Business registration Germany

As tax advisors in Germany, people frequently ask us numerous questions about business registration. For example, we can mention the following:

• Is it necessary to register a business in Germany?
• When to register a business in Germany?
• How and where to register a business in Germany?

In this article from Wise Business Group, we will answer some questions about business registration in Germany.

FAQs about business registration in Germany

1. Which law regulates business registration in Germany?

You can find the legal basis for business registration in the German Trade Regulations.

2. Is it possible for everyone to register a business in Germany?

In Germany, there is the principle of freedom of trade, which means that any person can register a business in Germany. However, the law may impose restrictions on some businesses or individuals. The reason for this is, for example, the documents, tests, approvals, and licenses without which the business is prohibited.

3. At which stage is business registration in Germany mandatory or optional?

Individuals in Germany are required to register a business under the following conditions. Also, they may need to re-register an existing business or register their business expansion.

The requirements for business registration in Germany are:

• Opening or setting up a business
• Opening or setting up a branch, either an independent or affiliated branch
• Starting a commercial activity
• Taking over a business
• Transferring a business to another place
• Expanding the business

Regardless of whether a business in Germany succeeds in making money, its registration is mandatory, and there is no choice. It doesn’t matter what the time frame of the activity or the amount of income, profit, and loss from that business is.

4. Is business registration also necessary for small businesses, side businesses, or small business owners?

Business registration in Germany is necessary for:

• All types of part-time businesses
• Small businesses
• Side businesses
• Entrepreneurs engaged in small businesses

According to the German Trade Regulations, a business is allowed to operate only after successful registration.

Also, if the founder of a business in Germany ceases to continue operating, stops their business, or sells it, they must take action to cancel the business registration.

Here, You can read more about main and secondary businesses in Germany.

5. When is a commercial activity carried out in Germany?

According to the income tax law, a commercial business in Germany is an independent and sustainable activity carried out to make a profit and represents participation in general economic activity. If people earn income from the following activities in Germany, they do not have a commercial enterprise or business:

• being an employee
• Agriculture and forestry
• Freelance job
• All kinds of self-employed work

To make it easier for you to remember a commercial business, you can say:

“As long as you, as your boss in Germany, earn money from activities that are not freelance, farming, or forestry, you are generally commercially active.”

Business registration is mandatory for commercial activities in Germany.

The activity of a GmbH, OHG, and AG in Germany is always commercial.

The activity of bloggers and influencers in Germany is also often commercial, as they earn income or gifts through advertisements.

6. Who is not required to register a business in Germany?

Freelancers in Germany are not required to register their business.

Read more on Wise Business Group: The steps of a Business Set-up in Germany

7. Which professions in Germany fall under the freelance professions category?

Among the activities that are known as freelance activities in Germany, we can mention all kinds of independent scientific, artistic, writing, educational, or teaching work.

The so-called catalog professions also belong to the freelance professions. Doctors, Dentists, Veterinarians, Lawyers, Notaries, Patent Attorneys, Surveyors, Engineers, Architects, Commercial Chemists, Auditors, Tax Consultants, Economic Consultants, Business Economists, Sworn auditors, Tax officials, Alternative medicine specialists, Physiotherapists, Journalists, Photographers, Interpreting specialists, Translators and Pilots are among these. Additionally, there are careers similar to catalog careers. Here, the income tax guidelines and notes contain lists. According to German income tax law, people working in the above professions earn income from self-employed freelance work. Thus, their income is not the result of a commercial operation.

8. Are the legal provisions of the Commercial Code for business registration the same as the income tax provisions for commercial businesses in Germany?

German trade regulations have their legal definitions of who is exempt from business registration and who needs to do so. Therefore, there may be deviations from business income tax classification.

9. When to register a business in Germany?

You must register your business at the latest until the start of your activity in Germany. The ideal situation is to register your business before you start operating. Failure to register a business or late registration can result in fines or penalties. Also, it is possible to register a business retroactively for a short time in Germany. However, there is a risk of imposing fines or penalties.

10. How and where to register a business in Germany?

The body responsible for business registration in Germany is usually the local trade office of the municipality or city where the business operates. Which one is the responsible department within this organization varies by municipality or city. For example, this could be the responsibility of the public order department, the citizens’ department, the resident registration department, the city hall, the district office, or directly, the trade office.

11. Which documents are required to register a business?

First, you should complete the business registration form and submit or provide it. You can fill out the form while registering your business in person or ask the relevant institutions to send it to you beforehand. Sometimes, you can also download it online. Currently, many cities and municipalities in Germany offer the option of online business registration. In addition, you may need your ID card or passport.

Read more: Meaningful points about entering into the commercial register in Germany

Other documents

Also, you may need to provide additional documents to register your business in Germany. For example, we can mention the following:

• An excerpt from the population register or a valid residence permit
• Considering the business, other documents, tests, approvals, permits, an excerpt from central trade registration, clearance certificate from the tax office, an excerpt from the commercial register, official medical certificates, entry in the commercial register, master craftsman certificate, restaurant license, broker license, police clearance certificate, partnership agreement for companies, so on.

You can contact the responsible office in Germany and ask them which documents you need to register your business.

12. How much does it cost to register a business in Germany?

Business registration requires payment of a fee. This cost in Germany is usually between 10 to 65 Euros. However, you may incur additional costs for documents you must request from other authorities or institutions.

13. Which institutions in Germany are notified of the business registration?

After registering a business, various reports are submitted to other entities, institutions, and offices according to the law.

The tax office in Germany receives this notification to monitor compliance with tax obligations. As a rule, the tax office sends a questionnaire for tax registration, in which it seeks information about the person and the company. Amongst the estimated or planned figures for sales, sales tax, payroll tax, number of employees, and profit should be mentioned. It allows the tax office to determine filing obligations for advance sales tax returns, advance payroll tax returns, and tax returns to be submitted later. Also, it can categorize the advance payments of income tax, corporation tax, and trade tax.

The requirement to submit declarations after registering a business in Germany

As a result of business registration in Germany, it is usually necessary to provide certain declarations as follows:

• Income tax return
• Assessment declaration for partnerships
• Corporate tax returns for legal entities

Depending on the business, additional obligations may arise to provide the declaration. For example, we can refer to the submission of sales tax or trade tax returns.

Other entities notified of business registration:

Further notices are sent according to legal and commercial regulations. For example, there may be notifications to the Chamber of Industry and Commerce (IHK), professional associations, Chamber of Crafts, Employment Office, Customs, German Pension Insurance, various registration courts, statistical offices or departments that are responsible for pollution control, occupational safety, food supervision or, as required by law, measurement and calibration.

Therefore, if you have a business in Germany, you should register it at the appropriate time. After that, some authorities, offices, or institutions aware of the business registration will contact you.

14. Which items can a freelancer, trade, side business, small business, or small business owner in Germany deduct from tax as operating costs and expenses when calculating income excess?

You can deduct various operating expenses from tax when calculating profits. To get more information about the tax-deductible expenses for the mentioned businesses, you can refer to our article titled “Tax System in Germany“.

15. Setting up a business in Germany: Is it possible to apply for a start-up grant and thus receive more liquidity?

For many founders or people taking over a business, the start-up grant provides an opportunity to receive additional liquidity when setting up their business in Germany. This grant is tax-free.

Before starting full-time self-employment, you must apply for a start-up allowance from the German Employment Agency. Report your unemployment and remaining entitlement to receive unemployment benefits timely.

In general, a business start-up grant in Germany can reach 20,000 euros at best. Your financial status does not matter here. If eligible to receive this grant, apply for it at the proper time.

More information about business start-up grants in Germany

You can find more information about this in our blog articles. Including: Who can use the start-up funding programs? What is the minimum amount of time to be self-employed during the week? How much is the start-up grant specifically for you, and how long will it be paid?

Read more: Self-employment residence permit in Germany

16. What are the characteristics of small businesses and VAT small business owners in Germany?

If one is a small business owner in Germany according to the sales tax, under which conditions will they no longer be a small business owner and must apply the standard tax? What are the pros, cons, and requirements for small businesses or small business owners in Germany? You can read the answers to such questions in our article titled “Registering Small Businesses in Germany“.

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A brief overview of business registration in Germany

• According to the principle of freedom of trade, all people can register a business in Germany if they provide the necessary documents, permits, and approvals.
• If you set up a business or branch, start a commercial activity, take over, relocate, or expand a business in Germany, you must register it. However, freelancers are exempt from business registration.
• As an entrepreneur in Germany, it is necessary to register your business at the latest until the start of activity. Otherwise, you may face fines or penalties.
• The local trade office of the municipality or city where the business is located in Germany is the responsible body for registration.
• You must complete and submit the relevant form when registering your profession in Germany. Also, bring your passport or ID card with you. Depending on the type of business, you may need to provide additional documents.

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