Starting a Business in Germany as a Non-EU Citizen: A Comprehensive Guide

The process of establishing a company in Germany can be daunting, especially for non-EU citizens. In this guide, we will walk you through the steps to start a business in Berlin, including key legal and administrative requirements and practical tips.

Introduction

Germany, a federal state, has its own set of rules and regulations for company establishment. This guide is based on the author's experience of founding a company in Berlin a couple of years ago. The focus will be on setting up a GmbH, a popular type of German company.

Step 1: Reserve a Company Name

The first crucial step is to reserve a company name with the German Trade Register. This ensures that your chosen name is not already in use.

Step 2: Draft the Memorandum and Articles of Association

These documents outline the internal rules and regulations of your company. It is a good idea to have a legal professional assist with this step to ensure compliance with German law.

Step 3: Deposit Required Share Capital

The appropriate share capital must be deposited according to the type of GmbH you wish to establish. This is an essential requirement before your company can proceed.

Step 4: Submit the Required Documents

Upon submission of the documents, your company will receive a Certificate of Incorporation. Following this, it must register for taxation and social security purposes.

Step 5: Secure Your Business Bank Account

To officially register your business and pay taxes, you will need access to a bank account that supports SEPA transfers. A German bank account is not necessary, as long as the bank can handle international transactions.

Step 6: Employ the Services of a Tax Advisor

Given the high costs of tax advisors in Germany, they can provide invaluable assistance. A tax advisor can register your business, handle tax declarations, and streamline accounting processes to avoid costly mistakes.

Step 7: Register Your Business with the Tax Office

The tax office will determine if you need to register as a freelancer (Freiberufler) or as a trade (Gewerbe).

Step 8: Trade License and Trade Tax for Tradesmen

If you are a Freiberufler or a Gewerbe, you may need a trade license (Gewerbeschein) and to pay a trade tax (Gewerbesteuer). These procedures must be completed before registration with the Finanzamt.

Step 9: Register Your Business with the Finanzamt

Your business must be registered with the Finanzamt. If registering as a Gewerbe, you need to obtain a trade license first. Then, you must complete the Fragebogen zur steuerlichen Erfassung online. A tax advisor can facilitate this step.

Step 10: Apply for a Freelance Visa (if required)

Non-EU citizens may require a residence permit or a freelance visa to operate a freelance business in Germany. If you are eligible for a Blue Card, work visa, or student visa, you may not need to apply for a freelance visa. However, if you do not have any of these, applying for a freelance visa is necessary.

Step 11: Manage Your Health Insurance

If you have health insurance and intend to become a freelancer, inform your insurance company. Freelancer health insurance is generally more expensive since your employer does not contribute to the costs. The insurance company will deduct the premium from your bank account monthly.

Conclusion

The process of starting a business in Germany as a non-EU citizen requires careful planning and attention to detail. Hiring a tax advisor can significantly simplify the process and ensure compliance with German laws and regulations.