Company Formation & Business Setup in Europe
Is 100% Foreign Ownership Possible in Europe?
In most EU member states, yes. Non-EU investors can generally hold 100% ownership of a European company. Some strategic sectors (defence, critical infrastructure, energy and certain media activities) may be subject to foreign direct investment (FDI) screening under Germany’s Außenwirtschaftsverordnung (AWV) or equivalent regimes in other member states, particularly for investors from outside the EU/EFTA.
There is no single “European company formation” rule: ownership and investment-screening rules are set mainly at member-state level. In Germany and many other EU countries, non-EU investors can generally own 100% of an ordinary company. However, acquisitions or investments in sensitive sectors can trigger national foreign-investment screening, notification or approval requirements, the answer should be confirmed for the chosen country, sector and transaction size.
Related: legal and corporate support in Europe, accounting, payroll and tax support in Europe and investment and risk advisory in Europe. View all business services in Europe or book a consultation with our team.
Our Support Includes, Using Germany as the Primary Anchor Market
- GmbH (limited liability company) formation: minimum share capital EUR 25,000, at least EUR 12,500 paid in at formation, or a UG (haftungsbeschränkt) “mini-GmbH” with as little as EUR 1 of share capital as a lower-cost entry structure
- Registration with the Handelsregister (Commercial Register) and notarisation of the Articles of Association
- Branch office (Zweigniederlassung) registration for companies that prefer not to incorporate a new entity
- Business activity classification and licensing coordination
Germany Corporate Tax: What Actually Applies
German corporate taxation runs across three layers, and this is the detail that most first-time investors underestimate:
- Corporate income tax (Körperschaftsteuer) at a flat 15% federal rate.
- A 5.5% solidarity surcharge applied on top of the corporate income tax amount (not on total profit), bringing the federal component to 15.825%.
- Municipal trade tax (Gewerbesteuer), generally 7-17% depending on the municipality, calculated from a 3.5% base rate multiplied by a local rate (Hebesatz): typically higher in large cities than rural areas.
Combined, this brings the effective corporate tax burden to roughly 29-33%, commonly cited as “around 30%”, materially higher than the flat rates seen in the GCC, and a figure that should be modelled before committing to a German entity over another EU jurisdiction.
- VAT (Umsatzsteuer) is charged at a standard 19% rate, with a reduced 7% rate for certain goods and services.
A legislative reform passed in 2025 will reduce the federal corporate income tax rate by 1 percentage point annually for five years starting in 2028, worth tracking if you are modelling a multi-year German entity.
Frequently Asked Questions
Is 100% foreign ownership possible in Europe?
In most EU member states, yes. Non-EU investors can generally hold 100% ownership of a European company. Some strategic sectors, such as defence, critical infrastructure and energy, may be subject to foreign direct investment (FDI) screening in certain countries, including Germany and France.
How long does it take to set up a company in Europe?
Timelines vary by member state. Forming a GmbH in Germany, for example, typically takes a few weeks once notarisation and registration are complete.
Can I repatriate profit from Europe?
Yes. EU member states generally permit full repatriation of capital and profits for foreign investors, in line with the EU single market’s principles on free movement of capital.