Setting up branches and business premises

A branch is an independent subsidiary of a company; it requires a business registration and must be entered in the commercial register. Business premises are a dependent subsidiary of a company; they only require registration with the relevant consumer protection office.
The expansion of companies is associated with economic and legal expense. In the event that companies want to expand and possibly found a new location, the question of legal classification within the company organisation arises.
This article is intended to provide an overview of the options for expanded commercial activity and the associated formalities.

The options for expanded commercial activity

If a company wants to expand, then there are three main options available: Founding a subsidiary (Tochterunternehmen), setting up a branch office (Zweigniederlassung), and setting up business premises (Betriebsstätte). Template contracts for the various company founding forms can be viewed in the contract handbooks provided in the Commercial Library of Hamburg Chamber of Commerce.

Subsidiaries (Tochterunternehmen)

When founding a subsidiary, a legally independent company is created. To found a subsidiary, the legal provisions applicable for the respective legal form are decisive. The subsidiary trades and prepares balance sheets independently. Even if it is a foreign founder, only the German specifications applicable to founding, business registration and commercial register entry apply.

Branch office (independent branch)

Branch offices represent an interim form between forming an independent business and mere departments of a company. It is characteristic for a branch office that it is in some respects dependent on the company, and in others has a certain independence.
The branch office is described as a branch which is geographically separated from the main business and is created as an additional hub of the business and a permanent setup from which, although not all the main branch’s material transactions are executed independently, those that characterise the company are. Alongside geographical separation, the independence that a branch is required to have is established by means of a separate management entity with a certain freedom of disposition, possibly also distinct bookkeeping, the drawing up of a distinct balance sheet, and distinct assets. All of this must be an expression of a permanently created organisational structure. The sub-office must therefore be organised such that if the main office were discontinued, the sub-office could continue to exist.
The geographical separation of the main branch and the sub-office however does not meant that they need to be located at different locations. It is therefore conceivable under certain circumstances that both maintain business premises in the same building.
Despite a level of independence, the branch office cannot itself be the bearer of rights and obligations in accordance with the applicable law. The main office and the branch office are part of the assets of one and the same legal personality: the company owner (Unternehmensträger). The company owner is, for example the proprietor in the land register and party to a legal dispute. A branch office is therefore a part of the company that is dependent on the company, without its own legal personality.
As a legal and organisational part of the company, the branch office is subject to the law of the main branch. If the branch office is set up by a foreign company, in principle the law that is applicable for the parent company applies to that branch office.
The branch office’s company name can be exactly the same as the main branch. The inclusion of additions (“Germany branch” or “Hamburg branch” and similar) is however possible. An addition is required if an authorised officer in accordance with Section 50 Para. 3 Commercial Code (Handelsgesetzbuch (HGB)) is to be restricted to the operation of a branch office with effect for third parties or if there is already the same company name entered at the location where the branch office is being set up.
In the case of branch offices, a business registration as well as entry in the commercial register is required.

Business premises (dependent branch)

Another option for expansion is setting up business premises. The term “business premises” (Betriebsstätte) comes from trade law and designates additional branches or offshoots of the company that are set up as business locations, but which are dependent on the head office. They therefore represent dependent branch offices that must not be operated under a company that differs from that of the main branch. From a legal perspective, these are uniform business operations at locations which are only geographically separated. The invoices are also issued in the name of the head office. An entry in the commercial register is not made for the dependent branches. However, a separate business registration must be made for each business premises.

Representative office

The term “representative office” (“Repräsentanz”) frequently comes up in the context of setting up branches, in particular when this is done by foreign companies. German trade and commercial law does not recognise this term.
Either: the office of the relevant company operates commercially in the Germany itself as a component of a distinct organisation, and in this case is a dependent business premises (as described above). This must be registered under trade law.
Or: an office is opened that is managed by an external and correspondingly commissioned independent trade professional (for example an agent). In this case, there is no independent commercial operation of the foreign company in Germany.


The formalities that are associated with the expansion of a company concern the business registration, the commercial register entry and, in some cases, necessary approvals.

Business registration

All commercial operations of a subsidiary, a branch office or business premises must be registered with the relevant consumer protection office due to considerations of trade law.
The following documents must be presented to the consumer protection office in this process:
ID documents for the person of the applicant
  • proof of identity by means of an ID card or passport;
  • if applicable, evidence of authorisation to execute trades for a third party; in the case of managing directors, the Management Board or authorised officers: the company’s commercial register extract;
  • if applicable, approvals (e.g. skilled trade permit, real estate licence, etc.)
A foreign national must submit a residency permit to the relevant foreigners’ registration office, which contains the licence to take up independent commercial activity.
Evidence for the company
  • A company registered in the commercial register must prove entry in the commercial register by means of an extract from the commercial register;
  • In the case of registration documents from a foreign commercial register, a translation must also be submitted;
  • In the case of a foreign company, authorisation to operate in Germany as well as an address in Germany is required. The party with authorisation to operate in Germany must present authorisation made out in their name

Commercial Register entry

Subsidiaries (Tochterunternehmen)

Independent subsidiaries must be entered in the commercial register of the relevant local district court. This registration must be notarised.

Branch office

Registering a domestic company
The branch office must be entered in the commercial register via the court of the company’s main branch or respectively headquarters. The registration must be submitted to the registry court in notarised format. The required signatures must be submitted to the registry court of the branch office.
There are several peculiarities for capital companies (Kapitalgesellschaft): For a GmbH (limited liability company), a notarised copy of the articles of association and a list of shareholders must be submitted. For an AG (public limited company), a publicly notarised copy of the articles of incorporation in the version valid at the time of the registration must be submitted.
Registering a company with its registered office abroad
The following must be considered when entering a company with its registered office abroad in the commercial register: Registration for entry into the commercial register must be completed directly at the court in whose district the branch office is located. The branch office of a foreign company is therefore treated as a main branch with regard to the laws on registration.
When registering, you must provide proof of the existence of the company as such and, if the purpose of the company or the authorisation of the commercial operation in Germany requires state approval, proof of this approval must also be provided. The registration must also include the address and the purpose of the branch office. In addition, the following should also be specified upon registration:
  • The register in which the company is registered and the number of the registry court where the laws of the country in which the company is headquartered provide for its entry in a register;
  • the legal form of the company;
  • the company name and headquarters;
  • the persons authorised to represent the company in court and elsewhere as independent representatives for the activities of the branch office, specifying the powers they have been granted;
  • if the company is not subject to the laws of a member state of the European Communities or another signatory state to the Agreement on the European Economic area, the law of the country to which the company is subject.
The registration should also include a notarised copy of the articles of incorporation for public limited companies (Aktiengesellschaft), a notarised copy of the shareholder agreement for a limited liability company (GmbH) and, where the respective document is not created in German, a certified translation into German.

Business premises

Business premises do not need to be entered into the commercial register; business registration is sufficient here.


It may be necessary to obtain permission from the respectively relevant authority for different kinds of business activity.
In particular, starting any skilled trade businesses requires approval and the business must also be registered in the respective regional Register of Qualified Craftsmen (“Handwerksrolle”). In order to be included in the regional Register of Qualified Craftsmen, the business must be run by a master craftsman, although exceptions may be made in limited circumstances.
Otherwise, commercial freedom prevails. In particular, most wholesale and retail commercial operations are unregulated. However, operating a trade may be subject to a range of particular specifications.

Requirements under aliens law

If subsidiaries, branch offices or business premises are operated by foreign natural persons, it is important to bear in mind that, aside from the residence permit for EU citizens, these may require a temporary residence permit under the German Residence Act (Ausländergesetz) permitting them to pursue the planned gainful activity in the form of a visa stamp on their passport. A person is not deemed to be pursuing a gainful activity if they only engage in meetings or negotiations with the German federal territory or if they assemble or maintain systems, for example, while maintaining their habitual residence abroad – provided that their stay does not exceed a total of three months.
These requirements do not apply to EU citizens from other countries, citizens of non-EU countries that are members of the European Economic Area (EEA) and citizens of countries with which special agreements are in place (e.g. USA, Switzerland, Canada).