Investing In Germany: Deal Structuring From a Legal and Tax Interface Perspective

Deal Structuring From a Legal and Tax Interface Perspective | Written by Jossip Hesse and Christiane Micha of Buse Heberer Fromm for the Fall/Winter 2015 issue of USLAW Magazine

Investing in Germany is different than investing in the U.S. However, although Germans also know about share and asset deals in addition to knowing about founding companies and businesses, investors should still know some facts about German companies and their respective liability schemes and tax treatments. The legal and tax structure of a business is something to be particularly considered in structuring acquisitions of assets or shares in a German company.

LEGAL TYPES OF COMPANIES

German law distinguishes between corporations (Kapitalgesellschaften) and partnerships (Personengesellschaften). The most important differences between these legal types are the liability of the company and its respective shareholders/partners, and taxation matters.

Corporations

The two major types of corporations are the stock corporation (AktiengesellschaftAG) and the limited liability company (Gesellschaft mit beschränkter HaftungGmbH). The GmbH is the most common form of incorporated companies for small and mid-market businesses in Germany. The AG is the corporate form assumed by many of…READ MORE.