Registered traders (e. K.) – foundation, financing, liability & Co.

With regard to the legal form of sole proprietorships, a distinction is made between freelancers, small traders and registered merchants, with the latter being the only legal form variant that must be registered in the commercial register. However, the obligation to register only applies to merchants who are actively engaged in commercial trading – the so-called “gewerbetreibende Kaufleute”. They are also referred to as “actual merchants” and are generally assessed according to the German Commercial Code (HGB).

If you are a sole trader and own a business but do not trade in it, you are considered an “optional trader” and have the choice of whether or not to have your business registered in the commercial register. If you decide not to register, you are subject to the German Civil Code (BGB) as normal. Typical “Kannkaufleute” are, for example, small traders and freelancers.

You can find out more about the individual legal forms here:

• Sole proprietorship (EU)

Foundation & Company Name

In comparison to the other two legal forms, the strictest requirements apply to the establishment of a company for commercial traders: In addition to applying for a tax identification number (tax ID) at your tax office and registering your company at the trade office, you are also required to have an entry made in the commercial register by a notary. At a cost of around 200 to 300 euros, you can thus secure the title of actual businessman or businesswoman. Only after completing this public registration do you have your own company in the legal sense.

You are free to choose the type of company name in many respects, but it must provide information about your commercial status and also be distinguishable from the companies of other traders. You can form a personal company, which describes you as the owner in more detail, or a material company, which reveals more about your business purpose and the associated services, or even a fancy company… It is obligatory that you add the gender-neutral suffix “e. K.” – or alternatively “e. Kfr.” for registered businesswomen or “e. Kfm.” for registered businessmen – to the contingent liabilities of your sole proprietorship. In addition, you can consider registering your company and/or your business name as a trademark to protect your name or your company.

Financing & profit distribution

No minimum capital is required to set up a business as a registered trader. Of course, it is still advisable to have some reserves and to draw up a financing plan in order to be financially prepared in case of unpleasant surprises. In addition, you will incur some costs for the start-up alone, before you have even begun to make a profit with your company. The positive aspect: Your profits are 100 percent yours and you don’t have to share them with anyone!

Liability, accounting & taxes for registered traders

As a sole trader, you have unlimited liability, i.e. with your business assets as well as with your personal assets. By registering, you are obliged to keep accounts and regularly prepare balance sheets and inventories for your business. However, you are exempt from the obligation to publish your business figures and books. Unless you achieve an annual turnover of more than 130 million euros…

A sole trader is always a natural person at the same time. Consequently, registered traders are, of course, first and foremost subject to income tax. In addition, according to tax law, further levies are provided for turnover tax and trade tax.

• Income tax (ESt)
• Value added tax (VAT)
• Trade tax (GewSt)

Registered trader (e. K.) – For whom is it worthwhile?

Do you love the idea of being your own boss and not having to coordinate decisions with other shareholders or managing directors? Then the legal form of a trader could be just right for you! Uncomplicated formation process, zero minimum capital required and no partners, co-founders or shareholder teams to nag you or interfere…. You take the risk and you reap the rewards – 100%.

Why should you register as a merchant? The legal form of a registered businessman (e. Kfm.) or registered businesswoman (e. Kfr.) is worthwhile for those who are prepared to take manageable risks in order to start their own business quickly and easily. You do not need enormous financial reserves and also pay relatively little tax on your profits. A sole proprietorship is therefore ideally suited for young entrepreneurs who not only dream of self-realization, but also want to take their lives into their own hands.

Alternatives to the e.K.: 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
• 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

One-person limited liability company: corporation for 1 person

The formation of a limited liability company requires at least one person. One-person companies tend to be the exception, but from a purely legal point of view, mono-corporate one-person companies are certainly permissible in the case of the GmbH as well as the Aktiengesellschaft (AG). In the case of a limited liability company, the term “one-person GmbH” – alternatively also “one-man GmbH” or “Einmann-GmbH” – is often used.

Other GmbH models with special features:

• Two-person limited liability company
• No-Person-GmbH

Emergence of solo founders – self-decision, exit & e. K.

The one-person GmbH can come into being in three ways: Either you consciously decide to become a solo founder, or you were originally in a two-person GmbH or multi-person GmbH and have been reduced to a one-person company by the withdrawal of the other shareholder(s). Alternatively, you are a registered trader and have the necessary share capital to change your legal form to a one-person GmbH.

Tip: If you basically do not want to manage your GmbH alone and divide the capital burden among several heads, but still want to decide alone on the structure and wording of the articles of association, you can form a one-man GmbH in the first step and take on any number of additional shareholders in the second step. The decisions you make in the pre-incorporation phase then automatically apply to the new shareholders as well.

Special features of the one-person GmbH: § 181 BGB and § 3 GmbHG

With a one-man limited liability company, you are automatically the sole shareholder and take the position of managing director. You also participate in the shareholders’ meetings in a so-called personal union. Apart from that, the same rules and laws apply to you as to companies with several shareholders. This also means that you must form all the corporate bodies prescribed for a GmbH – for example, the supervisory board. For this reason, it is particularly important that as sole managing director of a single-member company, you exempt yourself from the single standard “insichgeschäft” (section 181, see above) laid down in the German Civil Code.

In the case of a one-person GmbH, the shareholders’ agreement does not have to be notarised prior to registration in the commercial register and is therefore usually quite short, taking into account the minimum content required by the Limited Liability Companies Act (GmbHG). However, you need a non-receivable unilateral declaration of intent to complete your registration, and this in turn must be certified by a notary.

Excerpt from the law – § 3 GmbHG:

(1) The memorandum and articles of association shall contain:

1. The company name and registered office,
2. The object of the company,
3. The amount of the share capital,
4. The number and nominal amounts of the shares that each shareholder takes over in return for a contribution to the share capital (nominal contribution).

(2) If the company is to be limited for a certain period of time or if other obligations towards the company are to be imposed on the shareholders in addition to the payment of capital contributions, these provisions must also be included in the company statutes.

Establish a GmbH: Legal form and alternatives

1. No-person GmbH: inheritance, gift, termination
2. Two-person GmbH: Founder Duo
3. Limited liability company (GmbH)
4. Special case: Real estate GmbH
5. Legal forms: List

No-person GmbH: inheritance, gift, termination

No-Person GmbH – The model for a GmbH without shareholders! By appointing new shareholders or leaving existing shareholders, the limited company model you choose can easily change. Whether it’s a one-person company, a two-person limited company or even a company that operates without shareholders at all…. In each case, there are specifics that you should be aware of as they deviate from the norm of the traditional limited liability company.

• No-Person-GmbH

Two-person GmbH: Founder Duo

Two-person GmbH – The GmbH model for founding duos! By appointing new shareholders or leaving existing shareholders, the GmbH model you choose can easily change. Whether it is a one-person company, a two-person GmbH or even a company that operates without any shareholders at all… In each case, there are specifics you should be aware of as they deviate from the norm of the traditional limited liability company.

• Two-person limited liability company

Limited liability company (GmbH)

Limited Liability Company (Gesellschaft mit beschränkter Haftung, GmbH) – The limited liability company is a German legal form that is founded by at least one person and managed by at least one shareholder. As the name already indicates, this corporate legal form is characterized by a limitation of liability for its shareholder(s).

• Limited liability company (GmbH)

Special case: Real estate GmbH

Immobilien GmbH / Vermögensverwaltende GmbH / Immobiliengesellschaft – In this article you will learn the basics about real estate companies. Who would think of founding a limited liability company when buying a house or a condominium? Admittedly, this makes no sense for owner-occupation, but it does for renting.

• Real estate company

Here you will find all the legal forms that can be chosen as a founder in Germany and a guide with a checklist:

Legal forms: List

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

Take for example the Berliner Testament, what is it? How do you use it to your advantage? This is why knowign the details of German real estate laws is so advantageous.

What you Have to Know Buying a House in Germany!

If you’re looking into buying real estate in Germany, there’s some details you have to know about. Germany has substantially different laws relating to real estate than other countries. Therefore, to know where to save, what to look for, and the nitty gritty details, you have to get specific information. If you’re looking to invest, but don’t know where, our piece on the most expensive cities in Germany gives a run-down on the cities where you’re bound to lose the least, and win the most.

Saving Money

If you want to save money on real estate in Germany, you’ll need to optimize your taxes. There are many ways to do this of course, but we’ve taken a closer look at two important ones.

They are all summarized in an article outlining everything you need to know

• Saving Money on German Real Estate

How to Pay Less with an Immobilien GmbH

An Immobilien GmbH is, translated, a company created for the purpose of organizing or managing real estate. This is a handy tool to use in the case that you would typically pay a considerable amount when you own property privately. Private leasing translates to a tax rate of 42 percent, meaning you can quickly pay 4-digit sums a year in taxes.

Immobilien GmbH – Tax Optimization in Germany

Saving Taxes with a Foundation

Another way to save money on German real estate is by founding what is called a ‘Familienstiftung’. This allows the owner of a property to reduce the amount of taxes which they are required to pay on the income they make from renters.

Familienstiftung – German Real Estate Tax Tricks

Grunderwerbsteuer

Buying property in any country means paying taxes on the purchase. In Germany, the tax on buying real estate is called Grunderwerbsteuer. Consisting of the words Grund (land or property), Erwerb (purchase), and Steuer (tax), this would be the equivalent to the American transfer tax. Who pays this tax, how much it is where, etc. is all in our article

Grunderwerbsteuer – Real Estate Transfer Tax in Germany

Additional Costs

In Germany, as would be expected, the additional costs are different from the additional costs in the USA. Property investment therefore means different calculations and different things to watch out for. Notarization, commission, renovations, etc. all need to be taken account.

Additional Costs & Hidden Fees – Real Estate Germany

Contract Details

Buying a house means drawing up and signing a contract. A purchase contract regulates the transfer of ownership. This, as with everything else has different ins and outs in Germany than in other places. We took a look at the BGB (the German Civil Code) so you don’t have to.

Purchase Contract – Details for German Real Estate

With the conclusion of a purchase contract, the financing is already under the umbrella. The bills from the broker, notary, land registry and tax office come as soon as the loan is fixed. Because of this, the credit is often underestimated. Back to German Real Estate Overview.

Additionally, in the following there may be slight grammatical errors, as this article was written by a German tax expert. This does not detract from the quality of information.

What Percentage are Incidental Purchase Costs?

20% ancillary building costs should be included in the loan at least, in addition to the purchase price, and are quite realistic.

~ 20% of the purchase price

The 4 Biggest Additional Costs when Buying Real Estate

The overview shows the 4 largest additional costs you expect when buying a house. But what other costs are involved in building a house? Find out more here: House construction & the costs that come up.

Fees: Notarization of the Purchase Contract by Notary

The fees for the notary appointment are probably one of the largest items in the additional costs of the house purchase. The notary fees are fixed and may not deviate from these in any direction, but even these are quite high.

~ 1,5% of the purchase price

As a rule of thumb, about 1.5% of the purchase price has been set – and this only for the signature of the purchase contract. So if you purchase a property with a purchase price of 100,000 Euros, the notary’s fee is 1500 Euros, which, in Germany, is usually paid for by the buyer.

The exact fees for notaries in Germany are laid down in the notarial fee schedule, but can also be calculated online.

• Read more here: Notary and Purchase Agreement

Taxes: Real Estate Transfer Tax

As soon as the contract has been signed at the notary and the purchase agreement has been notarized, the buyer will receive mail from the tax office. Next, the purchase tax is demanded from the buyer.

This is incurred somewhat differently. Normally it amounts in Germany round about 3% – 6% of the purchase price of the real estate. Since the land transfer tax is a state tax, meaning each state determines their individual rates land transfer tax rate.

In some federal states, however, such as Hamburg, Berlin and Saxony-Anhalt, it is 4.5% of the property purchase price. For a purchase price of 100,000 euros, for example, you therefore pay another 3500 / 4500 euros for the land transfer tax.

Reading tip: Get to know tax planning options, from cooperatives to family foundations: Save taxes with real estate

Purchase price 100.000 Euro

This debt should be paid immediately, because only when the amount has been received by the tax office will the latter issue the so-called clearance certificate. This certificate is mandatory for the transfer of the new owner to the land register. This is arranged by the land registry office and costs again fees, which are comparatively low.

3.5 – 6.5% of the purchase price

Commission: Brokers Calculate their Share

Whoever buys a property or a plot of land through a real estate agent must of course include the commission to the agent in the overall calculation. You will usually receive the invoice from the real estate agent directly after the notarization.

How high the commission is varies and depends on various factors, such as the region. In most cases it varies between four and six percent of the purchase price of the property.

With a property purchase price of 100,000 euros, you pay between 4,000 and 6,000 euros only for the real estate agent. However, it is important to know that it is definitely worthwhile to negotiate with the real estate agent’s commission, as it is known that this is associated with a large amount of leeway.

A recommendable, total commission of 3.48 percent including VAT is a recommendable and realistic value.

~ 3.48 % of the purchase price

Supplements: Credit Interest and Installment Surcharges

The banks would like to take part in a house sale, of course, and not only through the loan interest rates. In addition to the negotiated loan interest rates, you are charged costs that are additional and usually not expected by the buyer.

These costs are not clearly visible at first glance and therefore banks are deceiving their customers. Such hidden costs can occur in the form of monthly provision interest on the unpaid portion of the total loan.

There, for example, 0.25% is charged, which the customer does not expect and which adds up to the mass. For a loan amount of 100,000 euros, this is about 250 euros per month, which you do not expect.

Additional, Hidden Costs

But there are other hidden costs that you don’t expect. These include account management, which some banks charge as a fee, but also installment surcharges if you get part of the loan paid out, depending on the progress of the construction.

With your loan, pay special attention to exactly what is written in the small print, ask about all unclear points and only sign if you are certain about all obligations.

To be on the safe side, have your bank calculate the so-called total effective interest rate or the actual effective interest rate. There, all service charges are listed in detail and clearly arranged.

Assessor & Renovation – Potential Additional Costs

Another factor that does not apply to all properties is the cost of appraisers and renovators.

Particularly with older real estate it is meaningful to hire an appraiser before the purchase, who examines the real estate down to the lattices. This includes, for example, checks on moisture and pollutants (especially for properties dating from the 1970s). Such appraisals are carried out by independent experts such as architects or civil engineers but also real estate experts.

The costs here are very different, as it depends on the type of expertise and the time required. Depending on how good the report is, possible renovation work in the future may be necessary, which should be incldued in the purchasing price as a reduction. For this reason, these assessments are critical.

Whether it is a new heating, new windows or the restoration of the roof, the costs for this case also vary greatly. Here you should note that there are usually costs for general renovation before moving in. New floors, different wall colors, a new kitchen or even tearing down a wall.

All these things again cost money, which should not be underestimated. Often there are more costs than planned, because something goes wrong, but was more expensive than calculated or small things are missing. Also note that many renovation works cannot be done by yourself. So you need craftsmen and experts to help you and they will of course calculate their working time. Before you decide on a house, think about which work would still have to be done, what you would like to renew and how much the costs for such renovation work will be.

Conclusion: Calculate additional purchase costs

In Germany, for a property with a purchase price of 100,000 euros and a loan of the same amount, expect additional costs of 9,000 to 12,000 euros.

If you do not include them in your loan amount, they must be deducted from your own capital. Such unexpected service charges should not be underestimated and can vary enormously from property to property. The higher the price of the property, the higher the service charges you expect.

• Back to our full guide on Real estate Taxes in Germany.

Grandmaster Chime Ref. 6300A-010

1st place: Patek Philippe’s Grandmaster Chime Ref. 6300A-010 sold 2019 at Christie’s (Geneva) for $31,194 million In October 2014 Patek Philippe presented a collection of selected luxury watches that the collector’s world has been waiting for for 25 years! The highlight is the Grandmaster Chime Ref. 6300A-010 for $31 million.

1. Manufacturer: Patek Philippe
2. Model: Grandmaster Chime Ref. 6300A-010
3. Type: wrist
4. Price: $31,194 million
5. Auction of: 9.11.2019
6. Christie’s Auction House
7. Place: Geneva

2nd place: Henry Graves Supercomplication by Patek Philippe sold in 2014 by Sotheby’s (Geneva) for $23,983 million

Here you see the Henry Graves Supercomplication by Patek Philippe, the most important pocket watch in the world. The Supercomplication was first commissioned in 1925 and has an amazing 24 mechanisms. Tips on choosing the right professional: hiring an agent. This makes it the most complicated watch ever made by a watchmaker without the help of computer technology! This watch was sold for $23.9 million at the auction in Geneva on November 11th.

1. Manufacturer: Patek Philippe
2. Model: Henry Graves Supercomplication
3. Type: pocket watch
4. Price: $23,983 million
5. Auction on: 11.11.2014
6. Sotheby’s auction house.
7. Place: Geneva

Stainless Steel Ref. 1518

3rd place: Stainless Steel Ref. 1518 by Patek Philippe sold in 2016 at the Phillips auction house (Geneva) for $11,137 million

1. Manufacturer: Patek Philippe
2. Model: Stainless Steel Ref. 1518
3. Type: wrist
4. Price: $11,137 million
5. Auction of: 12.11.2016
6. Phillips Auction House
7. Place: Geneva

Live auction: Stainless Steel Ref. 1518

Gobbi Milan “Heures Universelles” Ref. 2523

4th place: Gobbi Milan “Heures Universelles” Ref. 2523 by Patek Philippe sold by Christie’s (Hong Kong) in 2019 at a price of $8,967 million

1. Manufacturer: Patek Philippe
2. Model: Gobbi Milan “Heures Universelles” Ref. 2523
3. Type: wrist
4. Price: $8,967 million
5. Auction of: 23.11.2019
6. Christie’s Auction House
7. Places: Hong Kong >/li>

Five years earlier, the watch was worth $2.9 million. This means that the Patek Philippe has increased in value by +309.2%.

Stainless Steel Ref. 5016A-010

5th place: Stainless Steel Ref. 5016A-010 from the Patek Philippe factory sold in 2015 at Phillips (Geneva) for $7,259 million

1. Manufacturer: Patek Philippe
2. Model: Stainless Steel Ref. 5016A-010
3. Type: wrist
4. Price: $7,259 million
5. Auction of: 7.11.2015
6. Phillips Auction House
7. Place: Geneva

Titanium Ref. 5208T-010

6th place: Titanium Ref. 5208T-010 from Patek Philippe sold in 2017 by Christie’s (Geneva) for $6,226 million

1. Manufacturer: Patek Philippe
2. Model: Titanium Ref. 5208T-010
3. Type: wrist
4. Price: $6,226 million
5. Auction of: 11.11.2017
6. Christie’s Auction House
7. Place: Geneva

Gold chronograph Ref. 1527

7th place: Gold chronograph Ref. 1527 by Patek Philippe sold 2010 at Christie’s (Geneva) for $5,709 million

1. Manufacturer: Patek Philippe
2. Model: Gold Chronograph Ref. 1527
3. Type: wrist
4. Price: $5,709 million
5. Auction from: 10.5.2010
6. Christie’s Auction House
7. Place: Geneva