Living, Working and Doing Business in Germany

 

Throughout Europe, Germany is considered one of the best places to do business, largely thanks to its robust economy that has weathered the recent economic slump better than most, writes Heather Landau

 

The process of moving to Germany with the intention of opening a business can often be convoluted, confusing and not without its fair share of bureaucracy.

If you’re considering moving into Europe’s largest economy, here are some important considerations that will make the process a little less stressful.

There are essentially three different types of permits or visas that will allow you to stay and even work in Germany.

 

·         Schengen visa

·         Resident permit

·         Settlement permit

 

Schengen visa. For non-EU residents, the Schengen visa will typically suffice for conducting most business and administrative activities while living in your home country. The holder can stay for up to 90 days in any 180-day period.  If a longer stay is required, you have to apply for a resident permit that authorises the holder to stay for an indefinite period.

 

Permanent residency and citizenship. If you have been living in Germany on the resident permit for a period of five years you can apply for a permanent visa and citizenship after eight years.

 

Settlement permit. Similar to permanent residency, the settlement permit allows you to stay in Germany on a permanent basis but doesn’t allow you to move around the EU.

Highly qualified applicants can be issued with a settlement permit immediately and for the self-employed who can demonstrate a secure livelihood, permits may be issued after three years.

Non-European family members have the same right but need to register to obtain a residence card.

 

Company Formation

 

There are four main types of company formation in Germany:

 

Limited Liability Corporation (GmbH). The GmbH is the most common option for corporations in Germany and requires a minimum share capital of €25,000.

There must be at least one shareholder without any stipulations on the country of residence or nationality, offering flexibility for business owners to open a business from overseas. You must however have a registered business address and at least one local representative.

 

Stock Corporation (AG). An AG can be set up with one or more shareholders, but this particular option is typically reserved for large corporations. The minimum share capital is €50,000 and can be funded by cash or real estate. From the five options of company forms, AG corporations tend to have the strictest regulations.

 

Partnership. There are three forms of partnership for German company formation, Private Partnerships (GbR), General Partners (OHG) and Limited Partners (KG). At least two shareholders are required for all three types of partnerships, with the main differences revolving around the liability of both partners. 

With OHG and GbR there is no limit on the liability of each partner, whereas in a KG partnership, one shareholder must have unlimited liability with the other having full liability but not exceeding the value of their shares.

 

Sole Proprietor. As suggested, this form of business registration has one sole proprietor who is responsible for all company liabilities and debt. It’s the simplest form of business registration, the least regulated and all profits are taxed at the individual rates.

If you’re self-employed, your business name must have your personal name in the title to avoid any confusion with competitors.

 

Incentives, Aid And Tax

 

The German government is happy to provide a number of incentive programmes including loans and grants to assist a new business in setting up and establishing their presence in the country. If you qualify, grants of at least 50% of the amount eligible for a grant can be obtained.

Germany offers competitive rates on company taxation with many corporations paying less than 30%.

Thanks to the strong economic climate and the welcoming attitude towards foreign entrepreneurs, now is a great time to start a business in Germany, enabling you to enjoy the prosperity the country has continually experienced over recent years.

 


Heather Landau is the managing director of Open A European Company.com. We offer our clients a number of services including company formation and incorporation, bookkeeping, virtual offices, tax planning, accounting, and immigration advice.