© Pixabay.com

© Pixabay.com

European legal forms in Germany

Just as freedom of establishment is true for EU citizens within the EU, legal forms of enterprises or companies, which were established under the legal provisions of a Member State, have their central administration or principal place of business within the Community, may be used in other EU countries. Thus, a company that is legally founded and exists in an EU member state has the same rights in all other Member States which it would have in its country of formation.

The EU Services Directive prohibits imposing a specific legal form to service companies, which establish themselves in another EU Member State.

Using the legal forms of other EU Member States

Even if you want to be active only in Germany, you may also set up a company in another EU Member State under local law. Thus, founders in Germany are free to establish, for example, a limited liability company under English law, whose administrative headquarters is located in Germany. However, you must note that a company with a foreign legal form is subject to the law of the relevant country for the entire term of its existence.

Problems might arise when it comes to liability: German liability rules may be applied even when using the legal form of a foreign limited liability company to start a business in Germany. Thus, it is useful to inform oneself thoroughly!