Foundation in Germany – Setting up a business in Germany
You would like to set up a business in Germany, but you are not quite sure how to go about it? More and more company foundations and start-ups in Germany have a formation process that is not purely domestic.
Founders can choose between self-employed commercial activities and freelancing. There are also different legal forms for selection.
Due to many years of experience in supervising company formations, we know the foundation procedure inside out and will set up your business quickly, legally securely and at a fixed price. Your articles of association, if required, come directly from a lawyer.
We set up your enterprise. You focus on business
Foundation in Germany
- Can foreigners set up a business in Germany?
- Digression: Work visa
- Special requirements for foreign founders
- Formation by a foreign company
- Preparation of the formation
- Formation process step by step
- Digression: Trade licence and registrations
- Digression: Types of taxes in Germany
- EORI-number
- Employer identification-number
- Insurance and pension
- German contract law
- Other German legal regulations
- FAQ
Andre Kraus, lawyer and founder of the KRAUS GHENDLER RUVINSKIJ law firm, is your contact in matters of company formation, trade mark law, reputation protection and corporate law.
Online formation or in-person appointment
You can found directly online, book a free initial consultation online or send us a message
Free initial consultation
You will receive a comprehensive initial consultation free of charge. During this meeting, we will clarify any open questions you may have about establishing a business in Germany and advise you on the most important basic issues in formation, such as the right legal form or the costs and procedure involved.
Setting up your business
We start setting up your business. We will support you, from providing legal advice on forming a company, drafting tailored articles of association, arranging a notary appointment and entering your company in the commercial register, to registering a trademark, drawing up your application for tax and business registration, and handling your bookkeeping.
Can foreigners set up a business in Germany?
Freedom of establishment only applies to EU citizens: They are free to set up a company in Germany. This includes all EEA states (EU plus Iceland, Norway and Liechtenstein) as well as Switzerland.
If you are a non-EU citizen and plan to set up a business in Germany, you must bear in mind that you will need a residence or settlement permit. If you would also like to work with the company in Germany, you need a permanent work visa.
If you have got a German permanent residence, you can start a business here. If you have a work visa it depends. You should check if it also permits self-employment. The same applies to the so called EU Blue Card, a temporary residence permit issued for a maximum of four years in the case of permanent employment relationships. Freelancers can possibly get a freelance visa, if they have got clients in Germany.
Foundation by a lawyer
✔ CHEAP✔ FAST✔ LEGALLY SECURE
Open questions? – Just call us:
(Mo. – So. from 9am to 22pm / NATIONWIDE – German landline)
Preparation of the formation
If you have a residence in Germany and have registered your address with the local residents’ registration office you can get a tax-ID. This is required to register a business.
If you plan to set up a corporation (GmbH, UG etc.), you also need a business account. For foreign citizens without a residence in Germany, opening an account can be difficult. They might not only need documents confirming their identity but also an apostille/ legalisation for documents. If they are not in Germany, a power of attorney for the representative, who opens the account for them, is required.
Exception: If you buy a so-called shelf company the business account is already included in the purchase; problems with opening a German account can be avoided in this way.
Formation process step by step
Step 1 – Free Initial consultation/ legal form
The first question is the legal form of your business. If you want to set up a company in a cost-efficient way and you wish to exclude your personal liability at the same time the choice could be an UG (entrepreneurial company with limited liability).
If you have more money available for the contribution, you could think about a GmbH (limited liability company).
When deciding on a legal form you should also keep in mind it’s external effect/ reputation as well as taxes and administrative costs.
To discuss these and other questions we offer you a free Initial consultation.
Step 2 – In-depth consultation
The next step is an in-depth consultation with a lawyer. He also draws up a formation plan for you. He will tell you whether there are attendance obligations in Germany or whether a residence permit is required, if representation by us is possible (power of attorney) and which documents are required (if necessary, translated and certified foundation documents, apostille)
Step 2 – In-depth consultation
Step 3 – Checking the company name
Some chambers of commerce (IHKs) conduct a so-called preliminary assessment procedure to check whether there are any objections to your company name. We take care of this for you. The procedure is subject to a fee in some municipalities.
Step 4 – Drawing up the articles of association
In a next step your articles of association are formulated by a lawyer – tailored to your business.
Step 4 – Drawing up the articles of association
Step 5 – Notarisation appointment
Once your formation documents are complete, you have to make an appointment with a notary. We will organize this for you. If you are incorporating from abroad, we can represent you in Germany. This requires a formation power of attorney – notarized in your country of residence. Furthermore the application to the commercial register must be certified at the embassy or consulate, and a second notary appointment is necessary.
Step 6 – Opening the business account
Afterward you have to open a business account for your company and pay in the share capital, if necessary. As mentioned before, founders from non-EU countries do not always have easy access to a business account. We can help you with this too
Step 6 – Opening the business account
Step 7 – Entry into the commercial register
Your company will then be entered in the commercial register. If you are abroad, the instructions and commercial register application will be sent to you. The documents are certified by a German ambassador. A second notary appointment is necessary. We will then register your company in the German Commercial Register.
For freelancers and small businesses (Kleinunternehmen) there is no obligation to register in the commercial register. The classification as small business depends on the revenue.
Step 8 – Tax and business registration
Finally a tax and business registration is prepared. If you set up a business as a resident from abroad and choose the “Legally Secure PLUS” package, we will also take care of the business and tax registration for you
Step 8 – Tax and business registration
Transparency register
As of 2019, companies must be entered in the federal transparency register under the Geldwäschegesetz (GwG; German Money Laundering Act) of 2017. This should make it possible to recognise the persons economically responsible for a company at a glance. The first and last names, dates of birth, places of residence and the nature and extent of the economic interest of the beneficial owners must be entered. Registration may be waived if this information can already be retrieved from the commercial register or another public register.
If necessary, your company will be entered in the transparency register after notarisation.
Foundation by a lawyer
✔ CHEAP✔ FAST✔ LEGALLY SECURE
Open questions? – Just call us:
(Mo. – So. from 9am to 22pm / NATIONWIDE – German landline)
EORI number
If you need to declare exports/ imports to customs or require an exports permit from the competent authority (BAFA) you have to apply for an EORI number, an EU registration and identification number for businesses related to the import or export of goods into or out of the European Union.
It is necessary to obtain the EORI number from the national customs authority as soon as you start your first export or import transactions.
The EORI number is assigned on request and free of charge by the General Directorate of Customs’ Master Data Management office in Dresden (GZD – DO Dresden). The application procedure can be a bit tricky and you have to fill out an application form. We can also help you with this.
Employer identification number
If you if you employ members of staff you need an employer identification number. It is necessary to apply for it before you conclude employment contracts.
The number is required to be able to pay social security contributions (esp. health insurance, pension insurance, unemployment insurance).
The competent authority is the Federal Employment Agency (Bundesagentur für Arbeit).
We advise you about the application prosess and explain to you how to fill in the application form.
Insurance and pension
Pension insurance
In Germany there is a statutory pension insurance system. Contribution is mandatory for employees and also for many self-employed people as for instance
- midwives and obstetric nurses
- teachers and educators, if they work without an employee subject to compulsory insurance
- physiotherapists dependent on instructions
- nurses without employees subject to compulsory insurance
- artists and publicists or
- self-employed persons without employees subject to compulsory insurance who work permanently mainly for one client.
If this does not apply to you, you are free to make voluntary contributions. You have to pay a minimum of 18.6 percent of your income. Artists and publicists can apply to have half of their contributions paid by the Artists’ Social Insurance Fund (Künstlersozialkasse), if they become a member.
An alternative to the the statutory pension insurance are private pension plans offered by banks and insurance companies.
Health insurance
Health insurance is mandatory in Germany. However, self employed people can choose between contributing to the German statutory health insurance or taking out private health insurance.
Unlike employees, self-employed entrepreneurs have to pay for everything on their own, i.e, 14,6 percent of their income in case of statutory health insurance. Especially for young and healthy people, private health insurance can be much more cost-effective.
Other insurances
There are other ways to cover any risks, such as:
- Business interruption insurance
- Insurance against burglary and theft, fire, water
- Electronics insurance
- Commercial legal protection insurance
- Liability insurance, product liability insurance and environmental liability insurance
German Contract Law
Entrepreneurs who set up and do business in Germany are subject to German contract law in many respects. For example, they conclude
- contracts with landlords (commercial tenancy agreements),
- with customers (e.g. purchase contracts, service contracts)
- and suppliers as well as
- employment contracts with employees.
Many entrepreneurs also require general terms and conditions (GTC). We can help you with the drafting of contracts and the formulation of GTC.
Other German legal regulations
There are several other laws and regulations in Germany that you may have to take into account as well.
- If you have your own website, you must comply with the regulations on data protection and the mandatory information in the imprint. Especially for online shops, there are also special duties of disclosure. There is for instance an obligatory price indication within the meaning of the Price Indication Ordinance.
- In the case of an existing employment relationship or a shareholding in a company, non-competition or secondary employment prohibitions may have to be observed.
- There are statutory opening hours for shops in Germany and
- there is also an obligation to provide parking spaces for cars on the company premises.
It is important to know these and other regulations so as not to inadvertently violate laws. We will be happy to advise you.
Costs
| DESCRIPTION | COSTS (NET AMOUNTS) | |
|---|---|---|
| Formation costs | Advice on legal form, advice on forming a company and advice on financial statements, drawing up of the articles of association and forming documents, organisation of the formation, representation during the entire formation process, company audit by the IHK, managing director contract, opening balance sheet and preparation of the trade and tax registration, VAT ID application and contract documents. | Fixed price: 209,– € (“formation package START-UP”), 629,– € (“Rechtssicher”) or 859,– € (“Rechtssicher PLUS”) |
| Notarisation costs | Notarisation of the articles of association and other forming documents. By providing prior advice on formation and drawing up the articles of association and the formation documents for a fixed price, we may save you the significantly higher costs of a contract drawn up by the lawyer notary on the basis of the RVG (German Law on Lawyer’s Fees), or when invoicing on an hourly basis. | Between 280,- (Standard Record) and 835,- € (individual Statutes) on average |
| Check of company name with IHK | If the responsible IHK / HWK conducts a preliminary statement procedure, we will conduct an examination procedure at your IHK /HWK for your company. This is to show whether there are any objections to your company name. In some cities or municipalities (e.g. in Berlin) the preliminary statement procedure is subject to a fee. | In some cities or municipalities about 45,- € |
| Entry into the commercial register | Often 170,- € | |
| Commercial registration | Depending on the city or municipality, €10.00 to €60.00 | |
| Tax registration | Free of charge | |
| IHK contribution | From 115,- € |
Formation of an UG at a fixed price
Our legal fee is a one-time fixed amount: you will not incur any further costs. In particular you will have to pay
- no higher lawyer’s/notary’s fee according to RVG for the formation consultation as well as the final consultation
- no higher lawyer’s/notary’s fee according to RVG for the preparation of your individual articles of association
- no higher lawyer’s/notary’s fee according to RVG for the organization of your incorporation/your representation during the incorporation process
- no higher notarial fee according to GNotKG for the preparation of the formation documents (shareholders‘ resolutions, etc.)
These costs are usually not fixed from the beginning and can get very out of hand. With us it remains with a fixed price, which is independent of the complexity or lengthiness of your case (price transparency).
Discount for serial founders or Holdings
Often several companies are founded. This happens especially in the case of serial founders or when several companies are established within the framework of a holding model. In this case, we grant a discount of 20% on our respective fixed price from the second company onwards.
FAQ foundation
Can foreigners set up a company in Germany?
Yes. Freedom of establishment applies to EU citizens. As a non-EU citizen you need a residence or settlement permit.
Is it possible to found a company from abroad?
Yes, but the formation documents must be signed before a notary public in Germany. If shareholders or managing directors cannot appear in person, we can take care of the formalities for you. For this purpose, among other things, we need a power of attorney.
What kind of visa do company founders need?
You need an entry visa and a residence permit.
Are there special requirements for foreign founders?
Depending on the sector, foreign founders may have to provide proof of their professional qualifications (e.g. master craftsman’s certificate).
Are there licence- and registration requirements?
Yes. Companies are to be entered in the commercial register. If you are not a freelancer (“Freiberufler”), but a tradesperson, you need a trade licence and you have to register with the German trade office.
You also have to register with the tax office. Depending on the type of business and legal form, further registrations may be required (membership of the Chamber of Industry and Commerce, membership in professional and trade associations).
What taxes exist in Germany?
The most relevant taxes are income tax, corporation tax, capital gains tax, trade tax and value added tax.
What is a German permanent establishment?
A Permanent Establishment is a dependent branch of an already existing company. It acts on behalf of the head office.
What is a branch office?
A branch office is a legally and economically dependent part of a company that is locally separate from the company’s registered office.
What is a subsidiary?
A subsidiary is a company owned or controlled by another company abroad, the parent company. It is legally independent, has got its own legal personality and can trade and conclude contracts under its own company name
I have got a foreign internet presence; can I file my expenses from abroad?
If the enterprise is located in Germany it is responsible to file tax declarations in Germany, expenses are deductible from the taxable income.
The tax authorities usually accept international invoices as expenses.
Can I employ staff as a foreigner?
Yes, but if you employ members of staff you need an employer identification number.
Do I need a business account?
If you plan to set up a corporation (GmbH, UG etc.), you also need a business account.
Do I need an EORI number?
If you need to declare exports/ imports to customs or require an exports permit from the competent authority (BAFA) you have to apply for an EORI number,
Are there compulsory insurances in Germany?
Yes. Health insurance is mandatory in Germany. there also is a statutory pension insurance system. Contribution is mandatory for employees and also for many self-employed people.
Are there regulations for Websites?
Yes. If you have your own website, you must comply with the regulations on data protection and the mandatory information in the imprint. Especially for online shops, there are also special duties of disclosure. There is for instance an obligatory price indication within the meaning of the Price Indication Ordinance.
What forms of enterprises are there in Germany?
Companies can be divided up into partnerships, corporations and sole proprietorships.
What are the costs for founding a GmbH?
Our legal fee is a one-time fixed amount: you will not incur any further costs.
Notarisation costs are between 280,- ( standard record) and 835,- € (individual statutes) on average, the Entry into the commercial register costs between 170,- € and 240,- € and the commercial registration Depending on the city or municipality from 10,- to 60,- €., However, the formation of a GmbH requires a capital contribution of €25,000 or €12,500. An UG can be formed with only €1 of share capital.
Your formation team
Andre Kraus
Specialist lawyer for insolvency law
Ahaliya Kapilan
Lawyer
Oksana Enns
Business law graduate
Sara Garcia Corraliza
Lawyer
and a team
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frage zu ug
hallo ich habe ein einzelunternehmen und würde gerne eine ug machen da ich da doch einiges an kosten sparen kann angefangen von der krankenkasse usw. denken sie das es sinvoll wehre und was würden sie sagen gewerbe umwandeln in die ug oder eine ug neu günden und was würde es bei ihnen kosten wen sie […]
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Hello, dear, I am interested in whether I can cancel the six-month old “gewerbe” becouse job what I have for that gewerbe is broke, and because off Activities what I think to working now in new situation dont have registred in gewerbe. I certainly think that it is easier for me to establish a UG […]
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