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Cascade incorporation is particularly attractive for holding structures. Multi-tier corporate structures can be implemented without time-consuming intermediate steps; tax-efficient models, including structures designed to benefit from participation exemptions, can also be put in place quickly. At the same time, this is a legally demanding structuring tool and requires precise coordination of the articles of association, shareholder resolutions and commercial register filings.

Authority of the Holding GmbH before Registration

Upon execution of the notarial incorporation deed, the holding GmbH already acquires legal capacity and can in principle itself become the founding shareholder of a subsidiary GmbH. Before registration with the commercial register, however, the managing director’s authority of representation is, according to the prevailing view, limited to those acts required for the registration of the company.

If the holding is intended to incorporate a subsidiary at this stage, the managing director will therefore generally require a specific authorization by shareholder resolution. If this point is overlooked, the result may be legal uncertainty and delays in the registration process.

Underbalance Liability and Formation Costs

A further key issue concerns capital contribution and capital maintenance. Where the holding’s share capital is used to incorporate the subsidiary, there are strong grounds for treating this initially as a mere exchange of assets. According to the prevailing view, an impermissible concealed contribution in kind is therefore generally not assumed in cascade incorporations.

The more sensitive issue is the formation costs of the subsidiary GmbH. Although there are good arguments for capitalizing these as ancillary acquisition costs under Sections 253 and 255 of the German Commercial Code (HGB), the prevailing view departs at this point from the otherwise applicable balance-sheet approach to capital maintenance principles. In practice, this is often where registration obstacles arise.

To avoid such obstacles, the formation costs of the subsidiary should therefore either be borne by the shareholder of the holding or covered by additional contributions to the holding’s free capital reserve. What matters is a precise alignment of the articles of association and the commercial register application.

Practical Advantages of Cascade Incorporation

• Efficiency: The holding and the subsidiary can be established in one coordinated process.
• Capital efficiency: The share capital does not need to be provided afresh in full at each level of the structure.
• Speed: Multi-tier structures can often be implemented in a single notarial appointment.
• Flexibility: More sophisticated corporate and tax structuring can be put in place at an early stage.

Careful Structuring is Essential

Cascade incorporation is therefore much more than a mere acceleration tool. It is a powerful, but legally demanding, instrument for the swift implementation of holding structures. If prepared carefully, it is a highly practical way to establish multi-tier corporate structures efficiently and with legal certainty.

More on GmbH Incorporation, the incorporation process and our digital incorporation workflows can be found in our further guidance.

If you are planning a holding structure or a multi-tier incorporation, you may also provide the key information in advance through our online incorporation form. In cascade incorporations, we then tailor the structure, the required resolutions and the commercial register filings to your particular case.

For individual advice or questions regarding the implementation of a holding structure, please feel free to contact us directly.

The family home is often the most valuable asset in a private estate. Lifetime transfers offer immense tax advantages. However, the true art of drafting lies not in tax law, but in a legally sound civil law structure to protect the transferor.

Innovative Control: Section 745 German Civil Code (BGB) instead of Classic Usufruct

Classically, a usufruct (Nießbrauch) is often reserved in lifetime transfers. However, this has a serious side effect in inheritance law: According to established German Federal Court of Justice (BGH) rulings, it prevents the start of the ten-year "clawback" period for compulsory portion supplement claims (Section 2325 (3) BGB). The gift thus remains permanently relevant for the calculation of the compulsory portion.

A modern drafting approach utilizes the instruments of co-ownership law (Bruchteilsgemeinschaft) instead:

• Casting Vote Right: By modifying the management and use regulations under Section 745 (1) BGB, the transferor is granted the deciding vote in the event of a tie.
• Control without "Freeze": The transferor retains de facto control and dominance without a registered right of use blocking the ten-year period in inheritance law.
• In-Rem Security: These agreements can be secured by entry in the Land Register under Section 1010 BGB, making them effective against future successors.

Reversionary Rights as the Strategic Backbone

Regardless of tax incentives: Few transferors are willing to relinquish control entirely. Therefore, we flank the transfer with a precise regime of clawback/reversionary rights for critical life events:

• Predecease of the transferee or separation/divorce of the spouses.
• Insolvency of the transferee or third-party enforcement measures against the property.
• Endangerment of the tax privilege under Section 13 (1) No. 4a ErbStG.

These rights are secured by a priority notice (Vormerkung) in the Land Register and allow for a tax-neutral reversal in the event of a crisis under Section 29 ErbStG.

Strategic Advantages:

• Tax Optimization: Tax-free shifting of assets between spouses to prepare for a later utilization of allowances by the next generation.
• Protection against Compulsory Portions: Effectively initiating the 10-year period to reduce supplementary claims of other heirs.
• Flexibility: Preserving the transferor's ability to act without the rigidity of classic reserved rights.

Notarial practice consistently shows that the most exciting solutions arise where tax law and civil law are creatively intertwined. We are happy to advise you on positioning the family home as a central and secure component of your succession planning.

For individual advice or questions regarding the implementation of the "Family Home Swing": Please feel free to contact us directly.

Historically, German civil law followed a strict dogma: for a formal declaration (e.g., a consent or power of attorney) to be effectively received, the medium of transmission had to match the required form. Anyone requiring a notarized document was forced to wait for a physical courier – often a time-consuming process at the final stage of complex transactions.

New Statutory Regulation: Section 130 (2) BGB

With the new version of Section 130 (2) BGB, the legislator has broken this "congruence of form and medium." A declaration is now deemed effectively received even if the recipient receives an electronically certified copy instead of the physical original.

While the benefits for declarations of consent are immediately apparent, a more significant lever for practice lies in the structuring of powers of attorney.

The Challenge: Apparent Authority under Section 172 BGB

In transaction practice, original documents are still regularly dispatched by courier. The reason lies in ensuring the protection of good faith: To create the "apparent authority" (Rechtsscheinsvollmacht) of a power of attorney pursuant to Section 172 (2) BGB, the original document or an official engrossment must be presented. A simple scan or copy is insufficient for this purpose.

The Solution: Digital Notification under Section 171 (1) BGB

Thanks to the statutory amendment, the physical circulation of documents can now be legally halted. The key approach is the combination of Section 130 (2) BGB with a specific drafting of the power of attorney:

• Specific Notification: The principal stipulates within the power of attorney that the transmission of an electronically certified copy by the notary to the business partner simultaneously constitutes a "specific notification" of authorization within the meaning of Section 171 (1) BGB.
• Digital Apparent Authority: In effect, this digital transmission triggers a legal status comparable to the traditional handover of a paper original. The power of attorney is deemed to continue in force toward the third party, guaranteeing the necessary legal certainty for the closing.

Advantages for Transaction Practice:

• Speed: Immediate access to documents without postal delays or courier interruptions.
• Security: Electronically certified copies are tamper-proof, and receipt is documented by the transmitting notary.
• Process Efficiency: Fully digital preparation and execution of transactions without media disruption.

Through this statutory adjustment, the world of transactions is becoming significantly more digital – without compromising legal certainty or evidentiary function.

Innovation through Digital Structuring

We have already updated our standard powers of attorney to reflect the new legal situation and would be pleased to advise you on implementing these efficient workflows in your transaction processes.

For individual advice or questions regarding the implementation of this new digital process, please feel free to contact us directly.

This procedure is now available at our notarial office in Holzhausenstrasse, located in Frankfurt’s Nordend district (Holzhausenviertel).

The notarization continues to take place in person before the notary – however, the deed itself is created and executed entirely in electronic form.

What does “electronic in-person notarization” mean in practice?

• The deed is created exclusively in electronic form.
• The parties sign using a signature pad.
• The notary finalises the deed with a qualified electronic signature, replacing the handwritten signature and official seal.
• No paper version is required for legal validity.
• The legal basis lies in the amended provisions of the German Notarization Act (Beurkundungsgesetz).

Advantages of electronic notarization:

• Seamless digital process without printing and subsequent scanning
• Immediate and transparent incorporation of amendments during the appointment
• No subsequent clean copy required
• Faster electronic submission to the commercial register, land registry and public authorities

The established core principles of German notarial law remain untouched: identity verification, impartial legal advice, neutrality and the full evidentiary value of the notarial deed.

Scope of application

Electronic in-person notarization is available for numerous notarial matters, particularly in corporate law, commercial register and land register matters, as well as real estate transactions.

We will be pleased to assess whether your specific matter is suitable for this electronic procedure.

The digital transformation of the notarial profession thus continues consistently – without compromising legal certainty or evidentiary reliability.

Reference: Federal Law Gazette (BGBl.) 2025 I No. 320 of 12 December 2025

The publication deals with a key question of commercial register law: Under which conditions may a notary file a commercial register entry independently, without submitting a separately notarized power of attorney (§ 378 para. 2 FamFG)?

The Higher Regional Court reinforces the practical role of the notary in the registration process. It clarifies that merely notarizing a declaration relevant for the register – such as a shareholder resolution of a GmbH – is sufficient for the notary to make the registration. This also applies to frequent transactions like a change of business address.

The comment explains the decision in a clear manner and shows that § 378 para. 2 FamFG primarily serves to simplify and accelerate commercial register filings. It also clarifies that the facilitation of proof does not depend on corporate governance questions but on the notary’s special position as an independent officer of preventive legal administration.

For companies and shareholders, this means that register filings can be processed more efficiently, securely, and without unnecessary formalities – especially for standardized changes under GmbH law.

Reference: DNotZ 2026, 71