A German company can own up to 100% of an Indian subsidiary in most sectors. The usual route is a private limited company: German documents notarised, apostilled by the competent Landgericht and sworn-translated, digital signatures and director IDs, one SPICe+ filing, a bank account, and share capital remitted from Germany and reported to the RBI. It takes four to six weeks to incorporate. The 1995 tax treaty sets a flat 10% Indian rate on dividends, interest, royalties and technical fees, and a qualifying German corporation generally has 95% of a dividend exempt. A separate Social Security Agreement lets seconded staff stay in the German system for up to 48 months.
This guide is written for the managing directors, finance heads and operations leads of German companies, from the Mittelstand to large groups, deciding how to enter India. It follows the order of the decisions: structure, set-up, money, tax, German-side duties, compliance and people. Each section links to a deeper guide. Indian tax law changed on 1 April 2026, when the Income-tax Act, 2025 replaced the 1961 Act; where a form has a new name, we show the new name with the earlier one in brackets.
India subsidiary at a glance
| Item | What to know |
|---|---|
| Typical structure | Wholly owned private limited company under the Companies Act, 2013 |
| Foreign ownership | Up to 100% in most sectors under the Automatic Route; a few sectors have caps or need approval |
| Directors and shareholders | At least two directors and two shareholders; a wholly owned subsidiary uses a nominee or group company as the second shareholder |
| Resident Director | At least one director who has stayed in India 182 days or more in the financial year |
| Minimum capital | None by law; plan 12 to 18 months of costs |
| Registered office | A physical address in India |
| Incorporation filing | SPICe+ with the MoA and AoA, linked to PAN, TAN and other registrations |
| Travel | Not required |
| RBI reporting | Form FC-GPR within 30 days of share allotment; allotment within 60 days of receiving funds |
| Financial year | 1 April to 31 March, which differs from the common 31 December year end of German parents |
| Governing laws | Companies Act, 2013; FEMA, 1999 and the Non-Debt Instruments Rules, 2019; the Income-tax Act, 2025; GST laws |
Why German companies look at India now
Three things shape the decision in 2026: a new free trade agreement, a long-standing tax treaty and social security agreement, and a growing German interest in engineering and technology talent in India.
- Trade: India and the EU concluded a free trade agreement on 27 January 2026. It is not yet in force, and it contains no investment protection chapter. See India-EU FTA and Germany.
- Treaties: the 1995 tax treaty and the 2008 Social Security Agreement are in force and shape rates and staff costs. See India-Germany tax treaty, article by article and German employees in India: the Social Security Agreement.
- Talent: German groups increasingly run captive engineering and IT centres in India, a model covered in Global Capability Centres.
- Data rules: India's Digital Personal Data Protection Rules were notified in November 2025, with main duties from 13 May 2027. See Data protection: GDPR and DPDP.
What is specific to German companies
| Tax treaty | India-Germany DTAA (signed 19 June 1995, in force 26 October 1996): a flat 10% on dividends, interest, royalties and fees for technical services |
|---|---|
| German tax on dividends | 95% exempt under Section 8b of the Corporation Tax Act for a corporation holding at least 10% |
| Tax residency certificate | Certificate of residence from the German tax office, with Form 41 (previously Form 10F) |
| Social security agreement | Applied from 1 October 2009: a certificate of coverage keeps posted staff in German schemes for up to 48 months, plus 12 |
| Apostille | The Landgericht for the notary's district, or of the register court for Handelsregister extracts; sworn translation needed |
| Parent's financial year | Usually 31 December, against India's 31 March |
| Time difference | India is 3.5 hours ahead of Germany in summer and 4.5 hours in winter |
| Court judgments | Germany is not a reciprocating territory under Section 44A CPC; arbitration awards are enforceable under the New York Convention |
| Trade agreement | India-EU FTA concluded on 27 January 2026, not yet in force |
| Data transfers | No GDPR adequacy for India: 2021 standard contractual clauses or binding corporate rules, plus a transfer impact assessment |
| FDI route | Automatic Route in most sectors; Press Note 3 does not apply |
Which structure should a German company choose?
Most choose a wholly owned private limited company. A branch or liaison office needs RBI approval and track-record tests; a joint venture suits a local-partner model; an Employer of Record fits a first pilot.
| Structure | Best for | Key limits |
|---|---|---|
| Wholly owned subsidiary | Sales, development, captive centres | Two directors (one resident), annual audit and ROC compliance |
| Branch office | The parent's own activities such as consultancy or trade | RBI approval; net worth USD 100,000 and a five-year profit record; taxed as a foreign company |
| Liaison office | Market research and liaison | No income or invoicing; RBI approval; USD 50,000 net worth and three years |
| Joint venture | Local distribution or manufacturing partnerships | Shareholder agreement, FEMA pricing, exit terms |
| LLP | Partnership-style set-ups in eligible sectors | Tax treatment needs review in Germany and India |
| Employer of Record | First hires without an entity | The EOR is the legal employer; not a long-term substitute |
Full comparison, including a GmbH & Co. KG parent: Subsidiary, branch, LLP, JV or EOR.
How to incorporate, step by step
Eight steps take a German parent from board decision to a compliant subsidiary. The sequence matters because each step feeds the next.
- Check the sector. Match your activity to the FDI Policy to confirm the Automatic Route, and check the owner chain for land-border country ownership.
- Prepare and legalise the German documents. Handelsregister extract, articles of association, resolution and identity papers, notarised, apostilled by the Landgericht and sworn-translated.
- Choose the Resident Director. An Indian hire, a relocating colleague or an adviser-nominated director.
- Get DSCs and DINs. Digital signatures and director IDs for each proposed director.
- Reserve the name and file SPICe+. The Registrar issues the Certificate of Incorporation with the CIN, PAN and TAN.
- Open the bank account and send the capital. From the parent's own account, after the valuation is ready.
- Allot shares and report to the RBI. Allot within 60 days; file Form FC-GPR within 30 days of allotment.
- Commence business. File INC-20A within 180 days, appoint the auditor and register for GST, provident fund and ESI.
Typical timeline: 4 to 6 weeks to incorporate from complete documents. Deeper guides: Incorporation: who does what and Documents: Handelsregister, notary and apostille.
How money moves between Germany and the Indian subsidiary
Money goes in through shares or a loan, and comes out through dividends, fees, royalties, interest and loan repayments. Each route has its own tax, paperwork and German result.
- Going in: equity or compulsorily convertible instruments, priced at or above fair value, with an ECB for loans.
- Reporting in: Form FC-GPR and the annual FLA return by 15 July.
- Coming out: dividends (10% under the treaty, then generally 95% exempt in Germany for a qualifying corporation); fees and royalties priced at arm's length; interest at up to 10%.
- Paperwork out: Form 145, and Form 146 where a Chartered Accountant certifies the payment.
Related guides: Funding and FEMA and Getting money out of India.
The tax treaty, the social security agreement and the Apostille Convention
Three agreements matter to a German parent, and they do different jobs: the tax treaty limits withholding and shapes gains, the Social Security Agreement keeps seconded staff in one system, and the Apostille Convention removes consular legalisation of documents.
| Agreement | What it does | Key numbers | Guide |
|---|---|---|---|
| India-Germany tax treaty (signed 19 June 1995, in force 26 October 1996) | Caps Indian withholding, sets permanent establishment tests and allocates income | Dividends, interest, royalties and fees for technical services 10%; construction PE after 6 months; mutual agreement case within 3 years | India-Germany tax treaty, article by article |
| India-Germany Social Security Agreement (signed 8 October 2008, in force 1 October 2009) | Avoids double social security contributions for detached workers | Up to 48 months, plus a 12-month extension; certificate of coverage | German employees in India: the Social Security Agreement |
| Hague Apostille Convention | One apostille replaces consular legalisation of public documents | German apostille issued by the Landgericht; sworn translation needed | Documents: Handelsregister, notary and apostille |
Tax and transfer pricing: what the German parent should know
An Indian subsidiary pays Indian tax on its Indian profits, and the parent's exposure comes from payments, people, pricing and the way the shares are held.
- Transfer pricing: Indian rules apply with no small-company exemption, and Germany adds its own documentation and function transfer rules.
- Withholding Tax: payments to the German parent suffer Indian withholding under Section 393 of the Income-tax Act, 2025, reduced by the treaty where the documents are in place.
- Permanent establishment: German staff days and contract authority can create a taxable presence, and a construction or installation project over six months can create one.
- German result: a qualifying corporation generally has 95% of a foreign dividend exempt, and the German adviser should confirm the position for the specific parent.
Related guides: Transfer pricing, India-Germany tax treaty, article by article and Getting money out of India.
German and EU law that follows the group into India
German and EU duties do not stop at the border. They shape what the Indian team does and what the German parent must be able to show.
- Tax: participation exemption, controlled foreign company rules, reporting of foreign holdings and, for in-scope groups, Pillar Two top-up tax.
- Company law: Handelsregister filings, the transparency register and managing director duties.
- Works councils: moving work from German sites to India can trigger information and consultation duties.
- Data: the GDPR limits transfers of personal data to India without safeguards.
- Supply chain: the Supply Chain Due Diligence Act, EU sustainability reporting and the carbon border mechanism reach Indian suppliers and subsidiaries.
See German parent obligations, Data protection: GDPR and DPDP and Supply chain, ESG and CBAM.
Annual compliance: what the subsidiary files
The subsidiary has monthly, quarterly and annual filings on a 31 March year end, which often differs from the parent's own year end.
| Filing | Frequency | Typical timing | Authority |
|---|---|---|---|
| Statutory audit and financial statements | Annual | Before the AGM | Companies Act |
| Annual General Meeting | Annual | Within 6 months of the year end | Companies Act |
| AOC-4 and MGT-7 | Annual | 30 and 60 days after the AGM | MCA |
| Income tax return and Form 48 | Annual | By the due date; transfer pricing cases later | Income-tax Act, 2025 |
| Advance tax | Quarterly | 15 June, 15 September, 15 December, 15 March | Income-tax Act, 2025 |
| TDS deposit and returns | Monthly and quarterly | 7th of the next month; quarterly returns | Income-tax Act, 2025 |
| GST returns | Monthly or quarterly | 11th and 20th | GST |
| Provident fund and ESI | Monthly | By the 15th | EPFO, ESIC |
| FLA return | Annual | By 15 July | RBI |
| Form FC-GPR | Per share issue | Within 30 days of allotment | RBI |
The maintained version, with the German dates beside it, is in the Compliance calendar.
People: hiring, secondments and share plans
Indian employment is contract and statute driven, and there is no works council. German staff on assignment need the right visa, a tax plan and a certificate of coverage.
- Hiring locally: provident fund, ESI, gratuity, the labour codes and state rules. See Hiring in India.
- Sending German staff: visas, registration, day counts and the Social Security Agreement. See Relocating German staff and German employees in India: the Social Security Agreement.
- Share plans: Indian employees can receive German parent shares or virtual plans, taxed on exercise or payment.
What it costs and how long it takes
Cost has three parts: one-time setup, recurring compliance and variable items such as transfer pricing and disputes.
- One-time: government fees and stamp duty (by state and authorised capital), professional fees, the valuation, and apostille and sworn translation costs in Germany.
- Recurring: accounting, statutory audit, GST, TDS, payroll and ROC filings.
- Variable: transfer pricing documentation, tax notices, secondments and legal work.
Indicative setup fee: AU Corporate's fee for setting up the subsidiary is USD 750 to USD 1,000 for share capital up to ₹10 lakh (about €9,400 at an indicative ₹106.31 per euro on 23 October 2026). The costing depends on your plan.
Tell us what you plan to set up and we will prepare a costing and book a call.
Six mistakes German companies make
- Skipping the sworn translation. An apostille alone does not make a German document usable in English-language filings.
- Paying without treaty papers. No residence certificate or Form 41 means withholding at the domestic rate.
- Missing the 60-day and 30-day RBI clocks. Late reporting costs fees or compounding.
- Moving work to India without the works council. Offshoring can need consultation in Germany.
- Charging fees with no contract. Indian and German authorities both look for evidence of service and arm's length pricing.
- Letting German staff drift into a permanent establishment. Count days and limit contract authority.
More detail: 12 common mistakes.
The full guide series
India-EU FTA and Germany
What the 2026 agreement does, and does not yet do, for a German company.
Read the guide →India-Germany tax treaty, article by article
Rates, permanent establishment, share gains and relief.
Read the guide →German employees in India: the Social Security Agreement
Certificate of coverage, 48 months and EPF.
Read the guide →German parent obligations
Participation exemption, reporting and beneficial owners.
Read the guide →Documents: Handelsregister, notary and apostille
What the German parent must prepare first.
Read the guide →Incorporation: who does what
The German side and the Indian side, step by step.
Read the guide →Subsidiary, branch, LLP, JV or EOR
Choose the structure, including for a GmbH & Co. KG.
Read the guide →Funding and FEMA
Equity, ECB loans, valuation and Form FC-GPR.
Read the guide →Getting money out of India
Dividends, fees, royalties and loans to Germany.
Read the guide →Transfer pricing
Form 48, benchmarking and function transfers.
Read the guide →Hiring in India
Contracts, payroll, labour codes and share plans.
Read the guide →Data protection: GDPR and DPDP
Transfers to India, works councils and the new Indian law.
Read the guide →Contracts, courts and arbitration
DIS awards, German judgments and the investment protection gap.
Read the guide →Compliance calendar
Indian dates beside the German parent's dates.
Read the guide →Global Capability Centres
Models, pricing, the works council and function transfers.
Read the guide →Relocating German staff
Visas, FRRO, tax, certificate of coverage and PE risk.
Read the guide →Selling, restructuring or closing
Options, FEMA pricing and the German effect.
Read the guide →12 common mistakes
And the fix for each.
Read the guide →Supply chain, ESG and CBAM
How German and EU rules reach Indian operations.
Read the guide →146 FAQs on setting up an India subsidiary
From pre-incorporation to closure.
Read the guide →How AU Corporate can help
AU Corporate is a pan-India advisory firm, established in 2016, that supports foreign companies at every stage of an Indian subsidiary. We work with German finance teams and advisers so that the Indian and German positions agree.
Set up
Choose the structure and incorporate.
- Entity structuring
- Wholly owned subsidiary
- SPICe+ incorporation
- Bank account support
Fund and FEMA
Bring capital in and report it.
- FEMA
- FC-GPR
- Share valuation
- ECB
Operate
Books, payroll and indirect taxes, with a German reporting pack.
- Accounting and bookkeeping
- GST
- Withholding Tax
- Payroll
- Monthly MIS
- German consolidation support
People and relocation
Hire, pay and relocate your team.
- Employer of Record
- HR services
- Expat visa
- Certificate of coverage support
Repatriate funds
Move money to Germany with the paperwork and treaty position in order.
- Forms 145 and 146
- India-Germany treaty relief
- Dividends
- Royalties and service fees
- Intercompany agreements
Tax and transfer pricing
Keep the India position defensible.
- Direct and indirect tax
- Transfer pricing
- Form 48
- PE review
- CbCR filing (parent-prepared report)
Audit and assurance
Satisfy Indian law and your German auditors.
- Statutory audit
- Internal audit
- Internal financial controls
- GST and tax audit
Legal, disputes and arbitration
Defend your position and protect contracts.
- Tax litigation
- Arbitration support
- Agreement drafting and vetting
Restructure and exit
Scale, reorganise or leave.
- Restructuring
- Mergers and acquisitions
- Due diligence
- Valuation
- Winding up
Scope note: we handle the Indian side. German tax, German company law, labour law and regulatory advice come from your German advisers, and we coordinate with them.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, Federal Central Tax Office (BZSt), Handelsregister and the Deutsche Bundesbank.
Frequently asked questions
Can a German company own 100% of an Indian subsidiary?
Yes, in most sectors. India allows 100% foreign ownership under the Automatic Route for most activities. A few sectors have caps, conditions or need approval, so check your activity against the FDI Policy before committing.
Does a German company need to send anyone to India to set up a subsidiary?
No. The filing is online. Directors need Digital Signature Certificates and identity documents that are notarised and apostilled. India is three and a half to four and a half hours ahead of Germany, depending on daylight saving, so calls need planning but are easy.
How long does it take to set up an Indian subsidiary from Germany?
Usually four to six weeks from complete documents, and around twelve weeks to a working bank account, payroll and first filings. German documents with an apostille and a sworn translation are the usual cause of delay.
What does it cost to set up a subsidiary in India?
AU Corporate's fee for setting up the subsidiary is USD 750 to USD 1,000 for share capital up to ₹10 lakh (about €9,400 at an indicative ₹106.31 per euro on 23 October 2026). The costing depends on your plan.
What is the withholding rate on dividends from India to Germany?
Under the treaty, 10% of the gross amount, with no shareholding tiers. The Indian payer applies it under Section 393 on receipt of the German certificate of residence and Form 41.
How long can a German construction project run in India before a PE arises?
More than six months, counting connected supervisory activity, as summarised in the sources we checked.
Does the India-Germany social security agreement apply to my employee in India?
It applies to workers posted from a German employer to an Indian branch or subsidiary for up to 48 months, extendable by 12, if the certificate of coverage is obtained before the posting begins.
What documents does a German company need to incorporate a subsidiary in India?
A current Handelsregister extract, the articles of association, a resolution approving the investment and the director appointments, a certificate of representation and identity and address proof for foreign directors, notarised, apostilled and translated into English.
Can a German company send personal data to its Indian subsidiary?
Yes, with a transfer mechanism such as the 2021 standard contractual clauses and a transfer impact assessment, because India has no EU adequacy decision.
Can a German arbitral award be enforced in India?
Generally yes, as a foreign award under Part II of the Arbitration and Conciliation Act, 1996, on narrow grounds, if Germany is a notified New York Convention territory. Have Indian counsel confirm the current notification.
How should a German parent fund its Indian subsidiary?
Usually through equity or compulsorily convertible instruments, which are FDI. Loans from the parent or a bank are ECB and follow separate rules. A mix is common.
How is a dividend from India taxed on its way to a German parent?
India withholds 10% under the treaty, on receipt of the German certificate of residence and Form 41. In Germany, 95% of a qualifying dividend is exempt, so the effective German cost is about 1.5%.
Is the India-EU free trade agreement in force?
Not yet. It was concluded on 27 January 2026. The Commission asked the Council on 11 September 2026 to authorise signing, signature is being reported for December 2026, and entry into force is targeted for early 2027.
Sources and how this page is maintained
This guide is based on the Companies Act, 2013, FEMA and the Non-Debt Instruments Rules, 2019, the Consolidated FDI Policy, the Income-tax Act, 2025, the India-Germany tax treaty and Social Security Agreement, public statements on the India-EU free trade agreement, and India's Digital Personal Data Protection Rules, 2025. Rules change often. We review this page at least quarterly and show the review date at the top.
Last updated 26 October 2026. General information only, not legal or tax advice. Indian and German rules change often; confirm current requirements before acting.