When you open a business you must register it with the office for registration and supervision of trades. This must be done at the local authority where the business is to have its registered address. Exempted from this is the work of freelancers. They do not register their business with the office for the registration and supervision of trades but only with the tax office. Such work does not come within the scope of the law in Germany concerning trade, commerce and industry regulations (GewO) and is therefore not liable for trade tax. Classified as freelancers are people who work:
- in a consultative capacity
- in an educative/teaching capacity or
- providing “high level services” (for example as a tax adviser, engineer, journalist, architect or in healing professions)
The precise decision as to whether or not a person is a freelancer is made by the tax office. (§18 section 1 of the Income Tax Law/EStG). To be issued with a tax number freelancers simply apply directly to the tax office in their place of residence in Germany.
Self-employed work must be registered, irrespective of whether this work constitutes the person’s main job or second job. The takeover of a business that is already in existence must be registered as well.
In order to register as a sole trader the following documentation is required:
- ID card/passport
- a valid residence permit which permits the holder to engage in self-employed work
- confirmation of registration as a resident, insofar as you do not live in Bonn
- proof of being registered with the Chamber of Handicrafts (for trades which require a specific license)
In order to register a company that is to be entered in the commercial register the following documentation is required:
- personal details of the directors
- a valid residence permit
- an excerpt from the commercial register (the entry into the commercial register must be carried out before registration with the office for the registration and supervision of trades)
- In the case of ordinary or limited partnerships or a registered businessman/-woman: Commercial register A. In the case of joint-stock companies e.g. private or public limited companies: Commercial register B. In addition, a certified copy of the memorandum and articles of association should be submitted.
The Commercial register is held at the magistrates’ court in Bonn, Wilhelmstraße 21, 53111 Bonn, Tel. +49 228 702-0.
In principle, freedom of trade exists in Germany. For some trades/businesses however the following licensing criteria have to be met:
- trade with over-the-counter pharmaceutical products (test of specialist knowledge)
- production of weapons and pharmaceutical products (test of specialist knowledge)
- trade in weapons, munitions, explosives and poisons (test of specialist knowledge)
- trade in parakeets and vertebrates (test of specialist knowledge)
- the running of hostelries which serve food and drink (attendance at official information seminar/in some cases a licence to trade)
- freight transport company (test of specialist knowledge)
- broker (permission according to §34c of the law concerning trade, commerce and industry regulations (GewO) and a police clearance certificate)
- work in the security industry (test of specialist knowledge)
- accounting assistant (qualifications in business/commerce and three years’ professional experience)
- debt collection agency (permit in accordance with the law on providing legal advice)
- nursing/caring professions
- skilled trade/craft (see the explanatory leaflet entitled “Separation of handicraft/industry” – “Abgrenzung Handwerk/Industrie”)
In the above cases proof must be provided of personal reliability, of specialist knowledge and, where necessary, that particular criteria are met with respect to rooms or premises.
The office for registration and supervision of trades distributes, amongst other things, copies of documents for registering a trade/business to the following institutions and authorities:
- Chamber of Industry and Commerce
As someone running a business, membership is compulsory by law. Further information about the role of the Chamber of Industry and Commerce and the services it provides can be found on the Chambers websites.
- Chamber of Handicrafts
As someone plying a skilled trade/craft, membership is compulsory by law. It is a necessary pre-condition to be registered on the handicrafts roll if you are to run your own business as a skilled craftsman. For many skilled crafts you require a master craftsman’s diploma before you can be entered into the handicrafts roll.
- Tax Office
After the tax office has received copies of your registration from the office for the registration and supervision of trades; it issues you with a tax number and sends you a form to fill in. On this form you have to provide, amongst other things, details concerning the turnover and profit you expect to achieve. After you have returned the completed form, you receive notification of the advance payments you must make for income tax, sales tax and, where necessary, for trade tax from the tax office. If you are not able to predict the level of your turnover and profit accurately yet, you should provide turnover and profit forecasts that are on the low side so as not to make unnecessarily high advance tax payments. (For further information see the information sheet “Steuern für Existenzgründer/-innen” (“Taxes for entrepreneurs”)
- Trade Co-operative
As a rule, the appropriate trade co-operative will get in touch with you. You are insured against accidents which occur at work. Further information can be obtained from the Hauptverband der gewerblichen Berufsgenossenschaften (Association of Trade Co-operatives), 54754 St Augustin, Tel. +49 2241 23101.
For further information please contact us.