MHR & Partners

Challenges and Solutions for Opening a Bank Account in Germany

MHRPartner — Sun, 02 Mar 2025 10:41:51 +0000

Mehmet Akif Özmen | Sworn Financial Advisor - CPA | Founder, CEO

Starting a business in Germany is an exciting step filled with opportunities. However, for Turkish entrepreneurs, opening a bank account in Germany can sometimes be a complex and challenging process. Even if you’ve established your company in Berlin and secured your residence permit, you might still face obstacles when trying to open a corporate bank account. So, how can you overcome these challenges? In this article, I’ll share key tips and solutions to help you navigate the process more smoothly.

Tips for Quickly Opening a Bank Account in Germany

Entrepreneurs frequently ask about the difficulties of opening a bank account in Germany. Many encounter issues — for instance, a managing director who has set up a company and obtained a residence permit may still struggle to open an account. As someone who has helped numerous Turkish entrepreneurs establish companies in Germany and the Netherlands, I’d like to outline practical solutions to help you overcome these barriers.

1. Presenting a Comprehensive Business Plan

German banks typically want to review a detailed business plan. Your company should prepare a plan that demonstrates sustainability and growth potential. The bank will assess your financial stability and future payment capacity based on this document. A well-prepared business plan not only facilitates opening a bank account but also strengthens your position when seeking investors or business partners.

2. Establishing Strong Communication with Banks

To open a corporate account, your company’s director must hold a residence permit. If not, connecting with Turkish banks in Germany — such as Kuveyt Türk or İş Bankası — can be beneficial. These banks often understand the needs of Turkish firms better and may offer account services for a fee. Having a reference from a Turkish bank can also speed up the process.

3. Meeting Bank Account Requirements

German banks meticulously check the required documents, especially for foreign firms. Essential paperwork includes company registration details, a tax number, a business plan, and income statements. Obtaining a German tax number (Steuernummer) is crucial, as banks won’t open an account without it. Submitting incomplete or incorrect documents can delay or even result in rejection, so accuracy is key.

4. Maintaining a Strong Financial and Credit History

German banks assess both the company’s and directors’ financial history (schufa). They may review personal credit records, so having a clean financial track record is advantageous.

5. Considering Initial Capital and Transaction History

Banks evaluate a company’s financial health based on previous business activities and capital reserves. Initial capital is a critical factor, as it signals financial stability and business seriousness. A solid transaction history also influences long-term credit applications.

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6. Seeking Support from Local Financial Advisors

I recommend that Turkish firms seek help from local financial consultants or accountants. These professionals assist with document collection, proper application submission, and compliance with legal requirements.

7. Leveraging Digital Banking Services

Digital banking solutions in Germany can simplify the process. Platforms like N26 or Revolut offer faster account setups, lower fees, and flexible financial options, reducing bureaucracy compared to traditional banks.

8. Choosing the Right City for Business

Banking challenges vary by city. While major cities like Berlin and Munich may have more complex processes, smaller cities or regional banks might offer easier solutions. Cities like Cologne, Düsseldorf, and Aachen are often more flexible and business-friendly.

9. Adapting to German Business Culture

Understanding and aligning with German business culture is essential. Banks not only consider your financial status but also your professionalism and business approach. Adopting values like transparency, punctuality, and reliability can foster stronger relationships with local banks.

Conclusion and Final Thoughts

Although opening a bank account in Germany may seem daunting, the right knowledge, planning, and strategy can make it manageable. Turkish entrepreneurs can successfully navigate the process by building strong communication with banks, submitting complete and accurate documents, and showcasing financial stability. Leveraging local consultants and digital banking platforms can further streamline the experience. With the right city choice and a solid business plan, you can turn banking processes into a strategic advantage and take a significant step toward growing your business in Germany.

What Can We Do For You?

As MHR & Partners, we are directly and indirectly active in more than 20 countries worldwide. We aim to operate with 10 branches in 100 countries in 10 years. We offer you end-to-end consultancy and support services in establishing a company, obtaining a residence permit, and in all operational processes abroad, primarily financial issues.

Our priority is to provide consultancy services to companies with a growth vision and business strategy abroad. We attach particular importance to the uninterrupted continuation of our services with the assurance of MHR & Partners (Mühür YMM AŞ) after the company establishment stages. Our core mission is to be a safe harbor and provide sustainable services.

We want to be a bridge to our customers’ business plans for growth and development, even in the most remote parts of the world.

To establish a business in Turkey or Europe (Germany, The Netherlands, Belgium, UK, Romania, Bulgaria, Montenegro), you can contact Sworn-in Certified Public Accountant Mehmet Akif Özmen directly (+90 542 830 3408 or akif.ozmen@mhrpartner.com).

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Germany Tax System for Companies

MHRPartner — Sat, 08 Feb 2025 16:54:33 +0000

Mehmet Akif Özmen | Sworn Financial Advisor - CPA | Founder, CEO

Germany stands out as one of the most attractive business destinations in Europe with its strong economy, central location and opportunities for entrepreneurs. However, it is of great importance to have information about the tax system for entrepreneurs who want to establish a company or do business here. Although the tax system in Germany may seem complicated with its varying practices depending on the type of company, various tax types and obligations, it is possible to benefit from the advantages of this system with the right roadmap.

In this article, we have brought together the most up-to-date and necessary information on the German tax system for entrepreneurs who want to do business in Germany. When stepping into the business world full of opportunities in Germany, you can make an advantageous start with a solid tax knowledge.

Basic Principles of the German Tax System

The German tax system offers a comprehensive structure for both individuals and companies based on the principles of fairness, transparency and efficiency. Progressive taxation according to income, different tax rates according to the type of business and international tax treaties are the key elements of the system. Tax liability is applied equally to all, while exemptions and exceptions set by law are clearly defined. Under the principle of fairness, taxpayers with higher incomes pay more tax, while individuals with similar economic status have similar tax obligations. The ability to pay tax principle ensures that taxpayers are taxed according to their income, wealth and consumption levels.

One of the cornerstones of the system is the principle of legality of taxation; taxes can only be determined by law and cannot be changed arbitrarily by the administration. In calculating the tax base, the principle of netting is applied, taking into account business expenses and other deductions. At the same time, the principle of tax neutrality aims to ensure that tax policies do not directly influence economic decisions. While the transparency and comprehensibility of the tax system helps taxpayers to fulfil their obligations easily, the principle of continuity enables long-term planning by ensuring that tax rules do not change frequently.

While tax collection in Germany is carried out in a cost-effective manner, international co-operation and information sharing are of great importance. In line with the principle of social state, higher income groups pay more tax, contributing to the reduction of income inequalities. In addition, sustainable development is supported by applying carbon emission and energy taxes within the scope of environmentally friendly policies. Tax administration accelerates processes through digital systems and prevents tax evasion through audits. Taxpayers, on the other hand, have the right to object to tax decisions and to apply for judicial remedy.

The taxation process is generally based on self-declaration (Selbstveranlagung), i.e. taxpayers are obliged to declare their income and gains. In Germany, the tax authorities (Finanzamt) ensure the proper functioning of the system by supervising the tax obligations of businesses and individuals. Tax administration is shared between federal, state and local governments, which allows the system to be shaped according to regional differences rather than a centralised structure.

An important feature of the tax system in Germany is the various advantages and double taxation agreements provided for international companies and investors. This system, which is in line with European Union regulations, provides a predictable and reliable business environment for both domestic and foreign entrepreneurs.

Main Types of Taxes in Germany for Companies

Corporation Tax (Körperschaftsteuer)

Companies operating in Germany are liable to pay corporate tax on their profits. The corporate tax rate is 15%, plus a solidarity surcharge (Solidaritätszuschlag) of 5.5%. Thus, the total corporate tax rate is calculated as 15.825%.

Trade tax (Gewerbesteuer)

Business tax is a tax levied by local authorities in Germany and is calculated on the profits of companies from their business activities. The rate of trade tax varies from municipality to municipality and usually ranges between 7% and 17%. Trade tax is deductible from corporate income tax.

Important Note: The effective tax rate for companies in Germany is calculated by combining the federal corporate tax rate (15%) with additional taxes imposed by the municipalities, such as the trade tax (Gewerbesteuer) and the solidarity surcharge (Solidaritätszuschlag). Together with these additional taxes, the total effective corporate tax rate is usually around 30 per cent. However, this rate may vary depending on the region in which the company operates and other factors.

VAT (Mehrwertsteuer or Umsatzsteuer)

Value Added Tax (VAT) is a tax levied on goods and services sold in Germany. The standard VAT rate is 19%, with a reduced rate of 7% for certain goods and services (e.g. food, books, hotel services). Small businesses with an annual income of less than EUR 22,000 may be exempt from VAT under the Kleinunternehmerregelung. Companies are obliged to pay VAT to the government for VAT received from their customers and can deduct VAT received from suppliers.

Withholding tax (Quellensteuer)

In Germany, withholding tax is levied on certain types of payments. For example, withholding tax is withheld on income such as dividends, interest payments and licence fees. The standard withholding tax rate is 25%, which increases to 26.375% with the solidarity surcharge. Under double taxation agreements, lower rates may apply for some countries.

Property Tax (Grundsteuer)

In Germany, property owners are obliged to pay property tax. Property tax rates may vary depending on the municipality where the property is located. Property tax is usually calculated annually on the value of the immovable property.

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Taxation of Individual Enterprises in Germany

Individual enterprises refer to persons who run their businesses in Germany on their own behalf. In Germany, individual enterprises (Einzelunternehmen) are generally subject to income tax (Einkommensteuer) and value added tax (Mehrwertsteuer/Umsatzsteuer). Individual entrepreneurs declare their business earnings directly as their personal income and pay progressive income tax on this income.

Income tax rates vary between 0% and 45% depending on annual earnings. For small businesses, a regulation called Kleinunternehmerregelung allows entrepreneurs with an annual turnover of less than EUR 22,000 to be exempt from VAT. However, if this exemption is not preferred, individual entrepreneurs are obliged to apply the standard VAT rates (19% or 7%).

Individual entrepreneurs may also be required to pay trade tax (Gewerbesteuer), which varies according to the municipality in which they are located. However, there is a trade tax exemption for earnings up to EUR 24,500 per year. In Germany, it is recommended that individual entrepreneurs file regular tax returns and manage their accounting processes meticulously.

The ability to deduct losses incurred by companies in their early years from profits in the following years (Verlustvortrag and Verlustrücktrag) is also an important tax advantage. Furthermore, R&D expenditures, investment incentives and regional support programmes offer additional opportunities to reduce the tax burden of companies. Therefore, it is recommended that newly established companies work with a tax advisor to make the best use of tax advantages.

Reading Advice

Explore our comprehensive guide for all the details on starting a business and opening a branch in Germany!

Additional Tax Liabilities for International Companies Operating in Germany

International companies operating in Germany are subject to similar tax obligations as local companies, but may also face additional obligations arising from their international activities. These obligations relate to double taxation, transfer pricing, VAT and other special regulations. Here are important additional tax obligations for international companies operating in Germany:

Double Taxation Agreements (Doppelbesteuerungsabkommen – DBA)

Germany has entered into agreements with many countries to avoid double taxation. Through these agreements, international companies can avoid taxation of the same income both in Germany and in another country. Companies can claim tax refunds or obtain tax exemptions in accordance with the terms of the agreements.

Transfer Pricing (Verrechnungspreise)

International companies must comply with transfer pricing rules for intra-group transactions (e.g. purchase and sale of goods or services, licence fees). Germany has adopted the OECD transfer pricing guidelines. Companies are obliged to prepare transfer pricing documentation and submit it to the tax administration.

Taxation of Foreign Earnings

Companies resident in Germany are liable to tax their worldwide earnings. Earnings from foreign branches or subsidiaries may be subject to double taxation treaties. In some cases, tax exemptions or deductions may apply to foreign earnings.

VAT and Intra-EU Transactions

Germany applies special VAT rules for transactions within the European Union (EU). For supplies of goods and services within the EU, VAT declaration and Intrastat notification may be required. For transactions with countries outside the EU, export and import VAT rules must be observed.

Foreign Capital Rules (Fremdfinanzierungsregeln)

Germany has introduced limitations on interest paid by companies on financing from foreign sources. Interest payments are tax deductible within certain rates and conditions. In case of excessive borrowing, interest payments can be added to the tax base.

Controlled Foreign Company Rules (Hinzurechnungsbesteuerung)

German resident companies may be taxed on the passive income (e.g. interest, rent, licence fees) of their foreign subsidiaries. This rule aims to prevent profit shifting abroad for tax purposes.

Tax on the Digital Economy and Digital Services

Germany may apply special tax rules for international companies offering digital services. Regulations such as the EU’s digital services tax may affect international companies.

Tax Investigations and Documentation

International companies may be subject to more frequent tax inspections in Germany. Comprehensive documentation on transfer pricing, foreign earnings and other international transactions must be prepared.

Permanent Representation (Betriebsstätte)

When foreign companies open a permanent establishment (e.g. branch or office) in Germany, they can be taxed on this establishment. The permanent establishment is considered an independent taxpayer and must file its own tax returns.

EU Tax Harmonisation Rules

Germany has harmonised with the EU’s tax harmonisation directives. For example, the ‘Anti-Tax Avoidance Directive’ (ATAD) seeks to prevent hybrid mismatches, earnings deferral and other tax avoidance methods.

Tax Planning and Structuring

When tax planning in Germany, international companies should comply with the law and avoid aggressive tax avoidance methods. When fulfilling their tax obligations in Germany, they must comply with both local and international regulations. Tax declarations, documentation and payments must be made on time.

Professional tax advisory services help companies to comply with the law and minimise tax risks. By cooperating with tax advisors and lawyers, it is possible to optimise the company’s tax burden.

How to Make a Tax Declaration in Germany?

The tax declaration process in Germany is of great importance for businesses to fulfil their legal obligations. Companies must declare their income and earnings through the Finanzamt (tax office) every year. The tax declaration process is usually carried out via digital platforms and the ELSTER (Elektronische Steuererklärung) system allows companies to submit their declarations online.

Here are some of the main points to be considered when making a tax declaration:

– Annual Tax Declaration: Companies subject to corporation tax and trade tax must file their annual tax return each year within the deadline set after the close of the financial year.

– Value Added Tax (VAT) Declaration: Companies subject to VAT are obliged to file VAT returns on a monthly or quarterly basis. For small businesses, this process can also be carried out annually.

– Advance Tax Payments: For companies with high revenues, prepayments may need to be made during the year based on the estimated tax amount. This practice is applied to prevent the accumulation of large tax debts.

The timely and complete submission of tax returns is important to avoid possible criminal sanctions. In addition, since tax audits are carried out regularly in Germany, companies are required to keep their financial records meticulously and act in accordance with legal regulations. Due to the complexity of the tax process, it is recommended that businesses work with a tax advisor or financial advisor.

Tax Deductions and Incentives for Companies in Germany

Germany offers various tax advantages to support the growth of companies and innovation. The country, which attaches particular importance to R&D activities, provides significant tax deductions to companies working in this field. A portion of the expenses incurred to develop new products, processes or services can be deducted from the tax base. In addition, patent protection expenses can also benefit from tax advantages.

Investment incentives are another factor that attracts companies in Germany. There are additional tax deductions especially for investments made in the eastern regions and in the renewable energy sector. Incentives for environmentally friendly technologies also support companies in achieving their sustainability goals. There are also special tax breaks and grant programmes for SMEs.

Companies in Germany can also benefit from funds and grants from the European Union. In particular, the EU supports companies investing in areas such as digitalisation, green energy and innovation. These incentives encourage entrepreneurs to develop more sustainable and innovative business models in Germany.

Advantages and Challenges of the Tax System in Germany

The tax system in Germany offers several advantages for both domestic and foreign entrepreneurs. Firstly, the system is transparent and predictable, making it easier for companies to carry out long-term financial planning. Tax regulations are clearly defined and digital tax filing systems (such as ELSTER) make transactions fast and efficient. Furthermore, R&D incentives, investment incentives and special tax advantages for certain sectors make it attractive to start a business in Germany. In particular, double taxation agreements provide a significant advantage for businesses operating internationally.

However, Germany’s tax system brings some challenges. High tax rates can increase costs, especially for small and medium-sized enterprises (SMEs). Corporate tax, value added tax (VAT) and income tax rates are higher than in other European countries. Moreover, the complexity of tax legislation may cause businesses to incur additional costs and bureaucratic burdens in the harmonisation process. As financial transactions and accounting records need to be meticulously maintained, companies often need professional tax advisors.

In general, while the tax system in Germany provides a stable and reliable business environment, high tax rates and complex legal processes are among the elements that need to be considered for businesses. Therefore, it is important for entrepreneurs planning to do business in Germany to make strategic planning with expert support in order to make the most of the opportunities offered by the tax system.

Tax Audits and Criminal Sanctions in Germany

The tax system in Germany is highly regulated and tax evasion is considered a serious offence. Therefore, the tax authorities regularly audit companies. During audits, the financial records of companies are examined in detail and it is checked whether the tax base is calculated correctly. Companies caught in tax evasion may face serious consequences.

Both administrative and criminal sanctions can be imposed as penalties for tax evasion. Administrative sanctions include additional tax, delay interest, tax penalties and tax assessment. Criminal sanctions are more severe and may result in imprisonment, fines and ban from commercial activity.

Being prepared for tax audits helps companies minimise the risks they may face. Companies can protect themselves by keeping detailed and up-to-date records, following tax legislation and getting support from a tax advisor.

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Starting a Business or Acquiring One in Germany?

MHRPartner — Sat, 14 Dec 2024 16:49:50 +0000

Mehmet Akif Özmen | Sworn Financial Advisor - CPA | Founder, CEO

Germany, known as the economic engine of Europe, is an attractive destination for investors thanks to its strong industrial infrastructure, stable legal framework, and high profitability potential. The stock of foreign direct investment (FDI) in Germany rose to €1,240 billion in 2022. The largest sectors for FDI in 2022 included manufacturing, finance and insurance, as well as wholesale and retail trade.

If you’re considering starting a business in Germany, you have two main options: establish a new business from scratch or acquire an existing company. In this article, we will evaluate both options in terms of costs, capital, market entry speed, risks, and opportunities. By providing a comparative summary, we aim to help you decide which business model suits you best.

Starting a Business in Germany: Building Your Dreams from Scratch

Each year, more than 300,000 new businesses are established in Germany. Small and medium-sized enterprises (SMEs), known as “Mittelstand,” make up 99.6% of businesses in the country and generate more than half of the economic output. Starting a company from scratch in Germany offers the chance to shape your vision entirely according to your goals. However, this journey comes with both advantages and challenges.

Advantages:

Bringing Your Vision to Life: Everything is under your control. Your business model, products, or services are entirely shaped by your strategy.
Brand Identity: Building a brand from scratch ensures long-term independence and a unique position in the market.
Cost Control: From the outset, you can plan your expenses and create a capital structure tailored to your needs.
Tax Advantages: When starting a company in Germany, you can benefit from government incentives and support programs in specific sectors. Additionally, reduced VAT rates for small businesses can help lower costs during the initial years.

Disadvantages:

High Risk: Most new businesses face challenges in the first five years and may fail for various reasons. Establishing a foothold in the market can take time.
Longer Market Entry: Adapting to the market and building a customer base often takes longer compared to acquiring an existing business.
Legal and Bureaucratic Processes: Establishing a business in Germany requires “Gewerbeanmeldung” (business registration), tax office registration, and applications to local chambers of commerce, all of which can take time. Foreign investors may also need to navigate additional procedures like visas and residence permits.

Reading Advice

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Acquiring a Business in Germany: A Quick Start

The transaction value in Germany’s Mergers & Acquisitions (M&A) market is projected to reach USD 58.26 billion in 2024. This market is expected to grow at an annual rate of 13.97%, reaching a total of USD 66.40 billion by 2025.

Acquiring an existing business in Germany is an attractive option for investors looking for a faster market entry. This business model offers a ready-made infrastructure and customer base, thereby reducing certain risks to a degree.

Advantages:

Fast Market Entry: With the existing customer portfolio and brand recognition of the acquired company, you can start generating revenue from day one.
Lower Risk: The financial performance and market position of the acquired company are already known, allowing you to manage risks more effectively.
Ready Infrastructure: Compared to starting a business from scratch, you benefit from operational infrastructure, equipment, supply chains, and experienced employees that are already in place.
Labor Law Advantages: When you acquire an existing business, employee rights and contracts are protected under German labor law (Betriebsverfassungsgesetz). This can streamline workforce management processes.

Disadvantages:

High Capital Requirement: Acquisition costs can be significantly higher compared to starting a new business.
Cultural Integration Challenges: It may take time to align with the existing team and operations.
Limited Flexibility: You may have to adapt to the current structure of the acquired business, and restructuring could incur additional costs.
Hidden Liabilities: Special attention must be paid to the “Due Diligence” process when acquiring a business in Germany. The acquired company may have outstanding debts or legal issues from the past.

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Cost Comparison

Establishing a company in Germany generally requires lower initial costs. However, as the market entry process extends, operational expenses may increase. For example, setting up a GmbH (Limited Liability Company) requires a minimum capital of 25,000 Euros. Acquisitions, on the other hand, demand much higher initial investment costs; for companies with a large customer base, this cost can reach millions of Euros. Nevertheless, the existing revenue streams of the acquired company can quickly offset this expense.

Risks of Starting a Business in Germany

Starting a new company is an exciting step for many entrepreneurs, but it is also a risky process. When establishing a business from scratch in Germany, you should be aware of the following risks:

Difficulty in Market Adaptation: Starting a new company in Germany begins with a lack of market recognition. Building a customer base, creating brand awareness, and gaining trust takes time.
High Competition: The competitive environment in Germany is intense. In many sectors, you may have to compete with established companies and strong brands.
Bureaucratic Barriers and Processes: The process of starting a business in Germany involves various bureaucratic procedures, such as registering with the trade registry, obtaining residence permits, and completing tax processes.
Uncertainty in Investment Returns: It may take some time for a new company to establish itself in the market and achieve profitability. During this period, you may face challenges in managing cash flow and meeting capital requirements.
Risk of Non-Compliance with Regulations: Germany’s business laws are highly stringent and regulated. Failing to meet tax obligations or neglecting employee rights can lead to serious legal consequences.

Risks of Acquiring a Business in Germany

Although acquiring a business often carries less risk, there are still certain risks to watch out for:

Hidden Debts and Financial Obligations: The acquired company may have outstanding debts or financial liabilities from the past. Such situations can directly impact the financial health of the company.
Legal Disputes: You may encounter legal disputes or litigation processes related to the acquired company, leading to financial burdens after the acquisition.
Cultural Integration Challenges: Aligning with the existing employees, business practices, and company culture may take time, making it difficult to implement new management strategies.

Lack of Strategic Fit: If the operational structures or market strategies of the acquired company do not align with your objectives, this can result in wasted time and resources.

Opportunities of Starting a Business in Germany

There are also numerous opportunities for entrepreneurs looking to start a business from scratch in Germany:

Innovation and Freedom: You have the chance to design your own business model, build your brand from scratch, and implement a unique marketing strategy.
Germany’s Incentive Programs: Germany offers various incentive and subsidy programs to support entrepreneurs. You can benefit from tax reductions, financial aids, and EU funds.
Control Over Investment: By starting a business, you can directly shape your investments according to your goals, which is advantageous for long-term planning.
Creating a Brand from Scratch: Building your own brand allows you to establish a profitable business model and carve out a unique position in the market.

Opportunities of Acquiring a Business in Germany

An acquisition allows you to leverage the existing infrastructure and customer network of an established business:

Utilizing an Existing Customer Base: Acquiring a company provides direct access to its existing customer base, allowing for faster integration into the market.
Achieving Profitability in a Short Time: Thanks to the financial stability and operational infrastructure of the acquired company, you can achieve profitability faster compared to starting from scratch.
Ready Infrastructure: Without having to deal with production facilities, employees, or supply chains, you can focus directly on your business.
Ease of Legal Processes: By acquiring an existing business, you face fewer bureaucratic hurdles in managing employee contracts and ongoing business relationships.

Which Option Suits You Best?

Every entrepreneur has different goals and strategies. When making your choice, you should ask yourself the following questions:

What Is Your Goal? Are you aiming to build a long-term brand, or do you want to benefit from an existing market share?
What Is Your Financial Situation? Can you afford a significant initial investment?
What Is Your Risk Tolerance? Are you comfortable dealing with uncertainties?
Are You Familiar with Legal Processes? Do you have knowledge of Germany’s trade and labor law regulations, or do you have access to a consultant who can assist you in this area?

The Importance of Researching the German Market

Conducting comprehensive market research is essential for entrepreneurs aiming to establish or acquire a successful business in Germany. Steps such as competitive analysis, target audience analysis, and examining market trends are crucial to developing a business model and minimizing risks.

Given Germany’s dynamic economy and strict regulations, it is equally important to have in-depth knowledge about business establishment processes, tax legislation, and labor laws. Additionally, factors such as distribution channels, marketing strategies, and cultural differences should also be evaluated as part of the market research process.

By doing so, entrepreneurs can seize opportunities specific to the German market and ensure their businesses remain sustainable in the long run.

The Importance of Working with a Consultant

Whether you are planning to establish a company or acquire an existing one in Germany, working with an experienced consultant throughout the process provides a significant advantage.

In particular:

Due Diligence Processes: Professional expertise is needed to evaluate the financial health, legal status, and operational suitability of the company you intend to acquire.
Tax Regulations and Labor Law: Consulting a specialist on Germany’s complex legal framework helps minimize potential risks.
Time and Resource Management: Professional guidance prevents unnecessary delays and directs you toward the most effective steps.

Collaborating with a consultant not only reduces risks but also accelerates the processes, paving the way for success.

The Importance of Understanding German Business Culture

Doing business in Germany requires understanding the dynamics of the local business culture in a country with a rich history and cultural heritage.

Key aspects of German business culture include:

Formality and Hierarchy: Rules and hierarchical structures are significant in the German business world, where clarity and professionalism in communication are expected.
Direct Communication: The business environment favors open and straightforward communication, which provides an opportunity to build trust-based, long-term relationships.
Quality and Reliability: German business culture places high importance on quality and attention to detail, making it easier for entrepreneurs to establish trustworthy partnerships.
Bureaucracy: Company establishment and regulatory processes can be time-consuming due to detailed bureaucratic requirements.

Understanding and adapting to German business culture offers entrepreneurs a competitive edge. By seeking support from local business partners and consultants, they can navigate these cultural differences more effectively and build a successful business.

For more detailed information on German Business Culture, feel free to explore our in-depth article.

Support for Entrepreneurs in Germany

Germany is a country that wholeheartedly supports entrepreneurs. In addition to government institutions such as the Federal Ministry for Economic Affairs and Climate Action (BMWi), financial organizations like the KfW Bankengruppe provide various forms of assistance to entrepreneurs. Moreover, incubators and innovation parks in major cities like Berlin, Munich, and Hamburg offer office space, mentorship, and networking opportunities. Platforms such as Business Angels Network Deutschland (BAND) connect entrepreneurs with angel investors. The entrepreneurial ecosystem in Germany is constantly evolving and strengthening.

Conclusion and Evaluation

Starting or acquiring a business in Germany comes with its own set of advantages and disadvantages. When considering these options, it is crucial to take into account Germany-specific legal regulations and the investment climate, in addition to factors like cost, risk, and capital. With the right strategy and business model, you can make a successful investment in this attractive market. By choosing the option that best aligns with your goals, you can make the most of the opportunities that Germany offers.

What Can We Do For You?

We want to be a bridge to our customers’ business plans for growth and development, even in the most remote parts of the world.

You might like to see these contents also:

The post Starting a Business or Acquiring One in Germany? first appeared on MHR & Partners.

Establishing a Limited Company or Opening a Branch in Turkey

MHRPartner — Sat, 31 Aug 2024 11:40:53 +0000

Mehmet Akif Özmen | Sworn Financial Advisor - CPA | Founder, CEO

Establishing a company in Turkey is both a strategic step for foreign investors and a necessary process that opens the doors to a vast market. Turkey offers an attractive destination for investors with its dynamic economy, young and educated population, developing infrastructure, and strategic location. Foreign investors must follow specific legal and administrative procedures during this process to establish a limited company or open a branch in Turkey.

This article details the rules that apply to foreign investors regarding establishing a “limited company” or opening a branch, which is the most preferred type of company in Turkey.

Foreign Investors Establishing a Limited Company in Turkey

Foreign (i.e., non-Turkish) natural and legal persons can establish limited companies in Turkey and become board members in these companies. Foreign natural and legal persons establishing a company in Turkey are subject to the same rules as domestic investors.

The total paid-in capital of a limited company must be at least 50,000 TL (Fifty thousand Turkish Lira), and there must be at least 1 (one) shareholder for a limited company.

The nominal value of the principal capital shares can be determined as at least twenty-five Turkish Lira or multiples thereof. The entire capital brought in cash can be paid within twenty-four months after the registration of the company. The payment schedule can be arranged in the company agreement or determined by the directors.

Obtaining a Turkish Tax Identification Number for Foreign Partners and Foreign Managers of a Limited Company

Establishing a limited company and preparing its articles of association are carried out through the Central Registry System (“MERSIS”). Users start the company establishment process by creating a free membership via the MERSIS website.

In this system, Turkish shareholders and managers are identified with Turkish Identification Numbers, while foreign natural or legal persons are identified with Turkish Potential Tax Identification Numbers. A Turkish Potential Tax Identification Number must be obtained and registered in the MERSIS database for foreign natural or legal persons. The Turkish Potential Tax Identification Number does not define a tax liability; however, it allows foreign persons to be registered in the state database and to perform official transactions.

Documents Required to Obtain a Potential Tax Identification Number

The documents required to obtain a potential tax identification number are listed below:

i. The foreign legal person must have a trade registry summary (a document indicating the company’s capital, address, and authorized signatory). This document must be notarized and apostilled in the country abroad.

ii. The power of attorney authorizes the attorney to obtain a Turkish Potential Tax Identification Number. These documents must be notarized and apostilled in the relevant country abroad.

iii. The foreign company’s legal representative / authorized person from which the potential tax identification number will be obtained must also have a Turkish Potential Tax Identification Number. There are two ways to get a Turkish Potential Tax Identification Number for foreign natural persons.

The first method is to obtain a Turkish Potential Tax Identification Number online by entering the necessary information. Suppose a foreign individual has previously entered the Republic of Turkey’s borders with a passport. In that case, the essential information is automatically obtained from the police department’s system and can be easily obtained by entering information such as tax identification number, passport number, parents’ names, place of birth, telephone number, and address.

If it cannot be obtained online, a power of attorney and a copy of the passport must obtain a Turkish Tax Identification Number on behalf of the foreign individual. Both documents must be notarized and apostilled abroad.

iv. After obtaining a Turkish Potential Tax Identification Number for the foreign legal entity and its legal representative, these records will be added to the MERSIS system.

Required documents and information for this stage:

Power of attorney for establishing a company in Turkey and Turkish Potential Tax Identification Number – notarized and apostilled in the relevant country abroad.
Trade registry summary – notarized and apostilled in the relevant country abroad.
An attempt will be made to obtain a Turkish Potential Tax Identification Number online for the company’s representative abroad. To follow this method, a scanned copy of the representative’s passport, parents’ names, birthplaces, phone numbers, and address information will be needed.
If the overseas company’s representative cannot obtain a Turkish Potential Tax Identification Number online, a draft power of attorney, notarized and apostilled, will be provided. The representative’s passport must also be notarized and apostilled.

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Preparation of the Articles of Association of a Limited Company in the Central Registry System (MERSİS)

The articles of association of a Limited Company must include the following articles and information.

Founders (Shareholders) of the Limited Company
Title (Trade Name) of the Limited Company

Note: A similarity determination will be made after determining the trade name. The use of the expressions “Turkish,” “Turkey,” “National,” and “Republic” in the trade name requires a Presidential Decree.

Objectives and Fields of Activity of the Limited Company
Registration of Headquarters

Note: The newly established company must be a party to the lease agreement after the establishment procedures are completed. However, specifying the property address to be rented during the establishment phase is sufficient.

Capital of the Limited Company
Appointment of the Manager/Managers of the Limited Company
Signing of the Articles of Association in the Presence of the Trade Registry
Completion of the Establishment and Announcement of the Establishment in the Turkish Trade Registry Gazette

Types of Companies Subject to Permission for Establishment of a Company with Foreign Partners

The Foreign Direct Investment Law No. 4875 states that foreign persons can establish any company in the Turkish Commercial Code. On the other hand, if a company with foreign partners is to be established, in addition to all the necessary processes, permission must be obtained from the Ministry of Trade for some companies. In this context, the types of companies that are subject to permission to establish a company with foreign partners are as follows:

Banks,
Financial leasing companies,
Factoring companies,
Consumer finance and card services companies, asset management companies, insurance companies,
Holdings established as joint stock companies,
Companies operating foreign exchange booths,
Companies engaged in general retailing,
Licensed agricultural product warehousing companies,
Product specialized exchange companies,
Independent auditing companies,
Surveillance companies,
Technology development zone management companies,
Companies subject to the Capital Markets Law No. 6362 dated 6/12/2012,
Establishments of free zone founder and operator companies,

Read Advice

A guiding article for foreign investors who will do business in Turkey, who will establish a company or who will work in Turkey: Turkish Business Culture

Foreign Investors Opening Branches in Turkey

The branches of commercial enterprises headquartered outside Turkey are registered in Turkey as domestic commercial enterprises, provided that the provisions of the laws of their own countries regarding trade names are reserved. A fully authorized commercial representative located in Turkey is appointed for these branches. If the commercial enterprise has more than one branch, the branches to be opened after the registration of the first branch are registered as branches of domestic commercial enterprises.

Documents Required for Branch Registration

The documents that must be submitted to the relevant trade registry directorate for a foreign company to register its branch in Turkey are as follows:

A letter from the authorized authority indicating that the conditions sought by the law of the source country where the company headquarters is located for the business to open a branch have been met and the documents required to be presented for the registration of the branch and a copy of its Turkish translation
All documents required to be presented for the registration of the branch in the source country

Note: If the legal entity is a foreign national, this decision must be approved by the Consulate of the Republic of Turkey in the country where the company is located or by the provisions of the Convention on the Abolishing the Requirement to Legalize Foreign Official Documents and their notarized Turkish translations must be made.

A certified copy of the document containing the company’s current registry records and the company agreement and one copy of its Turkish translation
The original and one copy of the Turkish translation of the decision of the authorized body of the company regarding the opening of a branch and the appointment of a fully authorized representative resident in Turkey for the branch
The company’s trade name, type, business subject, type and amount of capital, date of establishment, registration number, the law it is subject to, whether it is a member of the European Union, website, the title of the branch and the amount of capital allocated to the branch, the name and surname of the person or persons who will represent the branch with full authority before private institutions and public institutions and organizations, including the courts, the identity number and place of residence, and the address of the branch, signed by the authorized persons of the center, and one copy of its Turkish translation.
If the person or persons who will represent the branch in Turkey with full authority before private institutions and public institutions and organizations, including the courts, and the authority granted to them are not specified in the decision to open a branch, the original and one copy of the Turkish translation of the power of attorney issued regarding these issues
Signature declarations of the persons who will represent the branch
For branches that are subject to the permission or approval of the Ministry of Trade or other official institutions, this permission or approval letter
In case a legal entity is elected as a director, a notarized copy of the authorized body decision of the legal entity manager, including the name-surname, address, nationality and Turkish Republic identity number (tax identity number or identity number specific to foreigners for foreigners) of the real person determined by the legal entity selected as the director and who will act on behalf of the legal entity together with the legal entity selected as the director (Trade Registry Regulation Art. 90/1-ç).
In case the natural person representative determined by the legal entity is a foreign national and resides in Turkey, a residence permit and a copy of the passport with a notarized Turkish translation.
If the manager/partner is a foreign legal entity, a document containing the current registry records of the legal entity.

This document must be certified by the Consulate of the Republic of Turkey in the country where the company is located or by the provisions of the Agreement on the Abolishing the Requirement to Legalize Foreign Official Documents, and a notarized Turkish translation must be made (Trade Registry Regulation, Article 32/2).

If there is a foreign legal entity partner / legal entity authorized person, the tax identification number must be specified in the company agreement.

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Comparing Company Formation in Germany, the Netherlands, and Bulgaria

MHRPartner — Mon, 08 Jul 2024 19:17:18 +0000

Mehmet Akif Özmen | Sworn-in CPA | Founder, CEO

Establishing a company abroad offers significant opportunities for entrepreneurs but also comes with its own set of challenges. Germany, the Netherlands, and Bulgaria are three key countries in Europe that attract entrepreneurs due to their advantages and favorable business environments. However, before setting up a business in these countries, it is crucial to consider various factors such as tax rates, legal regulations, cultural differences, and market dynamics.

When deciding whether to establish a company in Germany, the Netherlands, or Bulgaria, what criteria should you pay attention to, and what advantages should you look for? Sometimes a single advantage may suffice, while at other times, it is more prudent to consider multiple advantages together and make a decision based on a comprehensive evaluation.

In this article, we will discuss practical information and strategies you need to consider during the company formation process in Germany, the Netherlands, and Bulgaria, so you can build your business on a solid foundation in the international arena.

A Comparative Application Example When Making an Investment Decision

Comparative Tax Rates

From a corporate tax perspective, Bulgaria is advantageous with a rate of 10%. In the Netherlands, tax rates are 15% on earnings up to 200,000 Euros and increase to 25% thereafter. In Germany, both local and central taxes total between 30-40%.

If tax rates are important to you but the location of your company headquarters is not, Bulgaria, the Netherlands, and Romania may be suitable options.

Language Options in Meetings

It is easier to communicate in English in the Netherlands. In Germany, knowing German is a priority. In Bulgaria, you can easily conduct your business by finding a Bulgarian Turk.

Invoicing and Logistics Alternatives

While the regions where your customers are concentrated can determine your focus, sometimes this may not be crucial. You can ship goods from Turkey to Singapore and issue invoices from the Netherlands or Germany.

Sometimes you can source raw materials from where your customers are concentrated, process them in a customs area, and ship them duty-free to different countries, thereby increasing your power by adding value.

Alternatively, you can transfer goods to a warehouse in Bulgaria and circulate them within the Schengen area as European Union goods without paying customs duties.

Residence-Holding Managers and Partners

The most challenging and meticulous stage when establishing a company is opening a bank account for your company. We have observed that there are no issues in opening a company bank account if the partners or managers hold residence permits in that country. The tax office, especially in Germany, pays close attention to this matter.

In Bulgaria, you need to have 5 employees to obtain residence. In Germany or the Netherlands, you can obtain these opportunities later by employing 3 employees with an investor visa.

Manageability of Logistics

The location of your logistics center often provides you with an advantage. From a cost perspective, Bulgaria sounds appealing.

Countries with Sector-Specific Advantages

For software developers, Estonia and the Netherlands are more suitable in terms of tax rates and incentives.

For manufacturing companies, Germany may be the center due to ease of management, while the Netherlands may be more suitable for real estate investments. For hospital and healthcare investments, the UK and Germany are significant centers.

What Can We Do For You?

We want to be a bridge to our customers’ business plans for growth and development, even in the most remote parts of the world.

Okuma Tavsiyesi

Do you want to read about the big mistakes entrepreneurs make when setting up a company in Europe from the lived experience of an expert? Discover this article!

You might like to see these contents also:

The post Comparing Company Formation in Germany, the Netherlands, and Bulgaria first appeared on MHR & Partners.

Common Mistakes Entrepreneurs Make When Setting Up a Business in Europe

MHRPartner — Mon, 08 Jul 2024 18:42:09 +0000

Mehmet Akif Özmen | Sworn-in CPA | Founder, CEO

“Learn from the lives of others. One does not live long enough to make all the mistakes themselves.” – Tolstoy.

Many issues arise from the moment investors start thinking about establishing a company abroad until the actual setup. These issues stem from the realities that partially exist in everyone’s lives. This period is an exact test, straining friendships and testing individuals’ abilities and strengths.

For many years, I have advised entrepreneurs on establishing companies and investing in European countries. Together with my business partners, I have overseen the establishment of dozens of companies. As MHR & Partners, I also established a company in Germany. I want to share my experiences from my entrepreneurial journey so that investors do not rediscover Europe (!) and avoid repeating costly and time-consuming mistakes. So, let’s get started.

Move Quickly Without Getting Caught Up in Small Costs

Exact costs are often unpredictable in business. You should anticipate a risk premium of at least 40-50%. Flexibility is crucial here. If costs rise significantly, either the planning was incorrect or external factors need to be properly accounted for. It would help to reassess these risks during every crisis to prevent recurrence.

Avoid small and erroneous steps that can prolong the establishment process. Take guaranteed and solid steps to avoid being bogged down by minor issues.

There Is No Single Right Answer

The company establishment process in Europe differs significantly from that of Turkey and proceeds more slowly. We often observe that individuals cannot fully account for a commercial organization’s challenges and the “Team, System, Information, Labor-Intensive” aspects.

Individual entrepreneurs consult many people but often deviate from the rules or need more patience to achieve results. In contrast, companies usually have alternative scenarios and can build on what they learn from adverse situations.

Consult Experts and Experienced Individuals

It’s good to get ideas from friends in a commercial field, but they may lead you to different conclusions regarding decision-making.

When seeking advice, consider these criteria:

- How many years of experience do they have in this field?
- How many reference firms do they have in Turkey or abroad?
- Do they have a corporate team and system?
- How much support can they offer when problems arise

Take a Professional Approach, Use Contracts and Invoices

Contracts protect both you and your counterpart, helping progress without putting either party in a bind.

Avoid dealing with those who operate without invoices. Any illegal or incorrect business can cause future problems and bring additional issues.

Do everything in writing. Even specify partial refunds in contracts if the work is not completed. In developed European countries, no one can interfere with the flow of official documents. Officials are the main determinants, and a consultant can only support you by establishing timely and accurate communication with authorities.

Close Friends Are Just Friends

I know many people who have had issues coming here with their friends. Sometimes, a close friend hasn’t established their system and, unintentionally, gets involved in wrongdoings. Sometimes, they expect you to support their problems, and their expectations do not align with yours.

People who have experienced trauma look for others who can overcome their traumas. You end up in a loop. You should implement your plans. If your friend is not a professional consultant, do not believe everything they say.

Be Patient and Progress Step by Step

European business processes operate more slowly than in Turkey, and combined with document intensity, it is genuinely challenging. Adding managers and partners with residency makes it more accessible.

Keep Track of Document Flow

Obtain information about document flow and discuss the process in detail. Ensure all your questions are answered mutually. Everything should be in writing.

Low-Cost Services May Not Be Useful

Everything has a cost, and a team that does not make a profit will also cause you to lose. Services obtained below cost will bring you nothing but problems and bad experiences. They will waste your time and money and wear you down psychologically.

Those Who Travel Without a Plan Will Get Stuck on the Road

Plan, plan, plan. Always have alternative plans ready. Have your contingency fund prepared. Determine what you will do if things go wrong or processes are slow. The “let’s start and see” approach can sometimes lead to problems.

Request On-Site or Online Live Meetings

Seeing where the people you will be working with operate and meeting their team is extremely important to understand mutual expectations. This also helps build better social relationships.

Make Payments As Work Is Completed

You can make partial upfront payments for services received and the remaining payments as the work is completed. However, if the consultant has a team, a fixed workplace, a contract, and business references, making early payments is no problem.

Okuma Tavsiyesi

Would you like to learn about the main dynamics to consider when setting up and expanding your business in Europe? Discover this article!

What Can We Do For You?

We want to be a bridge to our customers’ business plans for growth and development, even in the most remote parts of the world.

You might like to see these contents also:

The post Common Mistakes Entrepreneurs Make When Setting Up a Business in Europe first appeared on MHR & Partners.

Dynamics to Consider When Establishing a Company in Germany and the Netherlands

MHRPartner — Mon, 08 Jul 2024 10:49:05 +0000

Mehmet Akif Özmen | Sworn-in CPA | Founder, CEO

Every entrepreneur’s dream is to establish a new company and grow their business abroad. For more than five years, I have been working with entrepreneurs in Turkey on establishing and investing in the European market. We established our own company in Germany. As the Chairman of the Board of MHR & Partners, I have coordinated the establishment stages of many companies in countries such as Germany, the Netherlands, Belgium, Montenegro, Romania, Bulgaria, and the UK, together with our business partners for the last three years. I have met with many business people, financial advisors, and business partners in Europe and made many business trips. I want to summarize the warm experiences I have gained from these contacts and businesses by combining them with our professional experience of more than 25 years.

What should you consider when establishing a company in Germany and the Netherlands?

Germany and the Netherlands, with their strong and stable economies, are among the countries preferred by entrepreneurs from all over the world to establish companies and make investments. In this article, we answer the following questions that business people are most curious about:

Which criteria should we consider, and which evaluations should we make when establishing a company in Germany and the Netherlands?
What individual and organizational factors should we investigate?

Entrepreneurial Dynamics

1. Your Workload and Time Management

One of the entrepreneurs’ most critical problems is time management. Our team and system can control the dynamics to manage this problem efficiently and effectively, which is crucial for growth and service diversification.

2. Your Customer Base Density

It would help if you correctly calculated which regions and sectors you are concentrated in, which sectors and regions you need to expand to, and the timing.

3. Regions with High Collection Rates

When expanding into new areas, you should assess the sectoral collection situation well. Financial revenues or reserve funds are essential in case of risk.

Reading Advice

Do you want to read about the big mistakes entrepreneurs make when setting up a company in Europe from the lived experience of an expert? Discover this article!

External Dynamics of Your Company

1. Language Skills of Managers

Using this language, you should evaluate the languages spoken in the country where you will invest and the presence of partners, teams, or partners.

2. Sectoral Density of Customers

Operating in customer-intensive areas, being close to the customer relaxes you and allows you to observe the change needs instantly.

3. Presence of Familiar People or People in Residence

The resident partner or employees will support you in difficult situations and help you get through the processes quickly. It is imperative to consult people who know the industry.

4. Proximity to production and market

Market and marketing activities are the most essential elements of a company. Although technical units produce, it is vital to have marketing and sales teams that will sell, grow, and reduce the pressure on the technical team.

5. Addressing the Customer Audience

It must be positioned according to the customer base and close to the market. Production companies should always be distribution and sales-orientated. Logistics companies need to establish a good coordination network in the field.

6. Marketing and Sales Network Structure

It is easy to grow your business, but the sales and marketing unit must ensure permanence in the field. In this regard, you need a responsible and active team.

7. Trends in the World

The world is changing quickly, and a team should follow these trends in direct contact with the customer.

8. Production Process and Channels

The production process is also changing rapidly. Wars, changes in production demands, and costs affect the market. Those who catch these changes instantly survive and grow.

9. Risk Analysis and Crisis Management

If you have a system that measures and evaluates risks, it will be easier to move forward. Having a team and a project system that considers these issues will make you more resilient in times of crisis.

What Can We Do For You?

We want to be a bridge to our customers’ business plans for growth and development, even in the most remote parts of the world.

You might like to see these contents also:

The post Dynamics to Consider When Establishing a Company in Germany and the Netherlands first appeared on MHR & Partners.

Things to Consider When Establishing a Company in Europe

MHRPartner — Sun, 07 Jul 2024 13:01:20 +0000

Mehmet Akif Özmen | Sworn-in CPA | Founder, CEO

For more than five years, I have been working on establishing and investing companies in the European market for entrepreneurs in Turkey. We also established our own company in Germany. As the Board of MHR & Partners Chairman, I have coordinated the establishment of dozens of companies in Europe, especially in Germany, the Netherlands, Belgium, Montenegro, Romania, Bulgaria, the UK, and our business partners for the last three years. I have met with countless business people, financial advisors, and business partners in Europe. I have been on numerous business trips. I share my warm experiences from all these contacts and businesses in a summary form by bringing together my professional experience of more than 25 years. I want to contribute to our entrepreneurs who wish to open up to the European market and grow their businesses to make the right decisions and take risks.

Today, with the impact of globalization, many entrepreneurs and business people seek to establish companies abroad. However, this process does not only mean opening up to a new market but also requires considering many strategic and operational factors. It is essential to consider both your entrepreneurial skills and the organizational dynamics of your company when deciding to establish a company abroad. In this article, I will focus on the primary individual and organizational dynamics you should pay attention to when setting up a company in Europe and share tips to manage this process successfully.

Internal Dynamics Related to Your Entrepreneurial Skills

1. Your Experience in the Sector

The experiences you have gained while operating in your sector equip you for the problems you may encounter. If you are entering a new industry, make preliminary preparations, create a business plan, and support it with a strategic plan.

2. Identifying Risks in Advance with Project Logic

The project logic provides a more predictable management model by distributing the risks in the process to alternative areas. Preparing preventive services in advance offers essential, systematic, and sustainable support within the company against possible risks.

3. Confidence in the Target Plan and Unity of Implementation

Unity of practice, in other words, organizational alignment, enables you to be more resilient in challenging times and ensures business continuity for your company. Teams and managers can become demoralized without unity in practice and lose motivation.

4. Flexibility and Availability of Alternative Plans

Flexibility is the most critical success criterion of long-term plans. Quantum logic, or “Uncertainty of Uncertainty” or partial flexibility, should be at least 30% within the Pareto Optimal.

5. Avoiding Small Costs

Exact costs are often uncertain in business. It’s advisable to anticipate a risk premium of at least 40-50%. Flexibility is crucial in this regard. Incorrect planning or inadequate consideration of external factors can lead to higher cost increases. Properly assessing these risks helps prevent recurring issues.

6. Providing Full Support to Those Responsible

When you set off, surprise problems will arise, and success will take time. The first year will be incredibly challenging. You should show patience and perseverance for at least 3-4 years. Your trust and support of your authorized colleagues will contribute to transferring the information into the right channel.

7. Process Management and Spreading the Subject Over Time

You should implement process and result-oriented structures together. Focusing solely on the result can lead to disintegration if there’s a failure, while focusing exclusively on the process may delay success. Establish measurement metrics and conduct evaluations at 6-month, annual, and 3-year intervals.

8. Trust in Your Consultant and Mutual Agreement

Consultancy services are highly valued abroad, especially in Europe. A counselor who provides you with the right channel of experience and draws a road map tailored to your goals protects you from all risks and helps you to achieve success. It is also essential to have a unity of practice together.

9. Sometimes, your closest people can be your biggest obstacle

It may be suitable to get opinions from your friends in a commercial area, but this may only sometimes yield the right results in the decision-making process. I suggest you act professionally in this matter. I can recommend you look for some criteria in your consultant or partner that we will work with when making decisions:

– How many years of experience do they have in this field?

– How many reference companies do they have in Turkey or abroad?

– Do they have a corporate team and system?

– Can they support you when problems arise?

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Corporate Dynamics of Your Company

1. Warehousing and Employee Recruitment

Warehousing and staffing decisions impact your costs, marketing, and turnover performance. Being close to the industry and having a high customer density help you make these decisions. The most crucial factor in determining your speed is accurately analyzing costs and risks.

2. Turnover and Net Profitability

Although not one of the first objectives, turnover, and target profitability should be known and calculated. It is the primary metric showing how much of the target you have achieved. Your connections, customer density, and sectoral proximity affect this situation.

3. Address and Billing

You must have a specific address, and this must stay the same. You must also be close to the customer and the industry. Whether you will invoice from a single center or the actual country depends on the size of your business and your target strategy. In our experience, a staff member who will manage the entire process here at the end of the second year will significantly contribute to any growth. Investments in these matters will give you positive returns to maintain motivation in long-term processes.

4. International Manageability

Significant changes in the company’s vision and mission can sometimes be painful and take time to digest. You need to have your team ready, and you need to prepare your structure. Differences of opinion between partners or managers can cause serious trouble for the process. Strife will tire the company as if it has lost its compass in a storm.

5. Evaluating the Withdrawal of Net Profit Share to the Source Country

You must accurately calculate and manage the dividends you bring back and the earnings you invest. You must also effectively manage profitability, tax advantages, and invoicing within or in different countries.

6. Subject of the Resident Employee or Director

The number of employees you will employ in the country where you will establish a company is vital to seize some opportunities. You can increase credibility and trust in your company by communicating directly with customers. In addition, you will open your bank accounts quickly, process your official documents rapidly, and ensure transactions run smoothly and on time. Thus, you will save time.

7. Preparation of your Strategic Plan

Knowing which steps to take helps you protect yourself from risks and work in a more agile structure. Scenario analyses strengthen you, reduce mental fatigue and internal opposition, and make reacting instantly easier.

8. Systemic Presence and Readiness of Your Team

You must have a team that will communicate directly with the customer and keep you strong in the field. You should establish your technological infrastructure and organizational structure accordingly.

9. Your Capital Structure

Your capital amount indicates that you will take decisive, continuous, and willing steps. It shows the strength of your company. It is also a desirable situation for the regulatory authorities of the countries in which you will invest. A strong capital structure also facilitates access to cheaper and more abundant financial resources.

Medium and large companies investing in another country should allocate an investment budget of approximately 50.000 Euros for office, personnel, and establishment expenses at the beginning and an additional 50.000 Euros on average in 2 or 3 years. The time it takes to exceed the break-even point and achieve operational profitability may differ on a sector and country basis.

10. Your Decision-Making Mechanism

Having specific decision-making mechanisms will help you move forward quickly. Consensus among partners is critical to avoid divergences.

As MHR & Partners, we have strong partners and considerable European experience, especially in Germany, the Netherlands, Belgium, Romania, Montenegro and Bulgaria. We can advise you on company establishment, residence, and work permits, accounting and consultancy procedures, company acquisitions, adapting to country working conditions, building teams, and accelerating your sales structure.

What Can We Do For You?

We want to be a bridge to our customers’ business plans for growth and development, even in the most remote parts of the world.

You might like to see these contents also:

The post Things to Consider When Establishing a Company in Europe first appeared on MHR & Partners.

Costs and Conditions of Establishing a Company in Montenegro

MHRPartner — Fri, 26 May 2023 16:19:27 +0000

Mehmet Akif Özmen | Chairperson at MHR & Partners | Sworn-in CPA

Montenegro (Montenegro) is formed from the combination of the English words “Monte = Mountain” and “Negro = Black”. In the Montenegrin language, it is spelled as “Crna = Black” + “Gora = Mountain”. Montenegro is considered a strategic region due to its direct connection to the Balkan countries and easy trade with the EU.

After 30 years in power in Montenegro, another party supporting the EU process took over the government. Since Montenegro is currently the country with the highest probability of full membership of the EU among the candidate countries, it attracts the attention of many people and entrepreneurs around the world, especially Turkish citizens.

Montenegro is one of the most beautiful Balkan countries in Europe and has become increasingly popular among investors in recent years. With its rich natural resources, strategic location and ease of doing business, Montenegro has become an attractive destination for entrepreneurs. However, the costs of setting up a company differ in each country and Montenegro is no exception. In this article, we will cover the general costs of setting up a company in Montenegro and some key factors related to the process. This information will serve as a valuable guide for entrepreneurs and investors who plan to do business in Montenegro.

Getting to Know Montenegro Briefly

The status of the union between Montenegro and Serbia was decided by a referendum on Montenegro’s independence on 21 May 2006. Serbia, the European Union and the permanent members of the United Nations Security Council recognised Montenegro’s independence. On 3 June 2006, the Parliament of Montenegro officially ratified the referendum result and declared independence of Montenegro.

On 28 June 2006, Montenegro joined the United Nations as its 192nd member state. However, many European countries manage their consulates in Belgrade. Turkey was the first country to open a consulate.

The dispute over Montenegro’s secession from Serbia continues, albeit partially. In general, around 50% of the population is of Serbian origin and the Northern Region, especially the Niksic region, is Serbian-dominated. However, there is not a very sharp division in communication within the country. Bosniaks and Albanians constitute the Muslim population. Rožaje, Plav, Ulcinj, Bar are Muslim-dominated regions and more than 50% of these regions are Muslim-dominated. Approximately 20% of Montenegro, which remained under Ottoman rule for 500 years, is Muslim.

Although the main centre is Podgorica, Budva, Bar, Kotor and Tivat are prominent settlement centres. In the Balkans, Kotor, Prizren and Mostar are the three most famous tourism regions to visit in this region. We recommend staying at least 1 night in all three.

In the first place, Montenegrin people are warm, relaxed, harmonious, humorous, establishing strong relationships, and distant but emotional in nature. They work with contracts.

According to a famous proverb in Montenegro, “Every man comes to the world to rest.” In Montenegro, after waking up, it is customary to rest on the sofa or sit on a chair next to the bed. Coffee culture and self-care products are important parts of life.

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Starting a Company
in Europe

Have your company in Germany,
UK, Netherlands, Belgium

Discover

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Service

Over 200 customers and over 1000
return reports in 10 years

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Audit

Beyond a full certification audit
Risk-focused tax planning

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Some Conditions for Company Formation in Montenegro

Tourism, real estate and the consumption sectors are very active. Compared to Turkey’s 1990s, Montenegro is a fast-developing, changing, and adapting country.

It is possible to establish a company in other countries while residing in Turkey. One of these countries is Montenegro. England, Estonia, and Germany can be used as examples for other countries.

Montenegro does not require visas for Turkish citizens. However, it is possible that some prohibitive visa decisions will be taken in the coming days.

DOO, only 1 Euro initial capital is sufficient for a limited company.

Montenegro’s currency is Euro. Since June 5, 2017, it has been a NATO member.

There is a daily non-stop flight from Turkey to Podgorica, the capital city with a population of 180.000. There are two Ottoman mosques in the capital Podgorica.

It takes approximately 1 week to establish a company and 15 days to obtain a residence. You cannot get a session without setting up a company and if you establish a company, you get a session. We recommend staying in Montenegro for a few weeks before making a residence decision. Observing the environment and meeting people will guide you in decision making.

Company Establishment Process in Montenegro in General Lines

The main types of companies you can open in Montenegro are:

Sole proprietorship, Limited liability company, Joint stock company.

In the first place, it is necessary to inquire in the commercial register to determine the original company name. Capital amount and field of activity should be determined. Preferably a High School Diploma or University Diploma and a criminal record are required for registration.

You do not need to come to Montenegro for company establishment. Apostilled powers of attorney allow the proxy to act on your behalf. It is sufficient to be in Montenegro for 3-4 days during the session process. Camera recording and fingerprints are taken when applying for residence.

In general terms, the steps to establish a company in Montenegro are as follows:

Choosing one of the above types of company according to the Company Law, and writing the relevant affairs in its statute
To have a certain number of partners and managers and to specify the General Manager for registration according to the Trade Registry
To prepare the articles of association and various application forms for the company’s establishment and to register the relevant activities
The minimum share capital must be specified and deposited. In addition, for the first few months, your bank transfer from the bank is directly or through an intermediary. The remittance process works well after settling a little.
After the company’s registration in the Trade Registry, it is necessary to obtain a tax registration number and VAT number, apply for various business licences and permits.

The documents required to establish a company in Montenegro are as follows:

-Registered office and residence address in Montenegro

-Names of at least one director or manager and a copy of their passport.

-At least one partner or guarantor/owner (can also be a manager),

– Articles of association and articles of association. This contract is the master plan for your business.

– Capital of at least 1 Euro for company registration. However, we recommend starting the business with a minimum capital of 1000 Euro.

-Bank account and Fiscalisation after the company’s establishment

Tax Rates in Montenegro

As of 2023, the taxes you have to pay and their rates are as follows: Corporate and Personal income tax 9%, Value added tax (VAT) 21

Up to a turnover of 30,000 euros, your company may not open a VAT number and pay VAT. However, a repeated and well-known mistake is the belief that there is no tax up to 30.000 Euros. Up to 30.000 Euros there will be no VAT tax, but if your company makes a profit, you pay corporate tax.

VAT will not apply to overseas invoices. However, they ask for this in advance. Consequently, you need to keep track of your turnover target, your contracts, and the banks from which the money will come.

Reading Advice

What are the types of companies in Montenegro? What are the advantages of investing in Montenegro? Where should foreign entrepreneurs and international investors start setting up a company in Montenegro? Do a deep reading for the answers to all these questions!

How Much Does It Cost to Establish a Company in Montenegro?

The cost of setting up a company in Montenegro can vary depending on factors. Basically, these costs depend on the type of company, capital requirements, registration procedures and specialised services. For example, joint stock companies and limited liability companies are two popular types of businesses in Montenegro. Each type of company has different costs and legal requirements. Also, a certain amount of capital may need to be deposited for the registration of a company. This amount may vary depending on the company type. The process of company formation in Montenegro may require legal advice, tax expertise and other professional services, which may affect the total cost.

Company formation in Montenegro for local or foreign persons is almost the same in terms of costs. Please find below a list of estimated company formation costs:

Costs Incurred in Establishing a Company

All companies must register in the Central Business Registration System under the Tax Office. The registration fee is EUR 10 for most types of companies, including limited liability companies and EUR 50 for joint stock companies.

The preparation of the documents required for the preparation and notarisation of the company contract may cost 30 Euros, depending on the capital.

If you bring a University Diploma, the equivalence document costs 200 Euros. You can avoid this burden with a high school diploma.

The company stamp costs around 40 euros.

The municipal administration fee of the city where you set up your company is 10 Euro.

Notarising your lease agreement costs 30 Euros.

It may cost around 30 euros for foreign persons and companies to have their identity documents and company contracts translated and notarised.

When you enter the country, you need to register with the trade office. If you do not register, 40 Euro is paid to the police during the application process when the company is established.

Costs After Company Establishment

For companies that do not issue invoices and do not employ workers (if partially virtual), the accounting fee starts at 100 euros, if active at 150 euros.

As a partner, a monthly fee of 570 euros must be paid to yourself or one of the managers. 120 Social Security contributions will be paid.

There will also be additional costs if you register your trade mark.

You need to rent a house. We help you show your workplace, but if you show the address of a friend at the residence, you will save 300 Euro rent. It is dangerous and wrong to display 5-10 people at the same address. It is not safe to share the same house to people you do not know at all.

Other Costs During and After the Residence

The residence card costs 350 Euros per person and 500 Euros for each partner separately. Criminal record certificate, passport, ID card, fingerprints and camera record will be provided.

It costs 120 Euros to get Fiscalation and Tokens. You need this card to issue invoices.

Registration and publication fees to Montenegrin banks can cost 10-20 euros. Ziraat Bank transfers 250 plus 100 euros to the account. The last three costs are not borne by counselling firms, and even if they are, they say so.

Once a year you pay 350 euros per person for your residence card renewal. Family members also benefit from this. This includes parents and siblings. After 5 years, the session becomes permanent and citizenship is obtained at 10 years.

We do not recommend managing these processes individually. It will be easier for you to adapt to Montenegro with the assistance of consultancy firms.

As we mentioned above, intermediary consultant companies can make their own pricing and include the fees listed in the list in their own services. They can also offer a turnkey solution.

Other Costs to Know for Company Formation in Montenegro

House rents in Montenegro start at 300 euros. You can rent a furnished apartment at 500 Euros. House prices for 50 square metres vary between 40.000 – 50.00 Euro. Since Montenegro is one of the favourite destinations for tourists, rent and hotel room prices increase especially in summer. Rents for an average 100 m2 warehouse start from 1.000 Euros.

As of April 2022, virtual addresses shown at other addresses are not accepted. As a result, people need to have a separate place to live, either with a friend or at home. There is no legal obstacle for 3 people to unite and conclude a lease agreement with the landlord.

In total, for the establishment of a company for one person, a cash capital of 800-1000 Euros is required. This includes government fees, bank, token and notary expenses.

Consultant companies that follow the company establishment process are actually interested in you for about 5 days during the establishment process.

As MHR & Partners, we support your every need in company establishment and residence processes with our Turkish, Montenegrin and English speaking team. We recommend you to get service from expert and experienced consultants for these procedures that require technical knowledge and follow-up.

If you have a project or production target, we are always with you wherever you are in the world. We support your airport reception, hotel reservations and meetings with the official authorities. We also provide the necessary support to grow your business and company in the field.

You will also have the confidence of being under the protection of a Turkish Certified Public Accountant. In addition, MHR & Partners’ international experience and support will be timely wherever you are in the world.

What Can We Do For You?

We want to be a bridge to our customers’ business plans for growth and development, even in the most remote parts of the world.

You might like to see these contents also:

The post Costs and Conditions of Establishing a Company in Montenegro first appeared on MHR & Partners.

How Much Does It Cost to Establish a Company in Germany and the Netherlands?

MHRPartner — Thu, 18 May 2023 06:38:58 +0000

MHR & Partners Academy

With its strong and stable economy, Germany and the Netherlands are among the most preferred countries for entrepreneurs from all over the world to establish a company and invest. In this article, we address a striking issue that businessmen are most curious about: How much does it cost to start a company in Germany and the Netherlands? We answer all questions investors may have about the costs of setting up a company summarized in the table.

The Main Costs to Start a Company in Germany and the Netherlands

The cost of starting a company in Germany and the Netherlands varies depending on the type of company you are forming. It also depends on the location of your business. We outline all costs for starting a limited liability company (GMBH) in Germany and a private limited company (BV) in the Netherlands.

Reading Advice

For in-depth information about Dutch business culture, review our in-depth article!

Comparative Table: Company Formation Costs in Germany and the Netherlands

Topic Tittle	The Netherlands	Germany
How long does it take to set up a company?	1 Month	1 Month
How long to open a company bank account?	2 Weeks	2 Weeks
Required paid-up capital (for Limited Company)	1 Euro	25.000 EUR
Is a lease agreement required before incorporation?	Then required	Yes

Legal considerations
Is a resident manager required?	No	No
Is a resident shareholder required?	No	No
Minimum number of directors	1	1
Minimum number of shareholders	1	1
Is a resident company secretary required?	No	No
Permitted company director	Yes	Yes
Public register of shareholders and directors	Yes	Yes
Points to be considered about tax and accounting
Corporate tax rate	15%	%30 (Double taxing)
How long does it take to get a work permit approved?	1-2 month	1 month
Invoicing local customers is allowed	Yes	Yes
Average monthly net salary of unskilled labour	1.950 Euro	2.200 Euro
Office rental per square metre per month	20 Euro	12 Euro
Warehouse rental per square metre per month	30 Euro	20 Euro
Accounting Fee	100 Euro	100 Euro
Estimated Costs
Consultants participation fees	1.000 Euro	1.000 Euro
Company secretary and legal registered office fees	300 – 500 Euro	300 Euro
Corporate bank account opening	500 Euro	500 Euro
Notary Costs	1.200 Euro	1.000 Euro
Total company involvement set-up costs	2.500 Euro	1.500 Euro
Next Annual costs	3.000 Euro	3.000 Euro

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Reading Advice

What are the types of companies in the Netherlands? What does it take to set up a company and open a branch in the Netherlands? Where should foreign entrepreneurs start setting up a company in the Netherlands? Do a deep reading for the answers to all these questions!

What Can We Do For You?

We want to be a bridge to our customers’ business plans for growth and development, even in the most remote parts of the world.

You might like to see these contents also:

The post How Much Does It Cost to Establish a Company in Germany and the Netherlands? first appeared on MHR & Partners.