German Business Glossary
Briefly explained terms for German businesses and founders in the USA.
General information only - not legal, tax, or immigration advice. Full disclaimer
Legal forms
- GmbHA GmbH (Gesellschaft mit beschränkter Haftung) is the German private limited liability company - the most common legal form for German businesses, broadly comparable to a US LLC.
- UG (haftungsbeschränkt)The UG (haftungsbeschränkt) is the "mini-GmbH" - a German limited-liability company that can be formed with as little as EUR 1 of share capital, aimed at startups and small founders.
- AGAn AG (Aktiengesellschaft) is the German stock corporation - a capital company whose ownership is divided into shares that can be publicly traded, used by larger enterprises; broadly the equivalent of a US Corporation (Inc.).
- GbRA GbR (Gesellschaft bürgerlichen Rechts) is the German civil-law partnership - the simplest way for two or more people to run a business together, with no minimum capital but full personal liability of the partners.
- Einzelunternehmen (sole proprietorship)An Einzelunternehmen is a German sole proprietorship - a business owned and run by one individual, with no separate legal entity and unlimited personal liability, comparable to a US sole proprietorship.
- Niederlassung (branch office)A Niederlassung is a branch office - a dependent or autonomous establishment of a company at another location, not a separate legal entity of its own.
- Tochtergesellschaft (subsidiary)A Tochtergesellschaft is a subsidiary - a legally independent company controlled by a parent company (the Muttergesellschaft), typically through majority ownership of its shares.
- Geschäftsführer (managing director)A Geschäftsführer is the managing director of a German GmbH or UG - the legally appointed person who runs the company and represents it externally, comparable to a US CEO/managing member.
- ProkuraA Prokura is a broad statutory commercial power of attorney under German law; the holder (a Prokurist) may sign for the company in almost all business matters and is entered in the commercial register.
- Inc. / CorporationAn Inc. (Corporation) is a US stock corporation - a separate legal entity owned by shareholders, with limited liability and its own taxation; broadly the US counterpart of a German AG.
- LLC vs GmbHA practical comparison of the German GmbH and the US LLC - both give limited liability, but they differ in capital, formation, taxation, and governance, and a German GmbH does not become an LLC when entering the US.
Tax & compliance
- ImpressumAn Impressum is the legally required site notice on German websites and publications, identifying who is responsible for the content - name, address, and contact details.
- Handelsregister (commercial register)The Handelsregister is the German commercial register - the official, public registry of merchants and companies (their legal form, capital, managers, and registered office).
- EIN (Employer Identification Number)An EIN is a US Employer Identification Number - a federal tax ID issued by the IRS that a business needs to hire employees, open a bank account, and file US taxes; the US counterpart to a German tax number.
- Steuernummer (German tax number)A Steuernummer is a German tax number assigned by the local tax office (Finanzamt) that identifies a person or business for German tax purposes.
- USt-IdNr (VAT ID)The USt-IdNr (Umsatzsteuer-Identifikationsnummer) is a German VAT identification number used to handle value-added tax on cross-border trade within the EU.
- Doppelbesteuerungsabkommen (tax treaty)A Doppelbesteuerungsabkommen (DBA) is a double-taxation treaty between two countries that allocates taxing rights so the same income is not fully taxed twice; Germany and the US have one.
- Form 5472Form 5472 is a US IRS information return that foreign-owned US corporations and foreign-owned single-member LLCs must file to report transactions with their related (foreign) parties.
- W-8BENForm W-8BEN is a US IRS form on which a non-US individual certifies their foreign status (and any tax-treaty benefits) to a US payer, so US tax is withheld at the correct, often reduced, rate.
Cross-border
- IHK (Chamber of Industry and Commerce)An IHK (Industrie- und Handelskammer) is a German regional Chamber of Industry and Commerce - a self-governing public body that almost every German trading company is automatically a member of.
- AHK (German Chamber of Commerce Abroad)An AHK (Auslandshandelskammer) is a German Chamber of Commerce Abroad - a bilateral organisation that promotes German business in a foreign market; in the US these are the German American Chambers of Commerce.
- ApostilleAn apostille is a standardized certificate that authenticates a public document (e.g. a birth certificate or company extract) for legal use in another country under the 1961 Hague Apostille Convention.
Visa & immigration
- E-2 visaThe E-2 visa is a US nonimmigrant "treaty investor" visa that lets a national of a treaty country - Germany is one - live in the US to develop and direct a business in which they have invested a substantial amount.
- L-1 visaThe L-1 visa is a US nonimmigrant visa for an intracompany transferee - an employee whom a company moves from a foreign office to a related US office, as a manager/executive (L-1A) or specialized-knowledge employee (L-1B).