Most problems for German companies in India are procedural, not strategic: shares allotted late, a form missing when the dividend is paid, a document apostilled but not translated, a secondment that creates a permanent establishment, or an intercompany charge with no contract. The list below groups the common ones by area, with the fix for each.
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Key facts
| FEMA | Late allotment (60 days) or late FC-GPR (30 days after allotment); missed FLA return |
|---|---|
| Treaty relief | No residence certificate or Form 41 on file before the first dividend |
| Documents | German documents not apostilled by the right authority, or no sworn translation |
| Transfer pricing | No intercompany agreements; Form 48 forgotten |
| Employees | Misjudging gratuity, provident fund and the labour codes |
| PE | Seconded staff concluding contracts; long project presence |
| Germany | Works council not consulted; function transfer ignored |
Mistakes and fixes
| Area | Mistake | Fix |
|---|---|---|
| Setup | Choosing a branch to avoid a subsidiary without testing the eligibility | Branch needs net worth of USD 100,000 and a five-year profit record; a subsidiary is the usual route. See structure options |
| Documents | Using an apostille from the wrong office or skipping the sworn translation | Obtain the apostille from the competent Landgericht and a sworn translation. See documents and apostille |
| FEMA | Receiving funds but allotting shares after 60 days | Allot within 60 days or refund; file FC-GPR within 30 days of allotment. See funding and FEMA |
| Directors | No resident director | Appoint a director who has stayed in India at least 182 days in the year |
| Tax treaty | Paying dividends without a residence certificate and Form 41 | Collect documents before the first payment. See repatriating profits |
| Transfer pricing | Charging management fees with no agreement or evidence | Contract first; keep a benchmark file. See transfer pricing |
| Staff | Sending engineers on business visas to work on site | Use the right visa; plan certificate of coverage. See staff relocation |
| Data | Giving Indian staff access to German systems without a transfer mechanism | Sign standard contractual clauses and run a transfer impact assessment. See data protection |
| Works council | Announcing an offshoring plan without consultation | Involve German labour counsel early |
| Disputes | Assuming a German judgment can be enforced directly in India | Choose arbitration. See contracts and arbitration |
| Supply chain | Ignoring due diligence duties passed on by German customers | Prepare for supplier questionnaires. See supply chain duties |
| Calendar | Missing AGM, AOC-4 or MGT-7 | Use the compliance calendar. See compliance calendar |
Three habits that avoid most of these
- Documents first: collect corporate and tax documents from Germany before any filing begins.
- One owner per deadline: a named person for each filing in each country.
- Two advisers who talk: an Indian adviser for local law and a German adviser for the parent's side, with a short monthly call.
Early warning signs
- A bank asks for a form you have not heard of.
- A German customer sends an Indian supplier questionnaire.
- The Indian team starts negotiating contracts for the German company.
- Payments to the German parent have no contract behind them.
- Share certificates are issued but no filing has been made.
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
What is the most common mistake German companies make in India?
Missing FEMA timelines: allotting shares more than 60 days after receipt of funds or filing FC-GPR more than 30 days after allotment.
Do German documents need an apostille for India?
Public documents generally need an apostille from the competent German authority, usually the Landgericht for court and register documents, plus a sworn translation where the document is not in English.
What do I need before the first dividend is paid?
A German certificate of residence, Form 41, and any no-PE declaration the payer requires.
Can seconded engineers work on a business visa?
A business visa is for meetings and talks, not productive work. Choose the visa category that matches the real work.
Why do intercompany charges attract disputes?
Because there is no contract, no proof of service or no benchmark. Fix these before the first invoice.
Where do I start to avoid these mistakes?
With the structure and documents pages, then the compliance calendar and an adviser in each country.
Related guides
Which Structure Should a German Company Use in India? Subsidiary, Joint Venture, Project Office, Branch, LLP or Employer of Record
A decision guide for German companies: wholly owned subsidiary, joint venture with an Indian partner, project office, branch, liaison office, LLP and EOR, with tests, tax results, a GmbH & Co. KG warning and a choice by business model.
Read the guide →Documents a German Company Must Prepare to Set Up an Indian Subsidiary: Handelsregister, Notary, Apostille and Translation
The document checklist for a German parent forming an Indian subsidiary: Handelsregister extract, articles of association, shareholder resolution, certificate of representation by a notary, apostille from the Landgericht and English translation.
Read the guide →Compliance Calendar: Indian Deadlines and the German Filings They Feed
A month-by-month compliance calendar for an Indian subsidiary of a German parent: TDS, GST, PF and ESI, advance tax, AGM, AOC-4, MGT-7, FLA return and the German-side reports.
Read the guide →Exit and Restructuring: Share Sale, Buyback, Liquidation and Closing a Subsidiary Owned by a German Parent
How a German parent exits an Indian subsidiary: share sale and FEMA pricing, capital gains and the treaty, buyback, voluntary liquidation, strike off, German effect and employee rules.
Read the guide →Sources
Last updated 26 October 2026. General information only, not legal or tax advice. Indian and German rules change often; confirm current requirements before acting.