Starting a business in Germany as a foreigner: What you need to know

In recent years, starting a business in Germany as a foreigner has grown easier. The bureaucracy has been simplified, the employment laws have been changed to permit flexible working, and there are now subsidies for young entrepreneurs. 

Furthermore, foundations are starting to fund creative project research, and venture capital is booming like never before. In this article, our DNBC Financial Group’s experts will help give you all the information you need to know when starting a business in Germany as a foreigner.

Starting a business in Germany as a foreigner: What you need to know

Benefits when starting a business in Germany 

Doing business in Germany appeals to entrepreneurial expats for a variety of reasons. The country, among other things, has: 

• A strong economy and a high purchasing power 
• A culture of innovation 
• A reputation for being friendly to expats 
• Excellent transportation infrastructure and a highly skilled workforce

Businesspeople may rely on a stable political and economic environment in Germany. You are also triple protected against idea hacking: valuable assets such as inventions, logos, and concepts are all well safeguarded in Germany under intellectual property, copyright, patent, and trademark laws.

How to start a business in Germany as a foreigner

Legal forms in Germany

Following that, you must select a legal structure for your business. Aside from sole proprietorships and small partnership businesses, the following are some of the most common legal structures in Germany:

Public trading company

For wholesalers, incorporating as a public trading company (Offene Handelsgesellschaft - OHG) is an especially appealing option. To accomplish this, your company must register a formal partnership agreement in the commercial register. However, no minimum capital is required to assure this business form, and shareholders are not personally liable for any debt or bankruptcy.

Limited Partnership 

A formal partnership agreement, capital, registration as a public trading firm in the German commercial register, and a limited partnership (Kommanditgesellschaft - KG) are all requirements. Each partner's profit share is specified in the partnership agreement, and the owner is required to file an annual profit and loss statement to the regional tax authority. The owner is accountable in the event of bankruptcy or debt, while the limited partners' liability is limited to the amount of their investment.

Limited liability company

The most well-known business structure in Germany is arguably the limited liability corporation or GmbH. A GmbH registration in Germany is viewed as an entity that is financially distinct from the persons who run the firm, in contrast to the other alternatives on this list. As soon as the necessary taxes have been paid, all profits are immediately reinvested in the company. A GmbH must have a minimum capital of 25.000 euros, of which 50% must be paid before signup.

Submit a coherent business plan

When registering a business in Germany, you must declare an official purpose (Unternehmensgegenstand). This includes your company's mission and the activities it performs. It is legally binding, so before submitting an official statement, you should carefully consider your company's objectives and activities. Your business purpose should also be included in the articles of association.

Schedule an appointment with a notary

The initial step is to gather your shareholders and go to a notary public to register your business. Depending on the nature of your company, you may be required to register with both the commercial register (Handelsregister) and the German trade office (Gewerbeamt). 

Bring proper identification as well as all required documents, such as your articles of incorporation, a list of your shareholders, and your official purpose document. If you are unsure about what documents you require, consult with your notary.

Open bank account

A European bank account is required when you register your company with the Finanzamt and start paying taxes. If you’re too lazy to go to the bank to open an account, you can choose a financial institution as an alternative. DNBC financial institution’s digital payment platform is a great choice for you. To remain competitive in the market, DNBC keeps its fees low. If customers shop around, they can expect to find comparable or lower rates at DNBC.

Registration

Following that, you must go to the tax office (Finanzamt) and register as a freelancer (Freiberufler) or tradesman (Gewerbetreibender). Most people will need to obtain a trade license before filing a company registration with the tax office (Gewerbeschein).

The acronym GmbH will be familiar to the majority of business owners. This is an acronym for the legal entity known as a Gesellschaft mit beschränkter Haftung, which is quite similar to a limited liability company.

GmbH founders must invest 25,000€ in capital or raise capital from 1 € to the minimum amount. A GmbH must be notarized after the registration process is completed. In the long run, forming a GmbH in Germany will cost 25,000€, plus a 400€ registration fee and any additional notary fees.

About DNBC Financial Group

DNBC Financial Group is a financial organization that operates in the global financial market. It offers corporate and individual customers a smart digital payment system, a practical payment platform, and an easily accessible online money transfer/receipt service globally. 

DNBC Financial Group aims to make daily business operations simple, streamline international financial transactions, and guarantee that customers always reach their payment targets.