The branch office: when it beats forming a GmbH

What a branch is — and how it is registered

The independent branch (selbständige Zweigniederlassung) of a foreign company is registered in the commercial register via a notary (§§ 13d ff. HGB). It is not a separate legal person — your foreign company acts, through a permanent establishment with its own management and bookkeeping. Required are, among others, corporate documents with translations and the branch manager’s details.

Pros and cons versus a GmbH

• no new share capital and a leaner group structure,
• the parent company’s history and references work for you in Germany,
• but: the entire foreign company is liable for the branch’s obligations — no risk separation,
• some German customers and banks prefer a local GmbH,
• for tax purposes a permanent establishment regularly arises — German taxation of branch profits with clean profit attribution.

When the branch makes sense

It fits where German orders are performed with the parent company’s resources (e.g. in construction), a track record is wanted and the start should be quick. With local hiring, warehousing and sales under a German brand, the GmbH wins more often. We compare both routes with your numbers — together with your tax advisor.

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