This guide shows you how to register a business in Germany, from start to finish. It focuses on freelancers and sole proprietors.

Is it hard to start a business in Germany?

Not really. You just have to be organised. When you start your business, you have to fill a few complicated forms, but there is a lot of information online to help you. Your tax advisor can also do it for you. There are many resources to help business owners, even in English.

After that, you must do your accounting every month. This is the hardest part. A good tax advisor will make this very easy. Tax software like Sorted, LexOffice and Debitoor can help with invoicing and VAT reporting. Some banks like Kontist, Holvi and Penta can also make your accounting easier.

If you don't speak German, things are a bit harder. The form to register your business is entirely in German (but Sorted lets you fill it in English). The Finanzamt only communicates in German. If you have an English-speaking tax advisor, they can take care of everything for you.

If you are moving to Germany to become a freelancer, it's a bit more complicated, because you must find an apartment, register your address and apply for a residence permit all at the same time. During that time, you can't work (because you don't have a residence permit), so you need a lot of savings.

Taxes in Germany

If you are self-employed, these are the taxes you will pay. These are the taxes for sole proprietorships and partnerships. Corporations are taxed differently.

Trade tax

Cost: 0% to 3% of all profits above 24,500€

If you are registered as a Gewerbe, you must pay the trade tax (Gewerbesteuer). This is a tax on all profits above 24,500€. You can credit most of it from your income tax. In Berlin, you pay 1.05% more taxes on your profits with the trade tax. In other German cities, you pay 0% to 3% of your profits.

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Health insurance

Cost: 90€ to 895€ per month

If you live in Germany, you must have health insurance (Krankenversicherung). If you are self-employed, your health insurance is more expensive, because your employer does not pay half of it. The cost depends on the type of insurance you have. Health insurance is deducted from your income, so it reduces your income tax.

When you are self-employed, you have more health insurance options. You can have public, private or expat health insurances. A health insurance broker can help you pick the best option for your situation.

Related guide: Health insurance in Germany

Value Added Tax (VAT)

Cost: 0€

VAT (Umsatzsteuer) costs you nothing. You charge VAT on your invoices, and give that money to the Finanzamt. It's not included in your income. If you charge VAT, you also get a VAT refund for your business expenses.

Small businesses (Kleinunternehmer) can choose not to charge VAT. If they don't charge VAT, they can't get VAT refunds on their business expenses.

Income tax

Cost: Up to 35% of your total personal income

As a German resident, you must pay income tax (Einkommensteuer). The income from your business is also taxed.

Useful link: German income tax calculator - Ministry of Finance (in German)

Tax advisor and bookkeeping

Cost: 0€ to 2000€ per year

A tax advisor can help you register your business and file your taxes. They are expensive, but they are worth it. If you want to save money, you can use tax software instead. Sorted, LexOffice and Debitoor can help with invoicing and VAT reporting. Some banks like Kontist, Holvi and Penta can also make your accounting easier.

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Other business expenses

Cost: varies

If you run a business, you can get insurance against disability, lawsuits, mistakes, and other problems. This is optional. You could also need tools, equipment and office space.

You can deduct most of those expenses as business expenses. This allows you to pay less income tax.

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Cost of living in Germany

If you are moving to Germany to start your business, you must understand the cost of living. This tells you how much money you must earn to live well.

Related guide: Cost of living in Germany

Step 1: Register your address in Germany (Anmeldung)

In Germany, you must register your address every time you move. This is called the Anmeldung. When you register your address for the first time, you get a tax ID (Steueridentifikationsnummer) and a certificate of registration (Anmeldebestätigung).

You need a tax ID and a registered address to create an ELSTER account and register your business.

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In this step, you need:

In this step, you will get:

Step 2: Open a bank account

You need a bank account to register your business, and to pay your taxes later. You don't need a German bank account; any bank account that supports SEPA transfers is okay1.

If you form a corporation (GmbH, AG or KGaA), you need a separate business account (Geschäftskonto)1. It's required.

If you are a Freiberufler or a Kleinunternehmer, you don't need a business account1. You can use your personal bank account. Check your bank's terms and conditions. Some banks do not allow you to use your personal account as a business account1.

If you don't have a bank account, look at my comparison of German banks. Business banks like Kontist, Holvi and Penta can also make your accounting easier.

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Two bank accounts is better

You should have two bank accounts: a business bank account, and a personal bank account. Your business and personal transactions are separated, and that makes accounting easier.

The Finanzamt can freeze your account

If you don't pay your taxes, the Finanzamt can freeze your bank accounts. They will freeze all your accounts, not just your business account. They can also freeze your accounts in other EU countries1. When your bank accounts are frozen, you can't withdraw money or make bank transfers1.

Sometimes, the Finanzamt can freeze your accounts because of a mistake. This happened to me, and to people I know. Even if it wasn't my fault, it took a few days to fix. During that time, I could not use my bank account to buy food or pay my bills.

You can protect yourself with a Pfändungsschutzkonto (P-Konto). A P-Konto lets you access some of your money, even if the account is frozen1, 2. That gives you enough money to buy food and pay your bills1. You can convert your bank account to a P-Konto for free1, 2.

In this step, you need:

In this step, you will get:

  • A bank account for your business

Step 3: Get the right visa

  • If you are a citizen of the European Union, Iceland, Liechtenstein, Norway or Switzerland, you can already start a business in Germany.
  • If you have a German permanent residence, you can already start a business in Germany.
  • If you have a work visa or a Blue Card, look for a line that says "Selbständige Tätigkeit gestattet" (self-employment allowed) on your residence permit. If you see this line, you can already start a business in Germany. However, you must keep your job, or your visa can become invalid.
  • If you have a student visa, you must ask the Ausländerbehörde to change your residence permit. This will allow you to study and run a business at the same time. Many students have done it.
  • Otherwise, you must apply for a German freelance visa. To get a freelance visa, you must have clients in Germany. You can't get a freelance visa if all your clients are in other countries.

In this step, you will get:

  • A residence permit (Aufenthaltstitel)
  • The permission to be self-employed in Germany

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Step 4: Find a tax advisor

Tax advisors are very expensive in Germany, but they will save you a lot of money. They can register your business for you and take care of your tax declarations. They make accounting much easier, and they prevent expensive mistakes.

Related guide: List of English-speaking accountants and tax advisors in Berlin.

Step 5: Are you a Freiberufler or a Gewerbe?

Later, you will need to register your business with the tax office (Finanzamt). The tax office decides if you must register as a freelancer (Freiberufler) or a trade (Gewerbe).

The difference is very important. Tradesmen must get a trade licence (Gewerbeschein) and pay a trade tax (Gewerbesteuer). They must also be listed in the trade register (Handelsregister) and sometimes follow different accounting rules. You must do these things before you register your business with the Finanzamt.

Not every freelancer is a Freiberufler! This title is only for specific professions. Engineers, doctors, architects and teachers can be Freiberufler. Food delivery drivers and tour guides are not Freiberufler; they are a Gewerbe1, 2. Most commercial websites are registered as a Gewerbe.

Related guide: Freiberufler or Gewerbe, what's the difference?

Step 6: Get a trade licence (Gewerbeschein)

If you are a registering a Gewerbe, you must get a trade licence (Gewerbeschein) before you register your business with the Finanzamt.

In Berlin, you can apply for a Gewerbeschein online. You need a valid residence permit before you do this.

In the rest of Germany, you can use the paper form. Your tax advisor can also do it for you.

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In this step, you need:

In this step, you will get:

Step 7: Register your business with the Finanzamt

The next step is to declare your business at the Finanzamt. You do this by filling the Fragebogen zur steuerlichen Erfassung. Since 2021, you must do this online. Your tax advisor can register your business for you. If you don't speak German, Sorted built a free tool to register your business in English. Firma.de can also register a corporation for you.

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In this step, you need:

In this step, you will get:

Step 8: Tell your health insurance company

If you already have health insurance, you must tell your insurance company that you are going freelance. Health insurance for freelancers is more expensive, since your employer is not paying half of it. The insurance company will take the money directly from your bank account every month.

If you have public health insurance, the cost of your insurance depends on your income. Since you don't know your future income, they use your estimated income. If you pay too much for insurance, you will get a refund later. If you don't pay enough, you will get an invoice later.

If you are self-employed, private health insurance could be a lot cheaper. Since I switched to private, I save over 350€ per month, and I have better coverage. Talk to a health insurance broker about it. It's not a simple decision.

Related guide: Health insurance in Germany

Step 9: Update your website

If you have a website, make sure it follows all the German and European rules. Website owners can receive damage claims because they have a missing Impressum or incorrectly attributed photos. It happened to me, and it cost me a lot of money.

Related guide: How to run a website in Germany

Need help?

These resources offer information, advice and counselling for business owners and freelancers in Germany. They are here to answer your questions.

Official resources

Local chamber of commerce websites:

Business, startup and freelancing communities

English-speaking professionals