Germany as the Center for European Activity of Israeli Companies Setting up a company in Germany Dr. Mathias Reif Managing Partner Bridgehouselaw Cologne

2 I. Who we are BridgehouseLaw with offices in Atlanta, Berlin, Charlotte, Cologne & Munich and over 24 professionals BridgehouseTax with offices in Atlanta, Cologne & Munich OneBridgehouse with offices in Atlanta & Munich

3 II. Fact sheet: German-Israeli trade  Germany is Israel‘s 2nd biggest trade partner with exports to Germany of € 1.6 bn and imports of € 2.6 bn (2007).  Imports from Germany are mostly high-end products such as machinery, cars or chemical products.  Exports to Germany used to be agriculture products but are now more and more high-end electronic and pharmaceutical products  More than 6,000 German companies hold business contacts to Israeli companies.  Cologne & Bonn are partner cities of Tel Aviv

4 Fact sheet: Germany as… Heaven for bureaucrat-lovers ? Heaven for vacation-lovers ? Heaven for beer-lovers ?

5 III. Choosing the right legal form  Representative Office;  Partnerships (OHG, GmbH & Co. KG or KG); or  Corporations (GmbH or Aktiengesellschaft)  Some questions in this regard:  Direct business activity or maintaining contacts and initiating business?  Tax considerations  Managing the company  Equity capital  Limitation of personal liability

6 IV. GmbH (Limited liability company)  Most widely used legal form  Combination of high flexibility with relatively few obligations  Limited liability  One person sufficient to set up the company  Required minimum capital contribution of € 25,000 (half of it upfront)

7 Foundation of a GmbH  Formation by the founding shareholder(s):  deed of formation; and  articles of association in notarized form  Formation Costs: approximately € 1,000 plus legal fees  Entry in Commercial Register (Handelsregister) and registration at Local Trade Office (Gewerbeamt)  Addendum “GmbH“ in company name

8 Structure of a GmbH  Managed and represented by its managing director(s) (Geschäftsführer)  Shareholders control the Geschäftsführer  Liability: (in general) only company assets; shareholders not personally liable  Distribution of profits: according to company shares or agreement  Transfer of interest: possible to freely sell company shares  Dissolution: resolution / insolvency / time

9 V. Fact sheet: German labor law  Employment Contract: No written form required  Minimum Salary: No, only for certain industries  „13th monthly salary“: No  Working Hours: In general, 40 hours/week;  Payment for overtime: If at all, then same compensation  Probationary period: 6 months; employment may be terminated with short notice  Vacation: 24 days; for managers up to 30 days  Optional benefits: Company car, life insurance, company pension, additional insurances

10 Fact sheet: German labor law  Sick leave: Up to six weeks; afterwards, employee receives allowance of up to 70% of last net salary from health insurance  Parental leave: Protection against termination; until child’s third birthday  Term: Temporary employment contracts (permitted under certain circumstances) vs. undefined term

11 How can we help you? Dr. Mathias Reif Managing Partner