Setting up a business in Germany
19 October 2009by Ina Dimireva -- last modified 20 October 2009
An overview of the process of starting a new business in Germany and contacts of help and advice centres.
Legal requirements
There are various business structures, according to whether you start up on your own or with business partners:
- Sole trader (e.g. businessman or professional);
- Registered merchant ('e.K.' in German);
- Limited-liability company ('GmbH' in German);
- Civil-code company ('GbR' in German);
- Limited commercial partnership ('KG' in German);
- Stock corporation ('AG' in German);
- General partnership ('OGH' in German), etc.
Hybrid structures may also exist between these structures (GmbH & Co. KG). According to the legal structure, the liability is covered by the capital contributed or else with the total assets. It may be mandatory to register on the Commercial Register in certain cases. However, this depends on the features of the business, including the level of turnover, the number and qualifications of the staff, the range of services provided, the business connections, etc. The decisive factor is whether the business can be planned and run only with the help of an extended commercial organisation. However, it is also possible to register voluntarily on the Commercial Register.
Merchants are governed by the rules in the Commercial Code (HGB), which focuses on the merchant's own liability and the speed and ease of trade and commerce, while non-merchants (small businessmen) are governed by the Civil Code (BGB).
Administrative procedures
Irrespective of the legal structure selected, a business must be reported to the competent Trade Licensing Office (in the place where the company is to be based). Many towns and municipalities require that a report be filed in person. As part of E-government initiatives, larger towns offer quick business registration by Internet. Forms may be found, for example, on your municipality's website.
The concept of a trade does not cover the so-called 'liberal professions' ('freie Berufe'), which means the likes of lawyers, tax advisers, doctors or artists, and 'original production' (for example, farming, wine production, fisheries). Professionals apply to the competent tax office for a tax reference number and are not subject to trade tax (on the basis of the chosen legal structure and the concrete activity, other conditions may apply in individual cases). In the case of the 'regulated liberal professions', an authorisation from the competent chamber is also required. Craftsmen must abide by specific regulations.
Institut für Freie Berufe (IFB): Information brochures (DE)
Germany basically offers freedom of trade, in other words any person may exercise his chosen calling without requiring permission. Different conditions apply, for example, in the case of the so-called 'trades requiring permission' under the Trade, Commerce and Industry Regulation Act(for example, pawnbroking, safekeeping, brokers).
For the sake of consumer protection, prior checks will be made on these to establish, for instance, whether the applicant has the reliability required for the exercise of the trade. In the case of the regulated professions, proof of a particular professional qualification is required in order to start and exercise the activity.
Craftsmen must also present their Craftsman's card when reporting their business, if they wish to engage in an activity requiring permission (such as bakers or plumbers). The Craftsman's card is issued after entry on the craftsmen's register by the local Chamber of Handicrafts. In order to be entered on the craftsmen's register, either the master craftsman's certificate must be presented, or one of the other conditions in the Trade, Commerce and Industry Regulation Act ('Gesetz zur Ordnung des Handwerks') must be satisfied, such as completion of a course of engineering study. The Chamber of Trade must be notified of any intention to start up a craft profession (such as tailor, watchmaker, etc) not requiring permission.
Trade, Commerce and Industry Regulation Act (DE)
Other official bodies handle entry on to the Commercial Register (local court), the issue of a business number (Labour Office) or a tax number (tax office). In addition, if the company has any staff, they must be reported to the sickness insurance scheme and the pension authority.
Resources
On-line opportunities for further education and information about the subject of business financing are likewise available.
On-line training for people starting a business (DE)
On-line Academy of the Chambers of Industry and Commerce (DE)
ProgrammesThe support databank ('Förderdatenbank') is a one-stop shop for businesses / business setups in Germany, offering an overview of the support programmes at federal and Land level, while the credit institute for reconstruction deals with support for commercial businesses and the Chambers of Industry and Commerce handle regional support.
Contact point for commercial enterprises (KfW-Förderung) (DE)
Personalised help and advice
Many sources of advice are available for people setting up businesses. As well as the Chambers of Industry and Commerce, some banks or specialist agencies also offer advice on setting up businesses.
What advice centre at what stage in founding a business? (DE)
Advice centre for people founding a business
Chambers of Industry and Commerce in the federal Länder (DE)
Centre for people founding a business (KfW)
Advice for women in business (DE)
Advice for artists and media creatives (DE)
Assistance with forms can be found in the 'Software package for business founders and young businesses' with the module on 'Formalities'
Software package for people founding a new business / businesses (DE)
The Enterprise Europe Network provides businesses with information and advice through its local partners.
Enterprise Europe Network – contact points – Germany
SOLVIT helps businesses deal with problems that arise when national authorities wrongly apply EU market rules.
SOLVIT – contact points – Germany
Source: European Commission
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