How to Register a Business in Germany as a Foreigner

Germany is a country where there are a large number of businesses ranging from sole proprietorships to Large Scale Merchandises. A large proportion of Germany’s economy is achieved from their Small and Medium Enterprises, and therefore the government is quite supportive of business startups, irrespective of the owner; local or foreign.

There are several types of companies that are generally promoted for startups: Gesellschaft mit beschränkter Haftung (GmbH), Aktiengesellschaft (AG), Offene Handelsgesellschaft (OHG), Kommanditgesellschaft (KG), GmbH & Co. KG, Töchtergesellschaft, Zweigniederlassung, etc (HowToGermany, 2019; LIESEGANG, n.d.).

Gesellschaft mit beschränkter Haftung (GmbH) is a limited liability company, where the shareholders are not personally responsible for the company’s debts. It can be intiated by even an individual shareholder, as long as the share capital is of a minimum €25,000. Aktiengesellschaft (AG) is a Joint Stock Company. Here, it is necessary to have a minimum of five members, with a minimum share capital of €50,000 each. In this category, no articles of association or authentication by a court is needed for the initiation. Offene Handelsgesellschaft (OHG is a General Partnership, where the partners have unlimited liability. 

Every partner must legally oblige to participate actively in all business operations, unless exceptions are made in the partnership agreement. Kommanditgesellschaft (KG) is a limited partnership, where there can be either General Partners  (Komplementär), with unlimited liability or Limited Partners (Kommanditist) whose liability is based solely on their nominal holdings. GmbH & Co. KG  is a Limited Partnership, where the partners are only liable as much as their registered share percentage. Töchtergesellschaft is a subsidiary; a non-independent company with its own management, only physically separated from its parent company. Zweigniederlassung is a more non-independent sales center of “Branch”, dependant completely on the parent, where there is a central administration.

There are several requirements when registering a business start-up in Germany (Government, n.d.). The main requirement would be the age; it is compulsory that you are an adult (age 18+). Also, you have to have a good reputation, eg. Never have been banned from a practicing profession, etc. next, you can register your company under any of the above mentioned business categories, based on your general requirement. For non-German European citizens, it is a must obtain a “European Certificate of Good Conduct”. There are several companies like the LIESEGANG that are recommended for obtaining support in the documentations and registration procedures, where the relevant documentations and legal clearances can be obtained for the registration (LIESEGANG, n.d.; HowToGermany, 2019).

Once the start-up is determined, the next step would be finding employees. For a foreigner, this may come up as a challenge, sue to the unfamiliarity, therefore there are mainly three categories of employees in Germany for hire: Free agents (freie Mitarbeiter), A full or part-time employee (Angestellter) and Temporary Workers (HowToGermany, 2019).

Free Agents are employees who are paid only for the agreed amount of work. They expected to take care of their own taxes and insurance, and are easy to be removed from the company if not useful. The hiring of a full or part-time employee entrusts many obligations on the company, such as deducting the taxes and insurance from the pay, giving a certain amount of vacation per year, and observing the law that ensures their employment rights, etc.