Subsidiary in Germany?
Can it be a good solution to establish a subsidiary in Germany?
Many think that it could be an advantage to establish a subsidiary office or an affiliate at an office center in order to enter the European market – but where?
It is obvious that B2B trading companies, producers and service providers have also switched to virtual platforms to offer their goods and services. At first glance this seems to be sufficient to be successful in this global village. And it is definitely true for some branches or businesses. However, long term relations need continuity, personal presence, reliability and trust. To be present in the country or the economic union of the clients can be beneficial not only for entering a market but also to continuously expand there. It should also not be forgotten that one definitely gets a better picture of competitors’ activities and a possibly changing market or legal environment.
So, to make use of all these advantages we should briefly discuss how
- to establish a subsidiary office
- an affiliate at an office center to
- enter the European market – in Germany
As individual as this might seem – and definitely is, there are some general thoughts that might help to get a clearer picture of benefits and therefore contribute to your business success in the world’s largest economic union.
How to establish a subsidiary office
The advantage of establishing a subsidiary office in Germany is that lawyers and tax advisers are bound by fixed tariffs and have to tell you in advance if they intend to charge more. So, you are quite safe as far as your cost structure is concerned. Similarly, costs are projectable if you choose an office center for your address. This is one of the reasons why many companies prefer to use the infrastructure of an office center to run their business – either remotely or with local people.
Contract periods with office centers are definitely shorter than on the commercial market, meaning you reduce your risk in case you want to change country, location or your method of market access. Flexibility is key here.
In addition, the office center might already be working with tax and legal partners and can therefore recommend solutions fitting your needs.
Costs are predictable: make sure you know all costs charged each month (we naturally do), so there will be no surprises with unexpected costs, maybe simply because there are different rules and regulations in the country of the parent company.
So, some summaries in a nutshell for establishing an affiliate at an office center:
- No cumbersome administrative work
- No waste of time for rules and regulations
- Cost transparency
Why establish a subsidiary office in Germany?
Besides the convenience of using a business center to establish a subsidiary office, one might think where is the best location. Germany is the largest economy within the largest economic union worldwide. If this is not a strong argument in itself, one should also think about the reasons why Germany, despite economic setbacks in the past, has always recovered and strengthened so impressively:
- legal certainty
- effective administration
- reliable transport systems
- proximity to other EU countries due to its geographical location
Which office center fits best?
Of course, there is no general answer to this question. Needs are too different. But maybe here are some guidelines for orientation:
How many of your staff would you like to place in one room? This was a very important question even before Corona times. It is balancing the need for a quiet, productive environment with an atmosphere in which communication can foster creativity. The question of how often and how long the telephone is used remains essential. Salespeople need to talk – and they like talking. So, if you mostly hire salespeople, you might think about giving them an undisturbed environment. The same for people who need to remain concentrated und uninterrupted. If you prefer real team offices, where a lot of discussions is the way you make successful business, then a large office with many desks is beneficial.
The majority of companies still choose offices in which focussed working is possible. Communication is important and there must be room for that. However, productivity is – in most business sectors – still key for profitable output. This means that private offices are still mainly preferred.
Which infrastructure do you need to establish a subsidiary office in Germany?
This is of course only relevant if you host staff in your office, However, be sure that you can establish your VPN and that the internet connection is reliable. Usually speed is less important than uninterrupted availability. You might also want to check how long the response time of the IT partner at the office center is. Operating times of the reception – if available at all – are important, since visitors should be welcomed and parcels accepted. Check if they also provide services such as making appointments, telephone answering during your absence (or in general) or even parts of the bookkeeping or essential administrative duties.
here should be a variety of restaurants in the proximity and probably also some supermarkets. The possibility of having lunch in a separate kitchen and a microwave might be a good idea. Do not forget that all these things have to be organized and paid for if one wants to establish it on his/her own. Not to mention the cumbersome administrative troubles.
And even hotels if business partners want to visit you.
SELECT your business mode
So, establishing an affiliate or a subsidiary office in Germany will bring you presence in and for a really big market. Government offices, like the Chamber of Commerce https://www.duesseldorf.ihk.de/servicemarken/englisch/welcome-2587266 will assist you directly in getting more details and information on the “how” for your expansion and market penetration. Serviced offices at an office center will save you a lot of administrative time – and also costs – in operating your affiliate abroad. Give it a try and get a quotation!