There are two main laws governing trade and commerce in Germany: the Commercial Code (HGB) deals with a trader’s own liability and business development, while the Civil Code (BGB) is for small business owners.
Legal structures for businesses
There are many possible business structures, depending on whether you start up on your own or with business partners:
- Sole trader (e. g. businessperson or professional);
- Registered trader (‘e.K.’);
- Limited liability company (‘GmbH’);
- Trading concern (with limited liability);
- Civil law partnership (‘GbR’);
- Private limited partnership (‘KG’);
- Stock corporation (‘AG’);
- General partnership (‘OGH’), etc.
There may also be hybrid structures (GmbH & Co. KG). Depending on the legal structure involved, the liability is covered either by the capital contributed or by the total assets.
Business activities and related rules
For some trades and liberal professions, special certificates and qualifications are required in order to obtain a permit or licence to operate. Trades requiring a permit include:
- Trades requiring a permit;
- Hotels and restaurants;
- Employment agencies;
- Real estate agents;
- Financial services;
Business plans and evaluation
Anyone setting up a company can produce an online Business plan, to turn the business idea into a structured and viable commercial concept. The business plan helps you to consider all the key points.
To succeed, a new business needs a sound commercial strategy and secure financing.
Some standard requirements to be completed when setting up a business are the same as when opening a branch.
The ‘Guide to authorities and forms’ (Behörden- und Formularwegweiser) provides a guide to authorities to be contacted and forms to be used throughout Germany, with addresses of the relevant bodies, e.g. licensing authorities and tax offices. The forms are available to download.
Registering a company
An entry in the Commercial Register is mandatory for larger companies, depending on:
- the level of turnover;
- the number of staff and their qualifications;
- the range of services provided;
- its business connections.
However, it is also possible to register voluntarily in the commercial register.
You must advise the local trade licensing office of your company’s activities.
Many offices require personal registration. In larger towns, offices offer rapid business registration. Forms may be found on your municipality’s website.
You can get help with forms via the Economics Ministry’s business start-up software package (Softwarepaket für Gründer und junge Unternehmer).
Social security registration
Employers have to calculate the medical, healthcare, pension and unemployment insurance contributions and - backed up with proof of contributions - report and pass these to the employee’s sickness insurance scheme. The Social security contributions are paid half by the employee and half by the employer (exception: ‘geringfügig Beschäftigte’ – people working less than 15 hours a week).
Since 1 January 2009, all people resident in Germany have been obliged to take out medical insurance. Germany has both statutory and private medical insurance providers.
Services Directive: Points of single contact
The service directive is a European legal provision that enables companies, which are providing services within the European Union, to get significant relief in their country of origin. Providing services within the European Union , to get significant relief in their country of origin. The directive includes the provisions for entrepreneurs, that wish to found a company or temporarily provide services in an EU Member State or the EEA (i.e. the 27 EU Member States, incl. Island, Liechtenstein and Norway). It obliges all Member States to remove unnecessary bureaucratic obstacles and eases the formalities of the companies. In addition, public authorities are becoming more efficient.
In order to implement the directives, each Member State had to name ‘ Points of single contact’ (PSC) and to install e-government portals, which help the companies to carry out all administration formalities online. The PSCs allow detailed information concerning all administration affairs, which are connected to the foundation or expansion of a service company in a specific country. Examples of possible questions:
- What licenses, notifications or permissions do I need to found a company (in my country of origin or abroad)?
- What do I have to do if I want to temporarily offer my services abroad?
- What do I need to do to apply for a licence? Which authority is competent?
- Are the licences subject to a fee? What kinds of deadlines apply?
- Which acts and decrees apply in my sector?
- What do I need to do to establish, for instance, a restaurant or a shop? Or to work as a tour operator in another country without actually setting up a company?
- Where can I turn for personalised advice and further information?
Thanks to the PSCs, you no longer have to turn to different authorities!! The PSC enables you to find all relevant information and file your online order, through this portal, with the relevant authorities. You can also process your administration formalities electronically through the PSC. Therefore, contact the PSC of the country in which you are operating.
All PSCs belong to the European EUGO Network and can easily be reached through a central website. Naturally all PSCs services have to be considered as mere offers. Likewise you always have the possibility to immediately turn to the relevant authorities.
For liberal professions special rules and procedures apply, such as: tax reference number, authorisation issued by the relevant chamber, proof of professional qualifications, etc.
Craftsmen must abide by specific rules as well. You will need a craftsman’s card when registering your business, if they wish to engage in an activity requiring a permit. It is issued by the local chamber of handicrafts after entry on the craftsmen’s register.
To be entered in the craftsmen’s register, a master craftsman’s certificate must be presented. The requirements defined in the Handicrafts Act must be satisfied.
You can find opportunities for further training and information about setting up a new business on the following portals:
You can obtain an overview of the support programmes available at the federal and local level through the support database, which acts as a one-stop-shop for businesses and start-ups in Germany.
The Credit Institute for Reconstruction (KfW) also offers support for businesses.
The Chambers of Industry and Commerce and Chambers of Crafts offer support at the regional level.