Forward-thinking entrepreneurs in Germany look to establish their businesses in Singapore, as the country offers a host of commercial opportunities. Singapore continues to enjoy its reputation as a global business hub. The strategic location of Singapore, strong legal framework, and robust ties with Germany make it a lucrative destination for German businesses.
However, the process of company setup in Singapore is simple and requires entities to understand the legal compliances. In this article, we have comprehensively discussed the process of establishing your business in Singapore.
5 Reasons Why German Companies Look to Start a Company in Singapore
1. Strategic location
The strategic location of Singapore in Southeast Asia draws established firms and startups from Germany. The country is positioned as a gateway to the Asia-Pacific region and offers seamless access to fast-growing markets like India, China, and the ASEAN countries.
Singapore is a central hub for global trade, with some of the busiest sea and air routes in the world. Thus, German businesses can efficiently manage supply chains, distribution networks, and logistics operations across Asia.
2. Business-friendly environment
3. Robust legal framework
4. Attractive tax system
German businesses can take advantage of various tax incentives like the Pioneer Certificate Incentive and the Development and Expansion Incentive. This significantly reduces the effective tax rate for qualifying companies.
Most importantly, businesses in Singapore need not pay any capital gains tax. The government has signed numerous double taxation treaties, including one with Germany.
5. Hub for innovation and technology
Singapore is a leading innovation and technology hub in Asia, attracting German brands known for their research and development. Thanks to the Smart Nation initiative of the government and support for sectors like clean energy, biotech, and fintech crafts an environment conducive to the growth of foreign businesses.
German companies are primarily known for their excellence in engineering and technology. They can collaborate with local and regional partners, access government grants and incentives for R&D, and stay at the forefront of technological developments in their industry.
A Step-By-Step Guide for German Enterprises to Set Up a Business Singapore
1. Choose the right business structure
At the outset, German entities need to choose the most appropriate business structure in Singapore. A private limited company is the most popular choice for foreign enterprises, including Germans. This type of company is a separate legal entity. Thus, it limits the liability of its shareholders and directors to their investments. A private limited company can have 1-50 shareholders, with at least one director who must be a resident of Singapore.
With this structure, German entrepreneurs enjoy flexibility in ownership and management, besides remaining protected in terms of liabilities. Depending on your business needs, you might also consider other structures like a limited liability partnership or sole proprietorship, though these come with different risk profiles and obligations.
2. Appoint a local agent
Foreign entrepreneurs, including Germans, need to appoint a local rate service provider or a registered filing agent to incorporate a business in Singapore. For non-residents, there is no option for self-registration in the country.
Working closely with a local agent, German companies can streamline the incorporation process, fulfilling all the legal and regulatory requirements. The agent will help you file the necessary documents, comply with the Companies Act, and maintain statutory records. Besides incorporation, the local agent can provide valuable assistance with key tasks like opening a corporate bank account and applying for business licenses and permits. Reputed professionals like the IMC Group also coordinate with German enterprises to manage ongoing compliance like filing tax and annual returns.
3. Apply for a work pass
If you plan to relocate to Singapore to manage your business, you to obtain a valid work pass. In this regard, the Employment Pass and the EntrePass are the most common options.
The Employment Pass is designed for foreign professionals with managerial, executive, or specialized skills. It requires a minimum salary threshold and is generally easier to obtain if you have strong qualifications and experience.
On the other hand, the EntrePass is tailored for entrepreneurs with innovative and scalable business ideas. This pass has specific criteria related to your business plan, innovation, and potential economic contribution to Singapore.
4. Take advantage of bilateral and regional ties
Germany and Singapore have a strong economic partnership. With professional guidance from leading consultants, German companies can take advantage of these treaties. Both countries are signatories to the European Union-Singapore Free Trade Agreement (EUSFTA). Thus, you can take advantage of tariff elimination, reduced non-tariff barriers, and enhanced market access for goods and services.
Both Singapore and Germany are members of the ASEAN-EU Business Council. Naturally, this promotes trade and investment opportunities between the regions. German entrepreneurs can also tap into support from organizations like the Singaporean-German Chamber of Industry and Commerce, the German Centre for Industry and Trade, and the German Embassy in Singapore. These institutions offer networking opportunities, market insights, and guidance tailored to German companies operating in Singapore.
