The steps of a Business Set-up in Germany

Few Things you must know when setting up a business in Germany as a foreigner

Imagine you have a business in your home country and would like to expand it into Germany. In the meantime, you are thinking of getting a temporary and later permanent residency of Germany as a well developed second home country. What would you do?

To this end, you should consider several points; firstly, how should you proceed as an applicant? Secondly, does your qualification match the requirements? and If that’s the case what steps should be made?

The important thing to know is that after every company formation or business set-up in Germany, there are some laws in Germany which enables you to settle down and work in the country, each of which requires different prerequisites. Most of the time applicants neglect or mix the requirements of different legal sections which can finally lead to the rejection of their case.

To clarify this for you as an applicant for the self employment in Germany, we provide you with two possible scenarios through which you may get your work permit if you can fulfill the requirements and provide valid documents.

Generally you can be either employed in the company you partially own (the ownership under 50% of the company share) or become a self employed in a company you majorly own above 50%. For the former you should have a position in the company as an employee in line with your resume and company activity, and for the latter you should be assigned as the managing director who can prove you can deliver the business operation successfully. For the former (§18 or §19a of the German immigration law) an employment contract is needed while for the latter  (§21) a business plan is needed.

Depending on your resume, capacity, and goals in Germany, your service provider should be able to properly decide which section is better for you settle you down in Germany and allow you to start your business as soon as possible.

If section 18 or 19a is an option for you, then an employment contract is needed. in this contract, your lawyer should perfectly consider the labor and immigration law at the same time in a way to justify whether you can be fit for this position in Germany and the reason why your physical presence is needed. Obviously the labor office is one of the main entities which will decide whether this job suits you or not. In addition, the immigration office of the target city (usually the city where the employer is based) will give the final word and decide to give you the residency title.

However, for section 21 of the German immigration law, what matters the most is the business plan which is behind the company you would like to set up in future. It should perfectly prove whether this business is economically attractive for the region, whether you have the financial, educational and professional capacity to run that business, and whether your physical presence is needed for the operation of that business. Contrary to §18 or 19, the labor office is not the entity in charge anymore rather three other organizations will be the new assessment bodies next to the immigration office, including the chamber of commerce of the area, the business promotion organization of the target city and finally the trade office.

There are several paths leading you to the self employment in Germany, but to decide which one is the best depends on your situation and capacities that should be perfectly analyzed by your service provider.

What should you do after residency?

The steps of business set-up now after Germany residency are relatively similar to what German citizens should do as follows:

• You should first determine the type of the legal entity. Whether it is GmbH, UG, GbR, sole entrepreneur or freelance, the procedure for registering the business is different. You may read more about it here. 
• Having registered the business, you should apply to get your business license through the trade office of your city. You are exempted only if you are considered to be a freelancer for which a registration in the local tax office suffices.
• In the next step, you should fill out the tax form and register yourself in the tax office. A tax number which is necessary for issuing an invoice in Germany will be sent to you within 1 month or two. For more info about the tax system in Germany, you may click here. 
• Getting your company established (commercial registration excerpt), having your licence issued, and finally getting your tax number, you are good to start your business operation in Germany. 

As a new resident of Germany, you should be able to fulfill the requirements of your residency title over a specific period of time so you can be eligible to get your permanent residency. Try to learn those requirements and plan to achieve them smoothly. For §18, 19a, the criterion is usually paying yourself a fitted salary and submitting B1 language certificate, and for §21 it is fulfilling the commitments of the business plan and the B1 language certificate.

Who can help you with the immigration process?

It is recommended that you choose a service provider who has a mix of business consultants and immigration lawyers. Business immigration in general is a legal and business development project at the same meaning that the feasibility of the project both economically and legally should be perfectly verified. 

Doing the location analysis, sourcing & business evaluation, business plan write-up and finally company formation are recommended to be done by qualified business consultants in Germany. Especially interaction with economic offices in each city is something that might not be of interest to a lawyer.

On the other hand, it is highly recommended that the case has an immigration lawyer for the interaction with authorities such as immigration offices and embassies, and especially for managing the case once it gets into trouble or is rejected. For example when it is needed to request inspection and access to the files in case of rejection, this can be done the lawyer. Our legal team will manage the case for this reason.

Long story short, a qualified business immigration team should have experts who are knowledgeable in economy, business development and law and we tried to cover them all in our projects.

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