Establishing your company in Germany can be a game-changer for your business. With its strong economy, skilled workforce, and strategic location in the heart of Europe, Germany offers immense opportunities for growth and expansion. But navigating the legal and bureaucratic landscape can be daunting. Fear not! Our comprehensive guide on how to start a business in Germany will take you through the step-by-step process of setting up your company, ensuring you have all the knowledge and tools necessary to succeed.

From choosing the right legal structure to registering your business in Germany, obtaining the necessary permits and licenses, and understanding tax obligations, we cover it all. We’ll also provide insights into cultural nuances, networking opportunities, and local business etiquette to help you establish strong relationships with German partners and clients.

For any question, just get in touch!

Choosing the right legal structure for your company in Germany

When establishing a company in Germany, it’s crucial to understand the legal requirements involved. Germany has several legal structures to choose from, each with its own advantages and considerations.

German GmbH (Gesellschaft mit beschränkter Haftung)

A German GmbH is a limited liability company. It is the most common type of company in Germany and is suitable for businesses of all sizes. Shareholders in a GmbH have limited liability, meaning that they are only liable for the company’s debts up to the amount of their share capital.

To set up a GmbH, you need at least one shareholder and one managing director. There is a minimum share capital of €25,000, of which €12,500 must be deposited into a corporate bank account during registration.

UG/Mini GmbH (Unternehmergesellschaft haftungsbeschränkt)

A UG, also known as Mini GmbH, is a simplified form of a GmbH. It is suitable for small businesses and startups. The minimum share capital to register a UG in Germany is only €1. However, shareholders in a Mini GmbH have unlimited liability for the company’s debts until the share capital is increased to €25,000.

To set up a Mini GmbH, you need at least one shareholder and one managing director.

German Limited Partnership (Kommanditgesellschaft)

A German limited partnership (KG) is a partnership between two or more partners, where at least one partner has unlimited liability for the company’s debts. This partner is known as the general partner. The other partners, known as limited partners, have limited liability, meaning that they are only liable for the company’s debts up to the amount of their capital contribution.

To set up a KG, you need at least one general partner and one limited partner. There is no minimum capital requirement for a KG.

Sole Trader (Einzelunternehmen)

A sole trader is a business that is owned and operated by one person. Sole traders have unlimited liability for their business debts, meaning that their personal assets can be seized to pay off the business’s debts.

To start a sole trader business, you do not need to register your business with the government. However, you will need to obtain a business license if you are required to do so by your local municipality.

AG – German Joint stock Company (Aktiengesellschaft)

A German AG is a joint stock company. It is a type of company that is owned by shareholders who purchase shares in the company. AGs are typically large companies that are listed on a stock exchange.

To set up an AG, you need at least five shareholders and a minimum share capital of €50,000.

Partnerschaftsgesellschaft (GbR)

The GbR, a general partnership, is formed by two or more individuals who share ownership and liability for the company’s debts. It’s suitable for partnerships or joint ventures.

Offene Handelsgesellschaft (OHG)

The “Offene Handelsgesellschaft” (OHG) is a partnership for commercial business in Germany. Key features include unlimited personal liability for partners, profit-sharing, and registration in the commercial register. Partners manage the business jointly, and the OHG does not have separate legal personality.

Genossenschaft (GenG)

The GenG, a cooperative society, is a non-profit organization owned and governed by its members. It’s suitable for businesses with a social or community focus.

Gemeinnützige Gesellschaft mit beschränkter Haftung (gGmbH)/Non-profit

The “Gemeinnützige Gesellschaft mit beschränkter Haftung” (gGmbH) is a non-profit organization in Germany. Key features include limited liability for members, a focus on charitable or non-profit activities, and adherence to specific legal regulations for non-profits. It has a separate legal personality and can pursue charitable objectives while enjoying certain tax benefits.

Gesellschaft des bürgerlichen Rechts” (GBR)

The “Gesellschaft des bürgerlichen Rechts” (GBR) is a partnership entity in Germany. Key features include simplicity in formation, shared profits, and unlimited personal liability for partners. A GBR is not required to be registered in the commercial register, and it’s often used for small-scale businesses or joint ventures between individuals or legal entities.

The GmbH & Co. KG

The “Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft” (GmbH & Co. KG) is a hybrid business structure in Germany. Key features include limited liability for the GmbH (similar to a limited liability company) and a partnership structure (Kommanditgesellschaft) with at least one personally liable partner (Komplementär). The personally liable partner has unlimited liability, while the GmbH has limited liability. This structure combines the benefits of a GmbH’s limited liability with the flexibility of a partnership.

Branch (Niederlassung)

A branch is a foreign subsidiary of a parent company. It is a separate legal entity from the parent company, but it is subject to the laws of the country in which it is located.

To open a branch in Germany, you will need to register the branch with the local commercial register. You will also need to appoint a branch manager who is resident in Germany. Learn also the differences between a branch, a subsidiary and a representative office in Germany.

Which type of company is right for you?

The best type of company for you will depend on your individual circumstances and business needs. If you are starting a small business, you may want to consider setting up a sole trader business or a Mini GmbH. If you are starting a larger business, you may want to consider setting up a GmbH or an AG.

It is important to seek professional advice before choosing a company structure. A lawyer or accountant can help you to understand the different types of company structures that are available to you and the advantages and disadvantages of each one.

Once you’ve chosen the appropriate legal structure for your company, you’ll need to register it with the relevant authorities. This process involves preparing the necessary documentation, such as articles of association and proof of capital, and submitting them to the local trade office or commercial register. It’s important to note that the registration requirements may vary depending on the legal structure you’ve chosen.

Additionally, certain industries in Germany require specific permits or licenses. These may include sectors such as healthcare, finance, or transportation. It’s essential to research and comply with any industry-specific regulations to ensure your business operates legally in Germany.

Setting up a company in Germany with Clevver.

Embark on your entrepreneurial journey with Clevver and experience a smooth, streamlined company setup process. We simplify the intricacies of establishing your business in Germany, ensuring you can focus on what matters most – building your venture.

Say goodbye to geographical limitations and unnecessary travel. Our fully digital incorporation process empowers you to start your business from anywhere in the world.

Our team of seasoned professionals is at your disposal, guiding you through every step of the incorporation process, from selecting the appropriate legal structure to preparing the requisite documentation.

With Clevver, you can set up your company in Germany in as little as a few days, allowing you to hit the ground running and seize market opportunities swiftly.

If you’re considering incorporating a company in Germany, Clevver is your gateway to effortless and expedited company establishment. Let us take care of the administrative details while you focus on building a thriving business.

Get in touch and start your business in Germany

Company setup in 5 steps

Step 1. Preparation + Notary

• Choosing a company name and legal structure. Your company name must be unique and distinguishable from other businesses in your jurisdiction. You will also need to choose a legal structure for your business, such as a sole proprietorship, partnership, limited liability company (LLC), or corporation.
• Drafting the company’s articles of association. This document outlines the basic structure and rules of your company, such as the name of the company, its purpose, the number of shares authorized, and the rights and responsibilities of shareholders and directors.
• Having the articles of association notarized. This is a legal process in which a notary public verifies the identity of the people signing the document and witnesses their signatures.

Step 2. Opening a Bank Account

Once you have drafted and notarized the company’s articles of association, you can open a business bank account. This will allow you to deposit the company’s initial capital and start conducting business transactions.

Step 3. Business/Commercial Registration

Once you have a business bank account, you need to register your company with the relevant government authority. This process varies depending on your jurisdiction, but it typically involves filing a registration form and paying a registration fee.

Step 4. Application for Tax number, VAT and EORI

Once your company is registered, you need to apply for a tax number, VAT number, and EORI number.

• Tax number: This is a unique number that is assigned to your business by the tax authorities. You will need this number to file your business tax returns and pay your taxes.
• VAT number: If your company’s turnover is expected to exceed a certain threshold, you will need to register for VAT. VAT is a value-added tax that is charged on the sale of goods and services.
• EORI number in Germany: If your company will be importing or exporting goods, you will need to apply for an EORI (Economic Operators Registration and Identification) number.

Step 5. Obtaining Required Permits and Licenses

Depending on the nature of your business, you may need to obtain specific permits or licenses. These may include:

• Trading license (Gewerbeschein): Required for businesses involved in retail, crafts, or services.
• Food handling license (Lebensmittelhygieneverordnung): Mandatory for businesses handling food or beverages.
• Construction permit (Bauantrag): Required for construction or renovation projects.
• Environmental permits: Applicable to businesses with environmental impact.

Once you have completed these steps, your company will be officially set up and you can start conducting business.

Need a faster solution? Check out our shelf company service here.

Securing Insurance Coverage

Protecting your business and assets from potential risks is essential. Consider the following insurance coverage:

1. Professional indemnity insurance: Protects against liability claims arising from professional services provided.
2. Property insurance: Covers physical damage to business premises and equipment.
3. Workers’ compensation insurance: Protects against work-related accidents and injuries.
4. Public liability insurance: Covers damages caused to third parties.

Get in touch with our Team

How much does it cost to start a Business in Germany?

The cost of starting a business in Germany can vary depending on the type of business, the location, and the services you need. However, in general, company incorporation in Germany it is relatively affordable compared to other developed countries.

Fixed costs

Some of the fixed costs associated with incorporating a business in Germany include:

• Company registration fee: The registration fee for a limited liability company (GmbH) is €75.
• Notary fees: You will need to hire a notary to prepare legal documents for your company, such as the articles of association. Notary fees can vary depending on the complexity of your documents.
• Registration with the trade registry (Gewerbeamt): The registration fee for the trade registry is typically around €20.
• Tax registration: You will need to register your business with the tax office (Finanzamt) and obtain a tax identification number (USt-ID). The registration fee is typically around €50.

Variable costs

In addition to the fixed costs, there are also a number of variable costs associated with starting a business in Germany, such as:

• Professional fees: You may need to hire an accountant, lawyer, or other professional services to help you with your business setup.
• Equipment and furniture: You will need to purchase the equipment and furniture necessary to operate your business, such as computers, desks, and chairs.
• Marketing and advertising: You will need to invest in marketing and advertising to promote your business and reach potential customers.
• Insurance: You will need to purchase insurance to protect your business from potential risks, such as property damage or liability claims.

Overall, the cost of starting a business in Germany is relatively affordable, but it is important to factor in all of the costs involved before making a decision.

Here is a table of approximate costs for starting a GmbH in Germany:

Cost	Range
Company registration fee	€75
Notary fees	€100-€500
Registration with the trade registry	€20
Tax registration	€50
Professional fees	€500-€1,000
Insurance	€500-€2,000

Total | €2,825-€3,875 |

How long does it take to start a company in Germany?

The time it takes to incorporate a company in Germany can vary depending on a number of factors, such as the type of company you are setting up, the complexity of your setup, and the workload of the commercial register. However, it is generally possible to incorporate a company in Germany within a few weeks.

If you have all of the necessary documentation and are able to work quickly, it is possible to open a company in Germany within a few days. However, it is more realistic to expect the process to take a few weeks.

Can a non-resident start a company in Germany?

Yes, non-residents can start companies in Germany. However, there are a few additional requirements that non-residents must meet. For example, non-residents must have a registered office in Germany and must appoint a local resident to serve as the company’s managing director. With Clevver, you can easily set up from abroad a virtual office in Berlin with local addresses and phone number.

Which taxes do I have to pay after opening a company in Germany?

After opening a company in Germany, you will be required to pay a number of taxes, including:

• Corporate income tax: This is a tax on the profits of your company. The corporate income tax rate in Germany is 15%, plus a solidarity surcharge of 5.5%.
• Trade tax: This is a tax on the business activities of your company. The trade tax rate in Germany varies depending on the municipality where your company is located.
• VAT: This is a value-added tax that is charged on the sale of goods and services. The standard VAT rate in Germany is 19%.

In addition to the above taxes, you may also be required to pay other taxes, such as payroll tax and social security contributions.

It is important to note that this is just a general overview of the taxes that you may be required to pay after opening a company in Germany. The specific taxes that you are liable for will depend on the type of business you are operating and your individual circumstances. It is always best to seek professional advice from a tax adviser to ensure that you are complying with all of your tax obligations.

Hiring employees in Germany

If you plan to expand your workforce in Germany, it’s crucial to understand the labor laws and regulations. Germany has strict employment laws that protect workers’ rights, including minimum wage requirements, maximum working hours, and regulations regarding holidays and severance pay.

When hiring employees in Germany, you’ll need to comply with various legal obligations, such as registering your employees for social security and health insurance, withholding income tax from their salaries, and contributing to pension funds. It’s essential to familiarize yourself with these requirements to ensure compliance and maintain a positive relationship with your employees.

Additionally, Germany has a strong tradition of worker representation through works councils (Betriebsräte). These councils play a significant role in employee participation and can influence company decisions. Understanding the rights and responsibilities of works councils is crucial when establishing and managing your company in Germany.

How to start your business in Germany with Clevver: Your Partner for a Smooth Start

To navigate the complexities of German business regulations and ensure a seamless incorporation process, consider partnering with Clevver, a trusted provider of business establishment services. Our expertise and experience will guide you through every step, from selecting the appropriate legal structure to securing necessary permits and licenses. With Clevver by your side, you can focus on the core aspects of your business – innovation, growth, and customer satisfaction.

Embrace the opportunities that await you in this dynamic market, and watch your business flourish.