Germany’s economy
With a 2013 Gross Domestic Product (GDP) of US$3.7 trillion, Germany is Europe’s largest economy, the 4th largest economy in the world and the world’s 2nd biggest exporter.
Main industries
Medicine and health care – Siemens
Chemicals and pharmaceuticals – Bayer, BASF
Financial services – Allianz, Deutsche Bank
Transport and logistics – Volkswagen, Deutsche Post/DHL
Technology and innovation – SAP, Deutsche Telekom
Energy and environment – E.ON, RWE
The startup scene
Berlin is considered the centre of the European startup scene, known colloquially as ‘Silicon Allee.’ More new businesses are started in Berlin than in any other Bundesland at 128 new businesses per 10,000 people (the German average is 84). According to McKinsey & Co., by 2020 Berlin startups could be responsible for creating 100,000 jobs. According to JobFluent:
- 5.3% of the adult German population are attempting to set up a new business or were owners or managers of young businesses
- 709 – the number of startups in Berlin
- 20 – the number of incubators/accelerators in Berlin
- 60 – the number of co-working spaces in Berlin
- VCs invested €130,000,000 in Berlin startups in 2012
Take a look at this interactive map to see the breadth of startups in Berlin.
Starting a business in Germany
Understanding the jargon.
Sole trader - business person or professional
- Single individual
- Funded by own assets
- Not bankruptcy protection
GmbH (Gesellschaftmitbeschränkter Haftung) - limited liability company
- Can be incorporated by at least one shareholder with a minimum share capital of €25,000 (either cash value or assets)
- Shares of a GmbH cannot be transferred to the public or registered at the stock market
- Management of GmbH is conducted by the company’s shareholders. Day-to-day running of the company can be undertaken by the director(s)
GbR (Gesellschaft bürgerlichen Rechts) - civil law partnership
- Flexible company model of one individual or contractually between two or more persons.
KG (Kommanditgesellschaft) - private limited partnership
- Two types of partner: silent (brings capital and has limited liability), general (don’t necessarily make capital contributions, have unlimited liability)
AG - (Aktiengesellschaft) - stock corporation
- Usually large businesses
- Possible to register on stock market
- Minimum share capital: €50,000
- Accounts are assured by a statutory auditor
OHG (OffeneHandelsgesellschaft) - general partnership
- No minimum share capital required
- Liability of members unlimited
- Formed by at least two investors
- All members can take managerial decisions and claim profits
Germany is famous for its fastidious bureaucracy and unsurprisingly, starting a business requires a lot of paperwork. This site provides a guide on who to contact and what forms need completing. The forms are downloadable and are available in English, German, French, Italian, Russian and Turkish.
Business law in Germany
Two main laws govern trade and commerce:
Commercial code (English), deals with a trader’s own liability and business development
Civil code (English) for small business owners
Registering your business – 3 steps
Step one – visit the local chamber of industry and commerce.
Here they will check the company name is not already registered, they’ll notarize your articles of association, check the company’s bank account and whether or not the initial capital has been deposited.
Step two – deliver the following documents to the German Commercial Register (electronically):
Notarized articles of association
Document showing management board structure
Confirm that share capital has been deposited
Step three – apply for trading license
Apply for trading license from local Office of Business and Standards
Register at the statistical office
Business tax
The major business taxes in Germany:
Municipal tax (Gewerbesteuer) around 18%
VAT (Mehrwertsteuer) 7% – 19%
+ income tax, solidarity surcharge (5.5%) and church tax (8% – 9%) for employees
Corporate tax (Körperschaftsteuer) if your business is incorporated – 15%
Comparison by country of various influencers on business. Scale runs from 1-100, with 1 being the best score.
Further resources:
Make it in Germany is administered by 3 government agencies and offers advice for those looking to start a business in Germany
How to Germany is an extensive resource for expats living and working in Berlin. It covers a broad range of topics including starting a business.
Toy Town Germany is the go-to site for all things expat in Germany. They host an extensive range of forums which are always extremely active.
Already started your own company in Germany? Leave your advice and experiences in the comments!