As of 12/31/2020, the United Kingdom has notably exited the EU internal market.

What implications does this have for the Limited in Germany?

First, it should be noted that this question is currently not uniformly answered. Ultimately, it will have to be resolved by the courts.

However, the blanket statement that the Limited in Germany is no longer legally valid because this corresponds to the supreme court jurisprudence in Germany seems premature. Such representations were mainly spread by authorities in mass circulars to Limiteds.

It is true that the BFH in its decision (resolution of January 8, 2019, II B 62/18) among other things, determined that the legal capacity is governed by the so-called incorporation theory if a company is effectively established in an EU member state, a member of the EEA, or a state treated as equivalent to these on the basis of a treaty in terms of freedom of establishment according to its regulations. This initially means that EU companies and companies from states with which a corresponding treaty has been concluded are legally valid in Germany, and the company in Germany is additionally recognized as a corporation with corresponding limited liability to the company assets.

If the company is not from such a state, it can still be legally valid (as a partnership) if it has more than one shareholder. However, it will not be recognized as a corporation. Thus, there is personal liability for the shareholders.

Interim result: According to BFH jurisprudence, companies are legally valid if they have at least two shareholders or are effectively established ...

The EU and the United Kingdom have agreed on a free trade agreement.

Especially relevant for the Limited in Germany could be the non-discrimination clause (national treatment) included in the free trade agreement. This can be found on page 101 of the German version of the agreement and reads as follows:

Article SERVIN.2.3: National Treatment

1. Each Party shall accord to investors of the other Party and covered enterprises treatment no less favorable than the treatment it accords to its own investors and their enterprises in like situations with respect to the establishment and operation in its territory. 

2. The treatment granted by a Party under paragraph 1 means ...

Are you considering transitioning from an English Limited to a German company? One approach could be to establish a German subsidiary under your existing Limited.

In our opinion, there are several compelling arguments for this model: ....

The Federal Council approved the Brexit Tax Accompanying Act on March 15, 2019. This clears the way for it to come into effect at the end of March. From a tax perspective, this law is intended to provide legal certainty for Ltd companies in Germany. In particular, a potential Brexit will not trigger any hidden reserves or real estate transfer taxes. The business assets of the Limited will also remain entangled in corporate income tax.

To ensure that the departure of the United Kingdom of Great Britain and Northern Ireland from the European Union does not lead to a real estate transfer tax burden solely due to an English Limited owning property in Germany, an exemption provision will be added to the Real Estate Transfer Tax Act. To this end, § 4 of the Real Estate Transfer Tax Act is being amended. A new number 6 will be inserted, which reads as follows:

"6. Acquisitions solely based on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union."

Thus, Brexit will become a special exception from real estate transfer tax.