Business people may wish to register a foundation for various reasons and with different missions. Similarly, you too can set up a foundation (Stiftung) in Germany, as a local or a foreigner. However, what exactly is a foundation (Stiftung)? What are the company registry requirements to follow? Where can you register your foundation (Stiftung) online? Please keep reading to get the answers to these and much more.
What is a Foundation (Stiftung)?
A foundation (Stiftung) is a type of non-profit organization. This type of legal entity is also used for cultural, social, and charitable purposes. In this case, the founder of the foundation determines the purpose of the institution. In civil law, foundations (Stiftung) are distinct legal entities or legal structures and legal persons that may have different regulations depending on what jurisdiction they are created. Therefore, foundations (Stiftung) are not taxpayers. However, the legal entity can also be commercialized and used for business.
You can either open a public or private foundation in Germany. Public foundations include community foundations whereas private foundations are mainly endowed by individuals or families.
Additionally, since you can generate funds from a foundation, you can channel them to a charity course by engaging directly in charitable activities. Alternatively, you can use the funds to support other organizations with goals in line with what you believe in. For example, you may offer grants to other non-profit organizations.
Notably, just like most businesses, foundations (Stiftung) that are used for business purposes must follow certain compliance regulations set by the state. Thus, it is important you find out the ones you need to follow before establishing your foundation in Germany. There are several acts governing foundations (Stiftung) in Germany. For instance, they are subject to Civil Code and Law on Foundations.
Features of a Foundation (Stiftung)
The following are the general features of a foundation (Stiftung);
- A foundation has a legal personality.
- Formed by a founder who determines its sole purpose. Also, the founder provides the foundation’s initial assets, also known as the endowment.
- A foundation has a board of members. This board is in charge of fulfilling the purpose of the foundation.
- Has numerous shareholders.
- May lack beneficiaries depending on what the purpose is.
- It may have an advisor.
As mentioned earlier, some foundations can be commercialized and used for business. Thus, you may wonder if they operate as companies or not. While a company has to register shareholders, a foundation does not have any shareholders. On the contrary, Foundations (Stiftung) have a board of members.
The Requirements For Registering a Foundation (Stiftung) in Germany
Before you consider registering your foundation (Stiftung), it is important to first know its identity.
Once you have deciphered whether yours is a formal or an informal foundation, there are legal requirements you must adhere to. These are a part of the 80 to 88 sections of Germany’s Civil Code. They include;
- Any natural person or legal entity can establish a foundation.
- Founder(s) can choose the name for the foundation for free will provided it does not already exist in another foundation.
- The foundation (Stiftung) must have a clearly defined purpose. It is the duty of the founder to give this at the beginning of the Stiftung’s activity.
- A foundation must have a proven address(Headquarter) in one of the regions in Germany. Notably, the local authorities must recognize this.
- It is a requirement of the local authorities that you have a minimum of 50,000 Euros when creating the foundation.
- It can be founded for a specific or indefinite period.
- The foundation (Stiftung) must prove its sustainability to get approval from German authorities.
- A foundation has a board of directors; at least 1 or a number of them.
- It is the duty of the board to keep the financial records and prepare a financial statement, annual report, and balance sheet.
- A foundation is not-for-profit only when recognized by the Inland Revenue Office. In this case, it can enjoy tax privileges.
- Any income realized from the foundation shall be allocated to the fulfillment of its purposes.
Other Foundation Requirements
There are documents you must submit for registering this type of legal entity. These are;
• The passports or European ID cards for all associated individuals
• Proof of residential address for all the associated persons (It must not be older than 3 months).
• An extract from the Trade Register. This too should not be older than 3 months.
• Document authorizing your usage of the registered office address. This can be a copy of the Rental Agreement, Certificate on property or an Authorization letter from the owner.
• Power of attorney, especially if you are registering the foundation (Stiftung) remotely.
• A signed copy of the Deed of Incorporation
How to Register a Foundation (Stiftung) in Germany
You do not have to be physically present in Germany to register your foundation (Stiftung). Nonetheless, anyone can register their company as a foundation (Stiftung) regardless of their nationality. This is because the German trade registry can help you get the work done on their smart portal. Once you have the necessary documents, you can go ahead and register the foundation at your convenience.
Below are the steps you need to follow when registering your company as a foundation with traderegistry.de
- Enter the name of the legal entity
- State the numerous activities your foundation (Stiftung) will perform
- Enter the necessary documents
- Deliver the documents
- Add whatever comment or special request you may want to be granted regarding the registration of the entity.
- Place your order
Register a Foundation in Germany
A foundation (Stiftung) is a type of non-profit organization that can be either for a charitable course or for commercial purposes. The founder of the foundation determines its purposes and even offers the initial assets. In this case, there are regulations governing these legal entities in Germany. Additionally, you can register your foundation online through a fast, safe, and convenient means through the German trade registry. Ensure you have all the requirements ready as you prepare for the registration.
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