Services - Germany

Updated 11/2010

Legal requirements

The European Services Directive was to be implemented by the end of 2009. It aims to create a properly functioning single market for services.

Other services-related laws:

Commercial Code
Civil Code

Types of services

In essence, German law divides the service sector into three categories: industry (Gewerbe), crafts (Handwerk) and liberal professions (freie Berufe).

Service sector
Industry
Crafts
Liberal professions

The craft economy (‘Handwerk’) distinguishes between businesses subject to mandatory licensing and those that are not. Special conditions apply to the former category of businesses.

Crafts

The group to which your service belongs is based on the principles set out in the Income Tax Act [Einkommensteuergesetz – EStG]. The liberal professions are listed under Section 18(1) EStG. Income from the services of the trade and craft groups constitutes income from industrial or commercial activities (Section 15 EStG).

Income Tax Act

Different types of service provision

Setting up a service company

German Business Portal
Business start-up portal

Temporary provision of services

German Business Portal
Service provision made easy

Points of single contact

In the course of the implementation of the European Services Directive, points of single contact were set up in all European Member States. The points of single contact help service providers to commence and exercise their service activity by offering information and processing all administrative procedures with the relevant authorities on behalf of service providers upon request.

Service provision made easy: Points of single contact
German Business Portal: Points of Single Contact

Labour market

Businesses from the newer EU Member States are normally allowed to provide cross-border services using their own staff without a work permit. Restrictions apply in certain sectors, however, e.g. the construction industry, building sector, cleaning industry, etc.

Administrative procedures

Tax Office and social security providers

Individuals working in one of the liberal professions should notify the relevant Tax Office. Practitioners of liberal professions in Germany are not subject to business tax (Gewerbesteuer) according to Section 18 EStG and therefore do not need to register their businesses. Individuals practising an occupation not ranked as a liberal profession must register their businesses with the relevant trade licensing office. The classification as either a trader or freelance professional is based on the principles set out in the Income Tax Act. Where staff are employed, they should be registered for social security.

Where to find your nearest tax office
Forms and official guides

Proof of qualifications

In the case of regulated professions, qualifications awarded in other EU Member States must be recognised for the purpose of accessing and exercising a particular profession.

Applications for such recognition should be sent to the office governing the relevant profession.

Details of regulated professions in Germany and the relevant authorities in the 16 federal states (Länder) can be found in the information system known as Anabin, which is designed to facilitate the recognition of educational qualifications from outside Germany.

Anabin

Work permit applications

Some EU nationals have to apply for a work permit for an interim period; however, this is not the case with services.

Resources

Basic information about the various liberal professions is available from the Federal Association of Liberal Professions (Bundesverband der Freien Berufe – BfB).