Starting a business in Germany: a detailed guide
Germany, a country with a strong economy and significant potential for growth and development, attracts many entrepreneurs who dream of starting their own business abroad. This is not surprising, as Germany offers a stable business environment and extensive infrastructure. Learn more about the specifics of starting a business in Germany
Today, Germany attracts not only with the opportunity to find a high-paying job, but also with a dynamic economy and a business-friendly environment. The country actively demonstrates its interest in entrepreneurs and investors. Currently, numerous citizens of the United States, China, Belgium, and Denmark are doing business in the country. Despite this, the authorities remain demanding, even to foreigners who are willing to invest in the German economy. When planning your own business in Germany, it is important to understand the opportunities, obtaining a business visa and identifying promising niches for development.
Business visa to Germany for foreign entrepreneurs: how to get it
Your goal is to start a business in Germany, and the first step is to obtain a German business visa. To be accepted, your products or services must be commercially attractive to German consumers, with regional demand and the ability to create new jobs. It is also important to have sufficient funds to finance your business.
You can enter Germany on a D visa, which can be converted into a temporary residence permit. To apply for a national visa, you need to submit the following package of documents: passport, passport of a citizen, biometric passport photo, completed application, proof of financial means to start a business, business plan, proof of sufficient provision for yourself in old age (for those over 45 years old), curriculum vitae, German language certificate and health insurance. Additional requirements for this type of visa can be found on the website of the German embassy in your country.
It can take from a few days to months to get a visa, depending on how quickly your documents are checked. The cost is determined according to your situation. In addition to the visa fee, you will need to pay for certified translations of documents, a language proficiency certificate, and other possible expenses.
In order to work as a freelancer in Germany, you need to obtain a work permit and confirm that you have the funds to implement the project. Upon arrival, you will need to register and make an appointment at the relevant foreigner's office to apply for a residence permit.
A national D visa allows you to move freely in the Schengen area for 90 days within six months. Now that you know all the details of obtaining a visa to start a business in Germany, you are ready to move on to the next steps.
Starting a business in Germany: the main steps
After successfully obtaining a visa, you will have to start setting up your company and choosing a legal structure. In Germany, all businesses are divided into small, medium, and large, with about 99% of them being small and medium-sized, known as "Mittelstand". The difference between them lies in the number of employees, profits, accounting requirements, and other aspects.
Choosing a legal form can be an important step, there are many options, and it is best to do so with expert advice. In Germany, there are advisory centers in each Länder, but it is also an important step to consider this issue with experts in your country.
Of course, it is necessary to register the company at the trade office and in some cases also at the commercial register, depending on the type of activity and type of legal entity.
The most common types of companies in Germany include GmbH (limited liability company), Mini-GmbH (entrepreneurial limited liability company), branches and freelancers.
A GmbH is the German equivalent of a Limited Liability Company (LLC), combining flexibility and limited liability. To register a GmbH, you need to have at least one shareholder, a registered office in Germany, a German notary, and a share capital of EUR 25,000.
A mini-GmbH is a variant of a GmbH with a share capital of less than 25,000 euros, with a mandatory deferral of 1/4 of the annual profit.
A branch can be opened by any foreign company, choosing between autonomous and dependent forms. An autonomous branch is engaged in commercial activities independently of the head office, while a dependent branch is subordinated to the parent company and is aimed at maintaining contacts in Germany.
Freelancers in Germany are divided into two categories - freelancers and self-employed persons. Freelancers, such as lawyers, consultants, teachers, are a separate group from the self-employed, such as salespeople or manufacturers of goods.
The final determination of your status will be made by the tax office. This will determine the documentary requirements and the registration process.
When you have already decided on the legal form of the company that will allow you to work and reside in Germany, the next step is to complete the necessary documents. Whether you are dealing with this issue on your own or hire a lawyer, it is important to remember that there are professional information centers for entrepreneurs in all German states where you can get advice on starting your own business.
Affordable and profitable niches for starting a business in Germany
If you are just starting out in the world of entrepreneurship and do not yet have a specific business plan, do not lose motivation. Germany is a country where the economy is showing steady growth, even during the pandemic, especially in industries such as automotive, medicine, IT and telecommunications, engineering, chemistry and pharmaceuticals, electrical engineering and electronics.
The German government actively supports small and medium-sized enterprises as well as innovative startups, which opens up new opportunities for those looking for business ideas. It is important to pay attention to current trends and market demand.
Some of the areas that are currently particularly popular and successful in Germany include alternative and renewable energy sources, biotechnology, aquaculture, hospitality, environmentally friendly products, recycling and product manufacturing, and real estate.
If you're looking for lower-cost areas, fast food, beauty salons, laundries, cafés and home-cooked meal delivery, and pet care services can be attractive options.
Traditional services, such as childcare, medical care, consulting, car or home appliance repair, construction, and legal services, are an integral part of the market. It is important to take into account demand and adapt your ideas to the realities of the German market.
So, when choosing a direction for your business, it is recommended to study the market needs well, taking into account your own knowledge and skills, and determine how your idea can become successful in the German economy.
German tax legislation for entrepreneurs
Taxes in Germany are becoming an integral part of business, and their amount depends on the legal form of the company you choose and its location. It should be noted that compared to the taxation of Ukrainian corporations, where the corporate tax rate is 18-20%, in Germany it is higher, approximately 30%.
It is important to keep in mind that the choice of the legal form of the company and its place of business may affect the amount of taxes you will have to pay. By taking these factors into account, you will be able to operate your business on more favorable terms within the German tax system.
Now that you have more information about setting up a business in Germany, you may have already decided on your line of business. We wish you every success in this endeavor, and if you encounter any difficulties, let them be only temporary challenges that you can successfully overcome.
Igor Usyk - Head of Legal Department at Visit World
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