If you, as an entrepreneur of a Limited company, have received a notice from the professional association in which you are personally assessed because the legal capacity of the Limited has allegedly been lost, we recommend filing an objection. You can download a possible non-binding template of such an objection here...

Currently, tax offices are sending out informational letters, referring to the BMF letter dated December 30, 2020. In these letters, the tax offices inform that, according to the BMF letter dated December 30, 2020, a Limited company will no longer be treated as a corporation starting from January 1, 2021.

We have already provided our legal assessment on this matter in several posts.

If these are purely informational letters from the tax office, we suggest the following non-binding letter, although you should also coordinate the approach with your tax advisor beforehand. If needed, you can also download the letter in Word format. Alternatively, we are of course also available for individual legal advice. However, always pay special attention to whether the letters to you or the LTD contain binding statements with specific regulations and/or a legal remedy instruction. In such cases, it is necessary to examine separately whether legal remedies...

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 ...