Corporate Compliance

Examples of corporate compliance requirements for a German GmbH business include:

• Your business letter must include the necessary information according to sec. 35 a German Limited Liability Company Act (“GmbHG”).
• You may not repay your share capital to the shareholders (sec. 30 para. 1 GmbHG).
• Take care of a proper bookkeeping in your company.
• Keep in mind that all requirements in connection with shareholders’ meetings must be kept.
• Mandatory resolutions must be passed annually.
• Make sure that the filing duties towards the commercial register are observed.
• Announcements in the electronic Federal Gazette must be made in time (e.g. the publication of the annual statements).
• Is there a compliance officer in your group and what are his/her duties?
• What are the documentation rules in your Company?

Tax Compliance

Once you entered the market, tax compliance is an on-going issue. Your business must comply with all national tax and finance requirements. Also, the company’s executive personnel can be held liable for damages arising from non-compliance. You should focus especially on the following issues:

• Tax efficient corporate and financial structuring
• Effective Transfer Pricing structuring and documentation
• Proper bookkeeping
• Timely provision of annual statements
• Proper invoicing for VAT purposes
• VAT, Corporate Tax and payroll tax filing

Employment

• You should always ensure that the contracts of your company with the management, the staff, external contracting partners or works council (if applicable) comply with all provisions of German employment law.
• You should always pay attention to anti-corruption rules, the contractual regulatory framework as well as the co-determination duty of the works council, e.g.
  • Adaption of the salary of your shop assistants
  • Meet minimum wage requirements
  • Reference to collective bargaining agreements in the retail sector
• Ensure sufficient compliance training of your management and staff.
• It might be recommendable to appoint a compliance officer who supervises the rules and regulations.

e-Commerce

E-commerce rules in German and European law are changing rapidly. Consumer protection watch dogs vividly follow-up on any violations of e-commerce rules. Any violation thereof may be considered an act of unfair competition. Therefore, please make sure that

• your general terms and conditions on your website comply with applicable consumer protection law;
• your information on consumer rights with regard to online purchases are complete and in line with fast changing jurisdiction;
• your website fully states your business details;
• your warranty conditions are transparent and compliant;
• you received a valid permission of your customers before sending out newsletters and e-mails.

Competition Law

The distribution of brand products and services is heavily governed by complex European and national competition law. It is essential for the smooth establishment and growth of your business and therefore for your success to be aware of the do’s and don’ts of competition law.

• You may not fix resale prices or link rebates, supplies and other conditions to the observance of minimum resale price levels.
• You must not prevent your distribution partners from internet sales.
• Allocating territories and customer groups is permitted but complex. Be aware of the pitfalls!
• Always have your market share in mind. A market share of beyond 30% speaks for your business success but limits your contracting abilities.

*Study “The True Costs of Compliance”.