Landlords, Tenants

Starting a business in Germany

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

rsz_215703665686_a70838a440_o

The startup scene

[blockquote text=”Germany has everything it needs to be the world’s leading digital nation

” show_quote_icon=”yes”]

John Chambers, Cisco Chief

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%

forbes rankings

 

 

 

 

 

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!

Featured image: jacme31 under Flickr CC license

Leave a Reply

Your email address will not be published.