Establishing a company, entrepreneurship in Germany: business migration, obtaining a business visa and residence permit, support for start-ups
This article covers the issues of business immigration, emigration to Germany: how to open and register a business in Germany, what the conditions for obtaining a business visa are. You will also learn about developing a business plan, opportunities for business consulting and financial support for start-ups in the country.
§ How to open your own business in Germany
The citizens of Germany, as well as those of the European Union and several other countries are free to choose, whether to establish their own business or work for hire, as an employed person in Germany. If a person has reached the age of majority, 18 years old, and does not have a judicial restraint on the performance of any activity, s/he can open their own business. However, not every person is entitled to be engaged in this or that kind of business: a number of professions in Germany are strictly regulated and to engage in them as an entrepreneur it is required to have the appropriate level of qualifications, and, for foreigners, that of the German language knowledge; examples of such professions: doctors / medicine, teachers / education. A number of other types of activities fall into different categories, requiring special permission to engage in them, for example: car mechanic, roofer, shipbuilder, broker. In this case, it is usually either required to have a German master craftsman’s certificate, or to take and successfully pass a special exam authorizing being engaged in this kind of activities, it may also be required to confirm your financial standing, provide a Police Verification Certificate, etc., depending on the type of your activity. The citizens of Russia, Ukraine, Kazakhstan and other some countries outside the EU and the EEA have to undergo the procedure for their educational qualifications or diplomas recognition in Germany; to this purpose you can also obtain a visa to have your foreign academic degree or obtain a visa to study in Germany. However, many other types of activities are not regulated and do not require any special conditions for beginning entrepreneurial activities.
In addition to having the appropriate qualifications and obtaining special permission, a novice entrepreneur has to choose one of their business activities categories, in particular:
Categories of business activities
- Beginning standard business activities (in German: Gewerbe, Gewerbetreibender);
- Being engaged in a free profession, freelancer (in German: Freiberufler);
- Beginning entrepreneurial activities that have to do with travel job (in German: Reisegewerbe, Reisegewerbetreibender), i.e. in this case it is the entrepreneur who visits customers to offer goods or services, rather than vice versa.
When beginning entrepreneurial activities, one should also decide on their legal corporate form, which will be critical for the entrepreneur’s liability, taxation, the required start-up capital to launch business, etc.
Legal corporate form major types as to entrepreneurial activity
- Private entrepreneur (in German: Einzelunternehmen)
- Registered merchant (in German: Eingetragener Kaufmann, e.K.)
- Simple partnership (in German: Gesellschaft des bürgerlichen Rechts, GbR)
- General commercial partnership (in German: Offene Handelsgesellschaft, OHG)
- Kommandit partnership (in German: Kommanditgesellschaft, KG)
- Limited liability company (in German: Gesellschaft mit beschränkter Haftung, GmbH)
- Limited partnership with a limited liability company as a general partner (in German: Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft, GmbH & Co KG)
- Joint-stock company (in German: Aktiengesellschaft, AG)
- and others...
So, if a person has the appropriate qualifications, has received the required permits and decided on the category of entrepreneurial activities and their legal corporate form, s/he can apply for their entrepreneurial activities registration; for more details on registering a company in Germany, see below on the page.
§ Business emigration, business immigration to Germany
Business activity in Germany is permitted without restriction for the citizens of their country, as well as those of the European Union and the EEA, however, citizens of other countries are required to obtain special permission to engage in entrepreneurial activities in Germany. Business can be done both by an individual entrepreneur, and by a manager or legally authorized representative of a company wishing to open their representative office in the Federal Republic of Germany, a subsidiary. The main law governing the conditions for granting permission is §21 of the Act concerning Residence, Employment and Integration of Foreigners in the Federal Republic of Germany (in German: Aufenthaltsgesetz), see the link below on the page. The main conditions for foreigners to open a business in the country are listed below:
- There is a need for or economic interest in this activity in the region of its implementation;
- This activity is expected to have a positive impact on the economy;
- The said kind of activities is financed at the expense of the entrepreneur’s own funds or lending.
These conditions are very generalized; for example, the competent regional authorities of the country assess the viability of a business idea, the experience and qualifications of a foreigner who wants to do business in Germany, the amount of capital invested, new jobs, the impact on employment and education of the population, as well as how innovative and research-related the business is.
§ Development of a business plan in order to open a company in Germany
In order to assess the business and possibly obtain a permit to engage in business activities, the entrepreneur provides the Embassy of Germany with their business plan. Below are the main sections of the business plan that have to be described to get started:
- Description of the business idea, substantiation of its feasibility, business strategy;
- Preliminary forecast of income and expenses and expenditures;
- About yourself, qualifications and experience in doing business;
- Investments, financing;
- The likely impact on the labour market, education of the local population;
- The likely impact on the research sphere, the economy of the region in which the activities will be carried on.
A positive decision on the business plan provided will be facilitated by the description of why the business will be successful and what will allow the entrepreneur to outperform the competitors, find and attract potential customers.
The German Embassy in some countries, beyond the business plan, also requests other detailed descriptions of the would-be business: investment plan, market research, competition analysis, marketing strategy, data on the planned number of jobs, and more.
If you meet these conditions and have a ready-made business plan, you can apply to the German representative office at your place of residence for a visa to engage in business activities in Germany.
§ Obtaining a business visa to Germany: conditions, procedure
The citizens of the European Union and the European Economic Area do not have to get either a special permit or a visa to establish and do business in Germany. However, for citizens of other countries, it is required to obtain a business visa to set up an enterprise or carry on entrepreneurial activities in the free professions field. An application for obtaining a visa shall be submitted to the Embassy or Consulate General of Germany in your country, at the place of your residence. General conditions for obtaining a visa to Germany are described on a dedicated page of our website.
Basic documents required for obtaining a business visa to Germany
- Application for a visa;
- Valid international passport;
- Documents confirming the qualifications to start your own business in the desired area;
- Business plan;
- Constituent documents, list of participants, shareholders;
- Confirmation of available funding;
- Confirmation of a foreign language knowledge;
- Personal history report/CV;
- For people over 45 years of age, proof of appropriate old-age insurance;
- Medical insurance.
Depending on the type of activity, the list of documents required for obtaining a visa may vary. A full list of the documents and conditions for obtaining a business visa in Germany can be found on the official website of the Embassy or Consulate General in your country.
With any academic degree available, such an entrepreneur is entitled to certain facilitations and privileges.
Refusal to issue a business visa
In case of a business visa denial in Germany, you can request information about the reasons for rejecting the application. Depending on the reasons for the denial, it may be required to provide the relevant documents or confirm the educational qualifications, revise the business plan to meet the requirements of the embassy. If the reason for the denial is a lack of qualifications, you may change the type of activity to similar or related, for which the requirements are less stringent.
§ Registration of a company in Germany and, later on, obtaining a permanent residence permit, a residence permit
After obtaining a business visa, an entrepreneur can enter Germany to begin their entrepreneurial activity. Upon arrival in the country, s/he has to register at the local Foreigners Registration Office (German Ausländerbehörde) and apply for a long-term stay permit (in German: Aufenthaltstitel, Aufenthaltserlaubnis), which is usually limited to 3 years with the possibility of further renewal. Under certain conditions, in the future you can get a residence permit; read more about how to obtain a residence permit in Germany
Then, a foreigner who has obtained a permit for doing business, has to apply for the registration of their company or entrepreneurial activities; this application has to be submitted to the local Trade Office (in German: Gewerbeamt), to the city administration at the place of residence or, for registration of activities in a free profession, - to the local branch of the Tax Office (Tax Inspectorate). To register a company or business, it is usually required to make an appointment and submit the documents listed below:
- Filled out application form;
- Money to pay the registration fee;
- International passport;
- Permit to stay and conduct entrepreneurial activities in Germany
- Certificate of Good Conduct (German: Führungszeugnis) from the police (in some cases);
- Required permits, qualifications and other documents in some special cases, when conducting certain types of activities.
When registering a business, the entrepreneurial activity is usually automatically registered with the Tax Inspectorate, the relevant chamber of commerce and other responsible institutions.
Besides, the entrepreneur usually has to conclude a contract for health insurance and disability insurance and, if so desired, for pension insurance. Another important type of insurance is professional liability insurance.
Another opportunity to launch a business in Germany is to buy an already-existing company or part of it, invest in a business already in place.
§ Support for start-ups, entrepreneurs in Germany
In Germany, comprehensive support is provided to the novice entrepreneurs and start-ups: it embraces both free information services, consultations, and financial support in the framework of hundreds of programs regarding gratuitous grants and soft loans, concessional lending.
Consultations for first-time entrepreneurs
In Germany, every novice entrepreneur can get free consultations at official counselling centers that help entrepreneurs organize their business. Depending on the type of activity, you can take advantage of the following offers presented in the list below. Some of them are free, others are paid, and it is also possible to enquire at the consultation center whether the consultation can be paid for as part of state programs to support entrepreneurs. When you go to the website of the relevant institution, pay attention to the menu items "Gründung", "Förderung", "Existenzgründung".
- Institut für Freie Berufe (IFB) - the Institute of Liberal Professions: Counselling centers for freelancers working in free professions
- Industrie- und Handelskammer - Chambers of Commerce and Industry - associations of entrepreneurs and enterprises
- Handwerkskammer - Chambers of Crafts and Trades, advice on craft professions
- Gründerportale/-initiativen - Portals to support entrepreneurs of the German lands
- Bundesagentur für Arbeit - Consultations for the foundersof their own business from the Federal Employment Agency
- English-speaking legal counsels and lawyers in Germany
- English-speaking tax consultants/ tax advisors in Germany
- English-speaking accountants in Germany
- Förderung unternehmerischen Know-hows - Promoting Entrepreneurial Knowledge Support Program
- bga - National Agency for Women Start-ups Activities and Services for women entrepreneurs
- Association of German Management Consultants
Another opportunity to get advice to a first-time entrepreneur is provided by fairs or Messen for the founders of their own business (in German: Gründermesse).
Any start-up needs a start-up capital, but not every entrepreneur has enough own funds to start their own business. To assess the required start-up capital, it is necessary to develop a detailed business plan, including the calculation of the required investments. Government agencies and various foundations offer many start-up financial support programs, including free grants as well as soft loans/ concessional lending. Each program has its own limitations and conditions that should be enquired about at the responsible agencies. The list below shows some support and financing programs:
- Einstiegsgeld and Gründungszuschuss - by the Federal Employment Agency for the unemployed;
- EXIST-Gründerstipendium and EXIST-Forschungstransfer - support for innovative projects by the German Federal Ministry for Economic Affairs and Energy;
- ERP-Gründerkredit – initial capital in the form of soft loans from the KfW Bankengruppe;
- German Accelerator Program - support for start-ups when entering foreign markets;
- Gründerwettbewerb – Digitale Innovationen - support for innovative start-up enterprises in the field of ITs;
- Gründungsfinanzierung - soft loans from L-Bank and the KfW Bankengruppe for start-ups, investment projects of start-up companies and freelancers;
- ERP/EIF-Dachfonds - venture capital from the European Investment Fund (EIF) and the ERP Fund;
- ERP-Beteiligungsprogramm - equity expansion for small and medium-sized enterprises.
Novice entrepreneurs interested in financial support for their start-ups can search for a suitable support program on the Federal Ministry for Economic Affairs and Energy website, a Database of support and financial assistance programs, to search, select "Förderberechtigte" - "Existenzgründer/in" in the field.
§ Useful links as to the work in Germany
- Aufenthaltsgesetz, §21 - Act concerning Residence, Employment and Integration of Foreigners in the Federal Republic of Germany
- EU regulated professions database
- Industrial Code, Trade Regulation Act, (in German: Gewerbeordnung)
- The Craft Trade Regulation Law, Trades and Crafs Code, (in German: Handwerksordnung)
- Portal for first-time entrepreneurs from the Federal Ministry for Economic Affairs and Energy
- The Integration durch Qualifizierung (IQ) support program for foreign entrepreneurs in Germany, with the assistance of the Federal Ministries
- Criteria for approval of foreigners entrepreneurial activity/ business activities, the IHK Rostok Chamber of Commerce