & Location in Italy

House & Apartment for sale in Italy

From the valuation to the speculation tax. In this guide you will find all the important factors simply explained. Learn step by step the procedure in the apartment sale to be able to answer the question: Selling with or without an estate agent? The private sale of real estate involves many risks and sources of error, starting with the apartment valuation to the offer price to the individual marketing, from “advertising” to internal customer network and off market real estate sales.

• Sell apartment
• Sell house
• Sell land
• Sell property

Buying: Portals for cheap real estate

The decision has been made and you are now looking for a property abroad that fulfils your wishes? If you search the internet for a property abroad in Italy, you will come across countless portals that present the best offers for you. They often have different filter functions that you can use to narrow down your search. We have selected the best portals for you, on which the search for a suitable property abroad can be worthwhile.

Immobiliare.it: The Italy Specialist

If you should already be quite sure that you are looking for a property abroad in Italy, then this real estate portal could be just right for you. Here, the focus is entirely on the beautiful country of Italy. On this portal you can not only find properties to live in, but also if you have the idea to build up your life abroad and want to open a restaurant or a small business, you could find here a commercial property. The website Immobiliare.it also offers various filter functions from the district to the price to the type of property.

Immowelt: A large selection

The large real estate portal Immowelt could be the right thing for you if you are not quite sure yet whether you want to buy a property abroad in Italy. Perhaps you are still in doubt between Italy and Greece and for this reason it is just right for you to have a larger selection available on the real estate portal. This way you have the possibility to compare prices and the quality of the properties you are interested in. The information you need is clearly presented on this portal.

Immozentral: The multifaceted portal

The real estate portal Immozentral also focuses on real estate around the world. Here you can not only discover many properties, but also advertise some yourself. Those who want to get rid of a property abroad and do without an agent can easily try their luck here. On this portal you will find properties from over 90 countries. Especially for Italy, the website has a very large selection.

Immobilienscout24: The portal that informs at the same time

On the portal Immobilienscout24 you can get some basic information about the country you decide to live in. Here you can not only search for a suitable property around the world, you will also receive important information about popular places to live, financing tips and other things you should consider. With just a few clicks and filter functions, you will find the offer that interests you in no time.

Renting out a property abroad: The advantages

The beautiful property abroad is too bad for many that it remains unused in the time in which one stays as an owner at home. Why not use the opportunity to rent out this property and thus create a small extra income? In addition, the property is occupied and the likelihood of someone gaining unauthorized access to the property is much lower. You don’t have to worry, you create the possibility for others to spend an unforgettable holiday in your apartment or house and at the same time you even earn money.

Investing in real estate: Italy

Living and working abroad is a very memorable experience, professionally, personally, culturally and of course financially. In this free guide, you’ll get investment tips for all the major cities in Europe, America and Asia, from New York to London to Paris.

• Investing abroad: Real estate (external)

A property in Italy is not the right thing for you? Perhaps you are interested in real estate in Mallorca. For this, please read our article:

Buying property abroad: Tips

• New York, LA, London & Co: Luxury Real Estate
• Real estate agent
• Buy a holiday home
• Foreign property France
• Foreign property Spain
• Foreign property Mallorca
• Luxury Real Estate Mallorca
• Off market – especially in hot real estate markets

Mallorca: Investment in a foreign property by the sea

Sun, wind and sea. That’s what most people think of when they hear the name Mallorca. Mallorca is the absolute favorite travel destination of the Germans. No wonder, because Mallorca has not only the famous Ballermann to offer, but also quiet, beautiful places where you can let your soul dangle. No matter in which part of Mallorca you prefer to live, with our help you will find your dream property. Not only do we recommend the best real estate portals for Mallorca, but we also show you some beautiful examples of how different life and living on Mallorca can be.

Luxury property in Mallorca

Welcome to the Germans’ favourite island. Lots of sun, relaxed people, the sea and only 1-2 hours flight from cities like Berlin, Paris and Madrid. This makes Mallorca one of the most popular regions for many from business and industry, but also for celebrities who are attracted to the island. Especially on the mainland, a little off the coast, you will find villas, fincas and condominiums of the extra class. But beware. If properties are tied up, you will quickly pay too much. Therefore, we strongly recommend working with a local real estate agent. Because in Mallorca there are also Spanish laws, from the residence obligation (subject inhabited houses) to tax issues. Therefore, before we take a look at available apartments and houses, we briefly highlight the property prices in Mallorca.

• Luxury Real Estate Mallorca

Pollensa (Pollença): Living inland

The town of Pollensa is located in the north of the beautiful island of Mallorca. When tourists spend their holidays in Mallorca and want to do more than just party, they also like to come to Pollensa to visit some sights. But which sightseeings are there in Pollensa? There is for example the Roman bridge also called “Pont Roma” and some more sights. The place itself is worth to be explored, as it is an old town and there are many winding streets. Pollensa is home to a mixture of locals and newcomers, which has created a particularly pleasant and warm atmosphere.

Pollença: Beach

Map & location: Pollença

Palma de Mallorca: Life between hustle and bustle and fun

Palma de Mallorca is the capital of the island. Even in this very popular city there is no shortage of sights. However, Palma de Mallorca is famous for long party nights. Palma de Mallorca offers the perfect mix for most holidaymakers, because there are varied beautiful places, such as an old town, a port district or a city beach. But how sensible is it to invest in a property in this popular and much visited city? From Palma, you can quickly get to all the places that could be important, such as the airport or the doctor. This will benefit you as a property owner in this city. You will also never get bored here, as there are countless varied places to visit. However, if you would rather have a bit of peace and quiet and live far away from the stress of everyday life, you should not necessarily choose Palma de Mallorca as a place to live.

Palma de Mallorca: Video Tour

https://www.youtube.com/watch?v=IjkTvUjf0jA

Map & Location: Palma de Mallorca

Son Vida: For the rich & beautiful

Son Vida is one of the most popular residential areas on Mallorca. This town is surrounded by mountains and is located west of Palma de Mallorca. As a residential area it is particularly popular here, because on the one hand the way to the center of Palma de Mallorca, so the hustle and bustle and fun is not far and on the other hand you have the opportunity to retire here in peace and enjoy the silence. This place is also a paradise for golfers and you are quickly at the airport, in the shopping mile or on the beach.

Son Vida: Video

Map & Location: Son Vida

Calvia: Rural living (Santa Ponsa Calvià)

Those who would like to live in Mallorca, but prefer a quieter place to live, could be well served with the town of Calvia. The surroundings here are rather rural and ideal for hiking. If you are particularly fond of nature, you might be well served with the town of Calvia as a place to live. With a property in Calvia you have the possibility to retreat from the tourist hustle and bustle and enjoy the peace and quiet. However, if you feel like having a good time with lots of people, you have the possibility to go to the nearby Palma de Mallorca. Calvia offers a perfect balance and is worth considering when looking for a suitable property.

Calvià from above (video)

Map & Location: Calvià

Port d’Andratx: Life at the harbour

Port d’Andratx is a very popular place for potential property buyers. It is a beautiful harbour that has a yacht club. Visitors to the port love the direct waterfront location and the nature that surrounds the port. No matter who visits this place – All are enchanted. There are also two small beaches and the town of Andratx town is only 5 km away. Port d’Andratx is particularly popular as a place to live as there is the ideal mix of restaurants, cafes, clubs and quiet places to relax. Those looking to buy a property in this area should bear in mind that the cost of living in this location is slightly higher.

Port d’Andratx Video

Map & location: Port d’Andratx

360° view from the harbour

Investing in real estate: Mallorca

Living and working abroad is a very memorable experience, professionally, personally, culturally and of course financially. In this free guide, you’ll get investment tips for all the major cities in Europe, America and Asia, from New York to London to Paris.

• Investing abroad: Real estate (external)

House & Apartment for sale in Mallorca

From the valuation to the speculation tax. In this guide you will find all the important factors simply explained. Learn step by step the procedure in the apartment sale to be able to answer the question: Selling with or without an estate agent? The private sale of real estate involves many risks and sources of error, starting with the apartment valuation to the offer price to the individual marketing, from “advertising” to internal customer network and off market real estate sales.

• Sell apartment
• Sell house
• Sell land
• Sell property

Buying: Portals for cheap real estate

There are now so many real estate portals that broker real estate abroad, that you often do not even know which would be best suited to your own interests and requirements. These real estate portals could be interesting for you.

Immobilienscout24: The all-rounder for all aspects of real estate

Everyone has actually used Immobilienscout24 to search for a property to rent or sell. Immobilienscout24 is also suitable for the search for a property abroad. If you are looking for a property abroad in Mallorca via Immobilienscout24, then you will benefit from a large selection of filter functions and a wide range of different properties.

Porta-Mallorquina: The Mallorca Specialist

The real estate portal Porta-Mallorquina offers many different properties. From luxurious villas to smaller apartments, there is a lot on offer here. If you are not particularly familiar with Mallorca, it is helpful on this website that you can read not only a description of the property, but also a description of the location and the surroundings. So that you do not feel overwhelmed due to the abundance of offers, you can also limit your property search. You can limit the locations, the types of property, the prices and the regions according to your interests. Porta-Mallorquina is for you if you are already sure that you want to invest in a property on Mallorca. Moreover, not only do you have the option of finding a property for sale, but you can just as easily find a property to rent long term or for holidays.

Immowelt: Find a property abroad

The famous portal Immowelt offers not only properties on Mallorca, but as the name suggests, all over the world. Immowelt offers a nice overview of the most important facts about an apartment or a house. Since many properties are sold privately here, you can possibly make one or the other bargain on Immowelt. If you are not under pressure, but on the side looking for a suitable property in Mallorca, you have the opportunity to be informed by e-mail about new offers that match your interests.

Firstmallorca.com: The fast track to property in Mallorca

On the real estate portal Firstmallorca the chance is high that you will find your dream property. Here you can not only specify the type of property, the location and the price, but also activate other filters so that you get faster to the result that fits your ideas. The real estate portal values loyalty, honesty, transparency, respect and team spirit.

5 housing options in Mallorca – What suits you?

Here we have compiled the most popular residential locations on Mallorca for you. We briefly present the residences so that you can get an overview and find out in which place the purchase of a property would be the most sensible for you.

Buying property abroad: Tips

• New York, LA, London & Co: Luxury Real Estate
• Real estate agent
• Buy a holiday home
• Foreign property France
• Foreign property Italy
• Foreign property Spain
• Luxury Real Estate Mallorca
• Off market – especially in hot real estate markets