March 29, 2024
Volume XIV, Number 89
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Potential Cost Savers in German M&A Transactions – Practical Experience with Notary’s Fees
Tuesday, March 10, 2015

International investors with corporate transactions in Germany are often surprised to learn that significant costs can be incurred by a German notary as part of a normal corporate transaction.  The involvement of a German notary is in many cases required by law, and the corresponding costs for such notary are set by the German federal statutory cost order (Gerichts- und Notarkostengesetz – GNotKG) with certain caps, however, amounting up to EUR 53,170.  A recent change in the German federal statutory cost order for notaries has increased these costs.

In practice, structures can be modified to save notarial fees without any material deviations of the transaction documents.  For instance, international transaction documents are drafted often as bilingual documents. Under the changes in the new statutory cost order, the value of bilingual documents has increased by 30 percent.  It is worth considering if such translated documents should necessarily become a part of the notarial deed at all or if they may be attached as a non-binding convenience translation to save costs.  In addition, a choice of law clause, which leads to another 30 percent increase in the value of the transaction and unexpectedly higher notary costs, may be (and sometimes even has to be) avoided.

The notarial deed may also incorporate legal issues that increase costs but that do not have to be notarized at all.  Provided that this does not affect the completeness of the notarial deed, certain provisions that would trigger further notary costs (for example, a choice of law clause) can be separated from the notarial deed.  In addition, other legal facts that have to be notarized may be incorporated in one deed instead of two separate ones, thus saving costs as the German federal statutory cost order reduces the overall costs in a percentage basis the higher they are.  Certain transactions such as sales and transfers, or pledges of shares in a GmbH, can also be notarized by a Swiss notary, whose costs can be substantially lower than a German notary´s costs.

In sum, (international) investors should carefully consider ways to avoid increasing notarial fees when entering into corporate transactions in Germany.

 

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