How to Start A Business in Germany?

How-to-Start-A-Business-in-Germany?

Written by Germany Simplified

November 20, 2020

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Here is everything you know about how to start a business in Germany. For anyone who wants to start a new business, Germany is the ideal location for you. With the buying power the Germans have and the high employment rates predominant in the country, the German environment is very conducive to start a new business.

The huge number of businesses that exist in Germany, make up as the strength and back bone of the strong German economy. The economy is one of the best economies in all of Europe. From single proprietorships to huge companies, Germany is home to a large number of businesses. Theses businesses employ a large number of people and allows them to have a high buying power.

Germany is open to all types of establishments regardless of whether they are owned by Germans or foreigners. A person of any nationality can set up a business in Germany. This makes the German economy absolutely unique since not all countries are open to such kind of trade. However, there are a few legalities that a foreigner needs to look into before setting up a business in Germany. It is not a tedious task but the necessary documentation needs to be submitted to the Government.

If you are someone who wants to set up a business in Germany, these are the things you need to do:

 

  • Address registration

When you move to Germany, make sure you get your address registered. This will help you greatly in the process of setting up your business. The address registration process is called the Anmeldung.

As soon as you get your house registered, you will get a tax ID along with a certificate of registration. You will need it throughout your business sett up process later. The tax Id will help you move on to the next step that is; making a bank account for yourself.

To complete this step, you will need a: –

  • A place to live in Germany.
  • The required documents to complete your Anmeldung registration process.

After completing this step, you will get: –

  • A certificate of registration.
  • A tax ID.

 

  • Opening a bank account

Your next step for setting up a business in Germany is to set up a bank account. A German bank account is necessary when you declare your business to the German tax officer. It is a crucial asset you need in order to pay your taxes too. It will prove that you have a clear trac record in order to start a business in Germany.

You will not necessarily need a business account to conduct business. A normal bank account will also do. However, there are a few German banks which will close your account if you use it for your business.

To complete this step, you will need a: –

  • Registration certificate. (not all banks require a registration certificate but it is an important document)

After completing this step, you will get: –

  • A German bank account (personal or business).

 

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  • Get the Correct Visa

If you do not hold a European citizenship, you are not allowed to work as a freelancer in Germany. Germany is extremely strict with its norms. If you are a foreigner who wants to freelance in Germany, you will have to take a little of an extra effort than all other European citizens.

First thing in the process is that you need to see if your residence permit has the line “Selbständige Tätigkeit gestattet”. This basically means that you are allowed to be self-employed. You will then be allowed to freelance in Germany with this kind of a residence permit.

If your residence permit does not have this line, you will have to apply for a German freelance visa.

After completing this step, you will get: –

  • A permission from the German Government to be self-employed.
  • Residence permit.

 

  • Register as a Freelance (Freiberufler) or a Tradesman (Gewerbetreibender)

You need to get your business registered at the German tax office and they will decide whether you are a tradesman or a freelancer depending upon your business operations.

Tradesmen have to get a trade licence and pay a trade tax while freelancers have to follow a different set of rules. This is why knowing the difference is extremely important.

 

  • Getting a Trade Licence

If you are thinking of setting up a business as a tradesman, you need to get your business a trades licence. That is the legal procedure to go about setting a trading business in Germany. You must have your licence ready before visiting the tax office in Germany.

You can get your licence from the local office and also apply for the licence online. It is not a very tedious task when you use the online method. A trade licence is extremely important because it acts as your business proof in Germany. Make sure you do not waste any time before making it.

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  • Register your business at the Tax office

The next step in setting up your business in Germany is to is to declare your business to the German Tax Office. You do this by filling the Fragebogen zur steuerlichen Erfassung. You must submit this form to your local tax office in person or by mail. This is an extremely important document and has to be submitted carefully.

This is a long and complicated form. You can hire a tax advisor to fill it for you.

To complete this step, you will need a: –

  • European Bank Account
  • Tax ID
  • Trade Licence

After completing this step, you will get: –

  • VAT number
  • Tax number (to pay off your taxes)

 

Conclusion 

Setting up a business In Germany is not a very difficult task even as a foreigner. Follow the steps mentioned above and you will have a flourishing business operating in Germany.

Read here to know more about the Business Opportunities in Germany.

 

 

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