UK recruiters looking to hire in Germany: Is a GmbH necessary?
My company doesn’t have a GmbH and we’re currently seeking to fill contract positions in Germany.
We’ve encountered numerous companies that are hesitant to engage with UK businesses on a contractual basis, forcing us to rely on payroll providers, which is quite frustrating.
So, is establishing a GmbH a must when recruiting in Germany?
While having a GmbH (Gesellschaft mit beschränkter Haftung) can provide a more formal and established presence in Germany, it is not strictly essential for recruiting in the country. However, there are a few factors to consider:
Legal Framework: Having a GmbH can help you navigate the legal complexities of German employment law, which can be quite strict. It provides a level of credibility and security that can reassure potential partners and clients.
Contractual Relationships: Many German companies prefer to engage with entities that comply with local regulations. This is why you may be facing challenges in establishing direct contracts from the UK. Without a GmbH, companies may perceive additional risks or complications in working with you.
Payroll Providers: Since you are currently using payroll providers, this is a common solution for foreign companies looking to hire in Germany without setting up a local entity. While it may involve additional costs and administrative overhead, it can be a practical short-term solution.
Future Growth: If you plan to expand your operations in Germany or engage with more companies in the future, it may be worth considering setting up a GmbH. This can streamline the contracting process and mitigate potential issues down the line.
In summary, while you can operate without a GmbH, establishing one can simplify business transactions and enhance your credibility in the German market. If you find consistent challenges, it might be worth evaluating the benefits of setting up a local entity.