GERMANY Law and Practice Contributed by: Wolfram H. Krüger, Barbara Rybka, Markus Wollenhaupt and Alexander Zitzl, Linklaters
5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Limited Liability Company A GmbH as limited liability company is a corporation acting fully independently of its shareholders, subject to rights and obligations. Only the company assets of a GmbH serve to discharge the company’s obligations vis-à-vis creditors, and any personal liability of the shareholders is excluded if the capital contributions have been fully paid. The applicable legal framework is quite flexible, and the company’s articles can be adjusted to specific needs. Its foundation requires a notarial act. The management is vested with one or more managing directors, who are generally bound by the instructions of the shareholders. The company may have a supervisory board ( Aufsichtsrat ). In order to establish a limited liability company, at least half of the mandatory EUR25,000 capital contributions have to be paid. Notarial, company register fees and fees for business registration amount to approximately EUR1,000. Limited Partnership The KG is a limited partnership under German law and must have at least two partners. The partnership agreement does not require notarisation, unless it con - tains obligations requiring the observation of specific form requirements (eg, contribution of real estate). It is characterised by having at least one general partner, personally liable without limitation, and one or more limited partner(s) only liable to the extent of their liable contribution ( Hafteinlage ) registered in the commercial register. Additional contributions can be agreed. Man - agement is vested with the general partner. There is no mandatory minimum contribution. Compa - ny and business registration fees as foundation costs amount to approximately EUR550. 5.3 REITs Although German law recognises REITs, they are hardly relevant (see 5.1 Types of Entities Available to Investors to Hold Real Estate Assets ). German REITs are listed stock companies and cannot be structured in another form. They are tax-exempt on entity level. Distributions are taxed on shareholder level.
arise, grants the building permit. Developers can file a preliminary building enquiry ( Bauvoranfrage ) to obtain a binding assessment before submitting a full appli - cation; several federal states already allow electronic filing. A refusal of planning permission can be chal - lenged in court, and affected third parties may also contest the grant of a permit. Building owners and developers may enter into urban development agree - ments ( städtebauliche Verträge ) with the municipality to secure and implement shared planning objectives. If a building is erected or used contrary to the permit, the authority may prohibit its use or order demolition, subject to the principle of proportionality. Municipalities regulate the development and use of individual plots through local planning instruments. At federal level, the German government sets overarching “leading concepts” ( Leitbilder ), such as the guarantee of equal living conditions, environmental protection and the correction of structural imbalances between former East and West Germany. The federal states then adopt state-wide spatial plans ( Raumordnung- spläne ), which are binding on subordinate planning authorities. These plans typically address the desired settlement structure, areas to remain undeveloped and locations and routes for key infrastructure. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Generally speaking, any entity, including foreign enti - ties, that has legal capacity can hold real estate in Germany, unless prohibited by law or court or admin - istrative order. Limited liability companies (GmbH) and limited partnerships (KG) are most commonly used to acquire and hold real estate. German law also recognises real estate investment trusts (REITs), which are listed real estate stock com - panies. However, there are only five REITs listed in Germany.
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