Entity structure
The four realistic legal structures for a US company operating in Germany — what each costs, what it exposes you to, and the decision rules that actually determine which one you need.
Updated 25 October 2026 · By Denis Celik
Short answer
A GmbH subsidiary is a separate German legal person; a branch is part of the US parent, which remains liable for its activities. Cross-border selling can be viable without either. Local inventory or employees do not automatically require a GmbH: assess VAT, payroll, permanent-establishment exposure and commercial needs separately.
Structure is not compliance
Stock in a German fulfilment centre can create local VAT obligations without automatically requiring a GmbH. Permanent-establishment analysis is a separate income-tax question: the premises, activities, control and applicable treaty matter. Ask a tax adviser to assess the actual arrangement rather than treating Amazon FBA or a 3PL as an automatic subsidiary trigger.
Changing the contracting entity can change who carries obligations, but incorporation does not supply a LUCID registration, system contract or PPWR documentation. Map the producer for your actual supply chain and sales model. If the responsible seller remains a non-EU company, check the German authorised-representative requirements independently of the entity decision.
Before incorporation
The options
Sell through the US company
Timing depends on registrations and product readiness
A separate German company is not automatically required for sales into Germany. Map importer of record, stock location, customer transactions and local activities. VAT, customs, product and packaging requirements remain relevant even without incorporation.
A registered extension of the US parent
Prepare parent documents and registration requirements
A branch has no separate legal personality. Registration requirements for the foreign company and the branch need to be confirmed, including documents and translations. It can support local operations but leaves liabilities with the parent; it is not automatically faster or cheaper than a subsidiary.
A lower-capital GmbH variant
Notary, capital payment and register process
The UG reduces the nominal capital threshold, not the need for adequate working capital. Capital must be fully paid before registration; formation contributions in kind are excluded. A statutory profit reserve applies. Assess the funding and contractual needs of the operation rather than assuming low nominal capital is enough.
A separate German operating company owned by the US parent
Documents, notary, bank, capital and register dependencies
A GmbH separates the German company from its shareholder. That can support local contracts, employment and risk allocation, but creates accounts, filings and governance obligations. Review parent guarantees, intercompany transactions and operating capital before choosing it.
Comparison
| Cross-border | Branch | UG | GmbH | |
|---|---|---|---|---|
| Typical tax on profits | Depends on PE exposure | Corporate + trade tax on branch profits | About 29–33% | About 29–33% |
| Separate legal person | No German company | No | Yes | Yes |
| Share capital | No German share capital | No separate branch capital | Below EUR 25,000; fully paid | EUR 25,000 nominal; cash rules apply |
| Direct business liability | US seller | US parent | Company assets; exceptions apply | Company assets; exceptions apply |
| German employment | Possible; specialist assessment | Possible; payroll duties | Possible; payroll duties | Possible; payroll duties |
| VAT and packaging | Assess independently | Assess independently | Assess independently | Assess independently |
| Administration | Depends on activity | Parent and branch requirements | Company accounts and filings | Company accounts and filings |
Decision rules
Map duties, contracting authority and work location. Review payroll registration and permanent-establishment risk before comparing direct employment, a branch, subsidiary or EOR.
Stock location and import arrangements affect VAT and customs. A separate income-tax assessment is needed; neither local stock nor a 3PL automatically requires a GmbH.
Check the requirements of actual customers, marketplaces, distributors and suppliers. A request for a German contracting entity is a commercial factor, not a universal legal rule.
Compare direct parent exposure through a branch with a subsidiary’s separate governance, funding and filing duties. Include guarantees, insurance and a potential exit or restructuring in the decision.
FAQ
A GmbH subsidiary is a separate German legal person. A registered branch is part of the foreign parent, which remains directly liable. A subsidiary describes the ownership relationship; GmbH describes the legal form.
The statutory minimum nominal share capital is EUR 25,000. For a standard cash formation, at least a quarter of each cash contribution and at least EUR 12,500 in total must be paid before registration. The unpaid balance remains owed. Contributions in kind and mixed formations require separate advice.
A UG (haftungsbeschränkt) is a GmbH variant with nominal capital below EUR 25,000. Its capital must be fully paid before registration and contributions in kind are excluded at formation. It must allocate a quarter of annual net profit, reduced by any loss carried forward, to a statutory reserve. Becoming a standard GmbH requires a formal capital increase; it is not automatic.
Yes, cross-border sales may be possible. The seller must still assess VAT, import, product and packaging obligations. A German company is not automatically required simply because stock or an employee is located in Germany.
No automatic conclusion should be drawn. Local inventory can create German VAT obligations, while permanent-establishment exposure is a separate question under income-tax law and the applicable treaty. Have a tax adviser review the premises, activities and contractual arrangement.
A German subsidiary is not the only possible route. Foreign-employer registration, a branch or an EOR may be options depending on the arrangement. Payroll, social insurance, employment law and permanent-establishment risks must be checked separately.
Request a schedule and quote from the notary and advisers for your actual ownership structure. Document preparation, certifications, bank checks, capital payment, registration and tax setup affect timing. Capital is separate from notary, register, translation and advisory fees. Published 2026 standard-template cash formation examples put notary and register fees at roughly EUR 570–710 (around EUR 600–740 including trade-office registration). Custom articles, apostilled US documents, translations and advisers add to that.
No. The label does not itself create a distinct company form or guarantee exemption from tax. Assess the actual activities, premises and authority of people in Germany before assuming a presence is non-taxable.
No. The company is generally liable with its assets, but unpaid capital, guarantees, director duties, conduct before registration and exceptional liability situations need review. A GmbH is not a substitute for adequate insurance and qualified advice.
No. Packaging responsibilities follow the relevant producer and packaging placed on the market, not simply the legal form. Identify who is responsible for each sales and import arrangement. LUCID registration, system participation where applicable and PPWR documentation need their own workstream.
No. This guide supports planning. A German lawyer and tax adviser should confirm legal structure, permanent-establishment exposure, registrations and the treatment of your specific transactions before you commit.
Keep reading
The Germany Readiness Review answers the structure question inside a wider entry decision: sizing, channel, compliance and a 90-day roadmap, done personally rather than by a template.
Sources and scope
Planning guidance, not legal or tax advice. Requirements depend on your products, transactions and operating model. Confirm the applicable treatment with qualified advisers; provider fees and processing times require current, scope-specific quotes.
