At a glance
- Four structures are usually on the table: an Employer of Record, an unregistered operating site, a registered branch (Zweigniederlassung) and a German GmbH. Only the last is a separate legal person.
- The branch is not the light option it looks like. § 325a HGB requires a German branch of a foreign company to disclose the parent company's accounts in Germany. Your Indian balance sheet becomes publicly available here.
- A branch has no separate legal personality, so the Indian parent is liable for its German obligations with everything it owns. A GmbH caps that at the company.
- Registering a branch under §§ 13d and 13e HGB needs the parent's register extract, articles and a board resolution: notarised, apostilled and translated. For a non-EU parent that document chain is at least as heavy as forming a GmbH.
- Neither choice settles tax. A branch is normally a permanent establishment and taxable here either way, and the transfer of a manager runs on the ICT Card under § 19 AufenthG, not on the self-employment route.
The four options, honestly
If you have not yet decided whether you need a German entity at all, start with Germany market entry for Indian companies. An established company entering Germany is usually shown a menu of four. They are not equivalent, and the differences are not the ones the menu suggests.
No German entity
- Employer of Record. A third party employs your person in Germany. Fast, and limited, the licence question and the eighteen-month ceiling are in our separate article.
- An operating site without register entry. A dependent establishment that is not registered in the commercial register. It still requires a trade registration, and it does not avoid tax.
With a German entity
- Branch: Zweigniederlassung. Registered in the German commercial register under §§ 13d, 13e HGB. Not a separate legal person. It is your company, operating here.
- Subsidiary: GmbH. A German company with its own legal personality, its own capital and its own liability. Your company owns it; it is not your company.
The choice that matters is the one on the right, and the widespread assumption that a branch is the lighter, faster, cheaper version of a subsidiary is where most of the trouble starts.
What a branch actually is
§ 13d HGB governs the case where the seat of a company is abroad: everything concerning a German branch is filed with the court in whose district the branch exists, and the entry has to state the location and the domestic business address of the branch.
§ 13e HGB adds the rules for branches of foreign limited companies. The filing is made by the managing directors, and it has to disclose the domestic business address, the object of the branch, the persons authorised to represent the company and the extent of their authority, the foreign register and the entry number, the legal form of the company and, where the company is not governed by the law of an EU or EEA state: the law applicable to it.
Read that list again. A branch is not a lighter form of presence. It is your Indian company, placed on the German public record, with its constitution and its representatives written into a German register.
The disclosure trap nobody mentions
§ 325a HGB: for a German branch of a company with its seat in another state, the registered representatives must disclose the accounting documents of the head office, in accordance with the German publication rules. The documents have to be in German; depending on the case, English or certified copies may be accepted.
That is the sentence which decides this question for a great many companies, and we have not found it on a single comparison page.
A branch does not publish a small German balance sheet. It publishes the parent company's accounts, your Indian company's figures, filed in Germany, publicly retrievable by your customers, your competitors and anybody else who looks. For a listed Indian company that may be acceptable, because those figures are public at home anyway. For a privately held family business it is usually the end of the discussion.
A GmbH publishes its own accounts, and at the bottom of the size scale that is a short balance sheet with notes. What the parent earns stays with the parent.
Who pays if it goes wrong
A branch has no separate legal personality. It has no capital of its own, it cannot be sued separately from the company, and it cannot fail on its own. A German customer suing the branch is suing your Indian company, and a judgment reaches everything the company owns.
A GmbH is a legal person. It has its own capital, its own creditors and its own insolvency. If the German venture fails, what is lost is what was put into it, subject to the usual qualifications about parent guarantees, comfort letters and the personal duties of the managing director under § 43 GmbHG, which we set out in the insurance article.
This is the reason most groups end up with a subsidiary even when the branch would have been administratively workable. You are entering an unfamiliar legal system with unfamiliar customers. A ring around the exposure is worth a great deal.
Why a branch is not the simpler paperwork
The belief that a branch avoids the formation process is where non-EU companies lose the most time.
Registering a branch requires the parent's documents to be produced to a German register court: the register extract, the articles, the evidence of who may represent the company and a resolution establishing the branch. Those documents have to be certified, apostilled: India is a party to the Hague Apostille Convention, so the Ministry of External Affairs route applies, and translated by a sworn translator.
That chain takes two to four weeks on a good run, and it is exactly the same chain a founder goes through when forming a GmbH from India. The branch does not skip it. It adds the parent company to it.
And one item that appears in no timetable we have seen: the originals have to physically travel. A German register court works from apostilled originals, not from scans, so the file goes to Germany by international courier, an additional cost, several additional days, and a risk worth insuring against. Keep certified copies before anything leaves India; if a set is lost in transit the certification chain restarts from the beginning.
Forming a GmbH, by contrast, needs the parent's documents once, at the notary, and thereafter the German company acts in its own name. Over a two-year horizon the branch is usually the more paperwork, not less.
Tax: you are here either way
We do not give tax advice and this section names the concepts rather than answering them for you. But one misunderstanding is worth removing before you talk to an advisor.
Choosing a branch rather than a subsidiary does not keep you outside the German tax system. A branch is normally a permanent establishment under § 12 AO and under the double taxation agreement between Germany and India, and the profit attributable to it is taxable here. Not registering anything does not help either: whether a permanent establishment exists is a question of fact, decided by what your people actually do here, not by what you filed.
The genuine differences are in how profit is determined and moved. A branch requires profits to be attributed to the establishment; a subsidiary is a separate taxpayer and its dealings with the parent are transfer pricing, with documentation obligations attached. Which is better depends on your group, your margins and where losses would arise. That is a conversation for a German tax advisor and your Indian one together, and it is worth having before the structure is chosen rather than after.
Moving your own people: the ICT Card
Almost everything written for this audience about German residence permits describes § 21 AufenthG, the route for self-employment. For an established company transferring an employee, that is the wrong provision.
The route is the ICT Card under § 19 AufenthG, for intra-corporate transfers. The requirements, from the provision itself:
- The person is transferred as a manager or a specialist, a specialist being someone with essential specialised knowledge of the establishment's field of activity, or as a trainee.
- They have belonged to the company or group continuously for at least six months before the transfer.
- The transfer is for more than 90 days.
- There is a valid employment contract setting out the assignment, and evidence that the person will return to an establishment outside the EU.
- The required professional qualification is shown.
The maximum duration is three years for managers and specialists and one year for trainees, and it cannot be extended beyond that. There is also a waiting rule: the card is refused where a previous intra-corporate transfer in Germany ended less than six months before the application.
Two consequences follow for planning. First, the six-month group membership requirement means you cannot hire someone in India in order to send them next month. Second, the three-year ceiling means the ICT Card is a way to start an operation, not a way to staff it permanently, by year three the person is either on a different permit or replaced.
The transfer also raises social security questions that are separate from immigration, including which system the person remains insured in during the assignment. Settle that with a specialist before the first payroll run rather than afterwards.
What customers and banks actually deal with
This is the practical argument, and for a company whose reason for being here is to sell, it is often the decisive one.
A German purchasing department checking a new supplier pulls a commercial register extract. What it wants to see is a German company with a German address, share capital and named managing directors. A branch entry of a foreign company is perfectly lawful and it reads differently: the contracting party is an Indian company, governed by Indian law, and enforcement means enforcement abroad. Some buyers will not mind. Others will treat it as a reason to ask for prepayment, a bank guarantee, or nothing at all.
Banks and landlords apply the same logic. Opening an account, taking a commercial lease and obtaining trade credit are all easier for a German legal person than for the German branch of a foreign one, which is why the bank question, difficult enough already, is one more reason to look closely at the subsidiary. The mechanics of that are in the bank article.
The decision, put simply
A branch can make sense when
- The parent is listed or otherwise already publishes its accounts, so § 325a costs nothing.
- The activity is genuinely an extension of the parent's business rather than a separate venture.
- Losses are expected early and your advisors confirm they are better used at parent level.
- The German operation is not expected to contract in its own name with cautious buyers.
A GmbH is usually right when
- You do not want the parent's figures published in Germany.
- You want the exposure ring-fenced.
- You will sell to German companies that check who they are contracting with.
- You expect to hire, lease premises, hold stock or take on credit here.
- You may one day sell, joint-venture or bring in a partner at the German level.
Our own observation from the files: companies that come to us convinced a branch is the light option change their minds at § 325a, and the ones that stay with a branch are almost always the ones whose accounts are public anyway.
What to do, in which order
- Decide the disclosure question first. Is the parent willing to have its accounts published in Germany? A no ends the branch discussion in one meeting.
- Ask the tax question before the legal one. Profit attribution against transfer pricing is the substance, and it should involve your Indian advisor as well as a German one.
- Start the document chain immediately. Register extract, articles, board resolution, certification, apostille, sworn translation, two to four weeks, whichever structure you choose.
- Settle the banking route before the notary appointment, not after. A foreign corporate shareholder is a heavier compliance file than an individual, not a lighter one.
- Check the six-month rule before you plan who comes. The ICT Card requires prior group membership, so the person you intend to send has to already be with you.
- Plan for year three. The ICT Card runs out. Decide early whether the role becomes a local hire or a different permit.
Questions
Sources
§ 13d HGB, register filings for branches of companies seated abroad: gesetze-im-internet.de
§ 13e HGB, branches of foreign limited companies: gesetze-im-internet.de
§ 325a HGB, disclosure of the head office's accounts: gesetze-im-internet.de
§ 43 GmbHG, liability of managing directors: gesetze-im-internet.de
§ 12 AO, permanent establishment: gesetze-im-internet.de
§ 19 AufenthG, ICT Card for intra-corporate transfers: gesetze-im-internet.de
Written by Christoph Schuler
Founder, Business Center Reutlingen. Fifteen years in international automotive at Daimler,
two of them living in Bengaluru.
Published 29 August 2026
Business Center Reutlingen provides administrative and organisational support and introduces you to licensed professionals. We do not give legal or tax advice, in Germany only admitted lawyers (Rechtsanwälte) and tax advisors (Steuerberater) may do so.