• Foundation in Germany – Setting up a business in Germany

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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

Bild von Globus

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.

Digression: Work visa

Highly qualified professionals, third-country nationals with a university degree or a non-academic professional qualification can apply for a work visa in Germany. They must fulfill the following requirements:

  • Job offer
  • Qualification equivalent to a German qualification
  • Qualification recognised in Germany
  • Licence to practise the profession.

To  apply for the work visa you need certain documents. such as:

  • Completed and signed application form

  • Two passport photos

  • A valid passport

  • A proof of residence

  • Health insurance

  • An employment contract

    or a binding job offer, stating the annual salary and with description of the employment 

  • An approval by the Federal Employment Agency, if applicable

  • CV and proof of qualifications

  • Proof of a clean criminal record

  • Proof of visa fee paid

  • A cover letter stating purpose and duration of the stay and

  • A declaration of the accuracy of the information given

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). 

Non-EU foreigners need a residence or settlement permit.  A residence permit can be granted, among other things, if there is an overriding economic interest for the company or if the activity is likely to have a positive impact on the German economy.

The Residence Act (AufenthG) sets high requirements for a settlement permit. These include a residence permit for at least five years, living expenses and housing have to be ensured, sufficient knowledge of the German language is required etc. ( see § 9 AufenthG). 

Formation by a foreign company

 If a foreign company wants to set up a business in Germany there are three ways of proceeding:  

  • Option 1

    With a copy of the original formation documents and an extract from the commercial register for the formation of the parent company

  • Option 2

    With translated and certified formation documents and an extract from the commercial register with apostille. 

    Option 2

  • Option 3

    With an expert report  of foreign notaries

Foundation by a lawyer

✔ CHEAP✔ FAST✔ LEGALLY SECURE

Over

20000

checked cases

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

  • 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

Over

20000

checked cases

Open questions? – Just call us:

(Mo. – So. from 9am to 22pm / NATIONWIDE – German landline)

Digression: Trade licence and registration requirements


Trade licence

If you are not a freelancer in the form of the German “Freiberufler” (e.g. journalist, architect, doctor…), but a tradesperson, you need a trade licence, have to register with the German trade office and you have to pay trade tax. To find out whether you are classified as a freelancer or a tradesperson, just inquire with  your local tax office.

If you set up a GmbH, UG or other form of corporation, you usually have to register a trade. To do this, you have to submit an application to the responsible trade office (Gewerbeamt) in your municipality and pay a fee. The documents you need for the registration are:

  • Your passport and a registration certificate
  • visa/ residence permit
  • your commercial register number
  • certificates of qualification and permits if applicable


Trades requiring a licence or supervision 

In Germany some trades, as for instance security services, gastronomy, real estate and insurance business, require a special licence or supervision. The Trade Licensing Office is the right contact point for this. They will usually ask you for an extract from the commercial register, a Schufa credit report, a certificate of non-objection from the tay office and a certificate of good conduct.  Often you also must be able to prove sufficient language skills. Some trades you are only allowed to practise, if you  are in possession of a foreign qualification certificate equivalent to the German one required for the job.


Register of craftsmen

In Germany for some skilled trades you have to apply for an entry in the register of craftsmen at the Chamber of Crafts (HWK). Examples are

  • qualified automotive engineer,
  • master roofer,
  • master joiner,
  • qualified information engineer,
  • qualified scaffolder,
  • qualified installation and heating engineer
  • qualified glass maker,
  • master baker
  • qualified hearing aid audiologist
  • qualified dental technician or
  • qualified optician.

There are more than 40 skilled trades in Germany. 


Further registration requirements 

Depending on the type of business and legal form, further registrations may be required.

  • IHK: A membership of the Chamber of Industry and Commerce is mandatory for many entrepreneurs.
  • Professional and trade associations: In addition, membership in professional and trade associations may be obligatory or useful.
  • Commercial employers’ liability insurance association: Employers are obliged to register with an accident insurance institutionn (§ 192 of the Social Code VII). The “Berufsgenossenschaften” /BGs are  responsible for statutory accident insurance in Germany, for  prevention, rehabilitation and compensation of accidents at work, accidents on the way to work and occupational diseases.

Tax registration

By registering your business, you automatically also set the tax office (Finanzamt) in motion. You have to complete the tax registration with the tax office within one month, using the tax questionnaire (§ 137 AO). You cannot write invoices for customers before you have completed this registration and received your tax identification number. 

The tax office needs information about your business, your estimated income, expenses and revenue, your bank details,  the registrations required (esp. commercial, IHK) and your tax ID (not to be confused with the tax number). Every person, who  registers in Germany and receives a registration certificate automatically receives a  tax ID shortly thereafter. The number is assigned to  everyone registered in Germany.

After you submitted the tax questionnaire  the tax office will send you your tax number  and also a  VAT number, if applicable.

Digression: Types of taxes in Germany

Foreign founders should get advice from a tax advisor in advance in order to clarify which tax obligations exist and what must be observed.

In the case of partnerships (e.g. GbR), the partners are  taxed personally. Sole traders are also personally taxable. In contrast, corporations (e.g. GmbH) pay taxes themselves.

The following taxes are particularly relevant:

– Corporation tax (15 percent of your profit)
– Capital gains tax on profit distributions (25 percent plus 5.5 percent solidarity surcharge)
– Trade tax (depending on the location of the enterprise)
– Solidarity surcharge (5.5 percent of corporate income tax, capital gains tax and wage tax)
– Value added tax (19 percent  or 7 percent of the  invoice total)

Taxes depending on legal form

If the legal form of your business is a sole proprietorship and you are a business- and  tradesperson, you have to pay  trade tax.  As a natural person you  are also subject to  income tax.

Unless you are a small business owner (Kleinunternehmer) and benefit from tax concessions, you  also pay value added tax  (VAT). Solidarity tax must be paid at the same time as income tax. Since 2021, however, some entrepreneurs benefit from the partial abolition of the solidarity surcharge depending on their  income. If  they are members of a church, church tax must also be paid and, if employees are employed, payroll tax is raised.

If the legal form of your business is an OHG, KG or GbR (partnership, German “Personengesellschaft”) as a shareholder you pay tax on the profits at your  personal income tax rate. If  a commercial business model is pursued, trade taxes must be paid. You are usually also subject to value added tax (VAT). If applicable, solidarity tax must be paid,  church tax and payroll taxes for employees.

If the legal form of your business is a corporation as the GmbH, UG, AG (German “Kapitalgesellschaft”) it is subject to Corporation tax, solidarity tax, trade tax and VAT if applicable, also to payroll taxes for employees. In the case of  profit distributions you also have to pay capital gains tax (25 %). Due to the enormously high taxation of profit distribution, it may sometimes not be worthwhile for an individual entrepreneur to set up a corporation.

Annual Obligations

Companies are obliged to keep books and accounts and, in particular, to prepare and file annual accounts, with balance sheet and profit and loss account. as well as a tax return annually. Advance turnover tax returns must be submitted regularly, initially on a monthly basis.

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

Übersicht der Pakete

UGStart-UP

€259,–zzgl. € 49,21 USt.
  • Begleitung der notwendigen Schritte Ihrer Gründung.

  • Anwaltliche Rechtsberatung
    • Erstberatung 30 Min.
    • --
    • --
  • Begleitung und Organisation
    • --
    • Checkliste Notartermin zur Beurkundung
    • Kontoeröffnung
    • Einlageneinzahlung
    • Handelsregister
    • --
    • --
    • --
  • Vertragspaket und Anmeldungen
    • Individueller Gesellschaftsvertrag / Satzung
    • Geschäftsführer Einstellungsvertrag
    • --
    • --
    • --
    • --
    • --

UGRechtssicher

€689,–zzgl. € 130,91 USt.
  • Gründung nach umfassender anwaltlicher Gründungsberatung und darauf aufbauender individueller Gestaltung.

  • Anwaltliche Rechtsberatung
    • Erstberatung 30 Min.
    • Gründungsberatung als Video- oder Telefoncall 60 Min.
    • --
  • Begleitung und Organisation
    • Individuelle Video- oder Telefonberatung mit Rechtsanwalt
    • Notartermin zur Beurkundung
    • Kontoeröffnung
    • Einlageneinzahlung
    • Handelsregister
    • IHK Firmenprüfung
    • --
    • --
  • Vertragspaket und Anmeldungen
    • Individueller Gesellschaftsvertrag / Satzung
    • Geschäftsführer Einstellungsvertrag
    • Mustervertragspaket
    • Muster-Eröffnungsbilanz
    • --
    • --
    • --

UGPlus

€939,–zzgl. € 178,41 USt.
  • Für Gründer, die den gesamten Prozess abgeben wollen: wir kümmern uns um alles. Steuerspar- und Asset-Protection Beratung sowie Steuer- und Gewerbeanmeldung inklusive.

  • Anwaltliche Rechtsberatung
    • Erstberatung 30 Min.
    • Gründungsberatung als Video oder Telefoncall 60 Min.
    • Abschlussberatung "Steuern & Assets" als Video oder Telefoncall 60 Min.
  • Begleitung und Organisation
    • Individuelle Video- oder Telefonberatung mit Rechtsanwalt
    • Organisation Notartermin zur Beurkundung
    • Kontoeröffnung
    • Einlageneinzahlung
    • Handelsregister
    • IHK Firmenprüfung
    • Erstellung Gewerbeanmeldung
    • Elektronische Durchführung Steuerliche Anmeldung
    • Elektronische Durchführung Umsatzsteuer-ID Anmeldung
    • Elektronische Durchführung Eröffnungsbilanzeinreichung
  • Vertragspaket und Anmeldungen
    • Individueller Gesellschaftsvertrag / Satzung
    • Geschäftsführer Einstellungsvertrag
    • Mustervertragspaket PLUS
    • Eröffnungsbilanz
    • Gewerbeanmeldung
    • Steueranmeldung
    • USt.-ID Anmeldung

The following costs are incurred when a UG is formed.

DESCRIPTIONCOSTS (NET AMOUNTS)
Formation costsAdvice 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: 259,– € (“formation package START-UP”), 689,– € (“Rechtssicher”) or 939,– € (“Rechtssicher PLUS”)
Notarisation costsNotarisation 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 registerOften 170,- €
Commercial registrationDepending on the city or municipality, €10.00 to €60.00
Tax registrationFree of charge
IHK contributionFrom 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

Yes. Freedom of establishment applies to EU citizens. As a non-EU citizen you need a residence or settlement permit.

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.

You need an entry visa and a residence permit.

Depending on the sector, foreign founders may have to provide proof of their professional qualifications (e.g. master craftsman’s certificate).

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).

The most relevant taxes are income tax, corporation tax, capital gains tax, trade tax and  value added tax.

A Permanent Establishment is a dependent branch of an already existing company. It acts on behalf of the head office.

A branch office is a legally and economically dependent part of a company that is locally separate from the company’s registered office.

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

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.

Yes, but if you employ members of staff you need an employer identification number.

If you plan to set up a corporation (GmbH, UG etc.), you also need a business account.

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,

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.

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.

Companies can be  divided up into partnerships, corporations and sole proprietorships.

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
of legal advisors, business law graduates and other lawyers

Over

8000

Mandates

Over

20000

free document reviews

Over

22000

free initial consultations

Over

2000

answered forum questions

Principles

  • Free initial legal consultation

    Free initial legal consultation on your foundation project.

  • Quick and easy

    We take care of the formalities of your formation – You concentrate solely on your business. There is no waiting period or long processing time.

  • Legal security

    Your incorporation directly from the lawyer. We fulfill the reservation of legal advice by a lawyer (§ 2 II RDG) and assume the full legal guarantee.

  • Price transparency

    We accompany you at a fixed price – without complex fees or indirectly allocated costs from intermediary portals.

  • Specialization

    Due to our concentration on certain core areas we offer you a particularly high level of expertise at a a relatively low fixed price.

  • Long-term perspective

    The consulting for your formation is our investment in a long-term cooperation in the fields of corporate and consumer law.

Start your company now!

    Do you have a general question about „formation in Germany“? We answer them here for free! Enter your question here

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