While technically a German GmbH (private limited company) doesn’t legally mandate a resident director, there’s an important practical consideration for business owners:
Tax residency status requires effective management to occur within Germany.
Without at least one German-resident director, tax authorities may question whether:
- Day-to-day decision making truly happens in Germany
- The company has sufficient substance for German tax purposes
- The business might be considered tax resident elsewhere
This is particularly relevant for UK businesses establishing EU operations post-Brexit who want to maintain control from their home country.
Key takeaway: Having a German-resident director is strongly recommended to avoid unnecessary tax scrutiny and complications, even though it’s not a strict legal requirement for incorporation.
Based on professional advice received April 2025
