SELF-EMPLOYMENT IN GERMANY
Being self-employed in Germany is necessarily tied to residence. Without some sort of residence permit it will be difficult, if not impossible, for an individual to establish their own business. It is strongly recommended to consult with experts in the field of residence permits and experts schooled in labour, business and tax laws before becoming self-employed.
Residence permits are usually easily granted for highly specialized professionals, e.g. scientists, professional experts or specific senior managers etc., but other qualified professionals can also obtain them. If you want to move to Germany and become self-employed and you meet certain criteria, then you will most likely be issued a residence permit automatically (for both you and your family).
You need to show that your business will have a positive effect on the German economy. A positive effect under German law means that the company brings in investment capital of 500,000 Euros and creates 5 jobs - both are minimum requirements. The business idea will be examined for viability. If the investment capital is less than 500,000 Euros then the case will receive a closer eye.
For those who don't have half a million euros to spare, it is still possible to become self-employed in Germany provided you can meet certain criteria. These criteria would usually be related to the type of business, your qualifications and whether or not you may be doing something that could be done by a German national or some other qualified resident. The local Foreigners Office would most likely ask for certain documentation and then may well check with the local Chamber of Commerce or other organizations to see whether or not your business is specialized enough, economically viable and could not be done by a German or other qualified resident. If your business is deemed acceptable you will most likely be issued a residence permit with limitations as to what you can do and where you can do it. In other words, your permit may restrict you to a certain type of self-employment in a certain geographical area.
Once all the residence permit questions are sorted out, there are a number of steps that have to be taken to establish and register a business. A determination must be made as to the exact classification of your work. Rules and regulations may vary depending on what sort of business you plan to engage in. Like the residence permits, this can be complicated. Again, it is be advisable to get expert, professional help in finding out just exactly where your profession fits in.
Free-professionals (Freiberufler) are those who have academic training - lawyers, doctors, pharmacists etc. Other professions may be considered to be "trades". Then there are the "crafts" - such as butchers, barbers, florists etc. And then there are the "freelancers" - writers, artists, performers, independent consultants etc. Your work classification is important because it may very well have an effect on your tax liability, the various certificates and licenses you may need to acquire and whether or not you may be required to be a member of a professional association or other "chamber". For example, if you intend to engage in what may be classified as a "trade", you should check with the local Trades Office (Gewerbeamt).
You will most likely be required to register your business and get a certificate of registration (Gewerbeschein). To get this certificate you will have to demonstrate that you are of reliable character and qualified to run your business. Having a Gewerbeschein obliges you to pay local trade tax (Gewerbesteuer) and requires you to become a member of the local Chamber of Commerce (Industrie und Handelskammer - IHK) and to pay a yearly membership fee to them.
Free professionals may be exempt from certain registration procedures at the Gewerbeamt as may persons engaged in agriculture or forestry. But there may be other regulations and procedures that are required to be followed. To engage in "Crafts" you may need the approval of a trade association and establish the fact that you meet German standards relating to specific qualifications for your chosen craft.
"Freelancers" fall into a category all their own and have yet another, somewhat different set of regulations, laws and procedures that must be followed. The importance of getting expert advice about being self-employed in Germany cannot be stressed enough. Laws, rules, regulations and procedures are always undergoing change.
To avoid misunderstandings that may result in headaches and trouble with the authorities you should get professional assistance. Should your business flourish and reach a certain level of turnover or profitability you may want to consider incorporating a company in Germany.
To learn more about how we can add value to your business in Germany, please do not hesitate to contact us today!
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