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BUSINESS

Everything you need to know about setting up a business in Germany

Ever dreamed of setting up a cafe in your favourite Kiez? Always wanted to plug that huge gap in the German market? Setting up a business in Germany can be a daunting prospect, but help is at hand in our comprehensive guide.

Everything you need to know about setting up a business in Germany
German bureaucracy can be a daunting beast. Photo: Depositphotos/Xalanx

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Before you even think about starting your new venture, it is worth making sure that you have got the basics out the way.

Whether you are from Germany, another EU-country, or anywhere else in the world, you will not be able to set up a business until you are registered at an address.

Other basic requirements include being over the age of 18 and, unsurprisingly, being legally allowed to practise the profession of your choice.

If you have all those bases covered, then you can take your first steps in setting up your business.

Work out what kind of business you are

Depending on what kind of business you want to set up, there are different authorities to refer to and different requirements to fulfil. When it comes to German bureaucracy, it is sometimes hard to see the wood for the trees, but here are a few questions to ask yourself.

Firstly, there are two ways of being self-employed in Germany, so are you going to be a business person or a freelancer? If you plan to go into something like retail, trade or catering, then you are almost certainly a business person.  

If your chosen occupation is one of the so-called “Freie Berufe” or “liberal professions”, such as those in medicine or journalism then you will need to register as a freelancer. If this sounds more like you, check out our guide on setting up as a freelancer instead.

A businessperson in Berlin. Photo: DPA

Secondly, do you require any special permissions? There are some occupations which are “subject to authorization”, which means they require a licence or certain qualifications.

To find out whether this applies to your business, you can get in touch with the German Chamber of Trade and Industry (IHK) or, if you are a tradesperson involved in manual or skilled labour, the Chamber of Skilled Crafts (HWK).

The Economy Ministry website also provides information on which professions are subject to authorization.

Register with the authorities

Once you’ve worked out what you want to do, it’s time to prepare yourself to go deep into the belly of the beast of German bureaucracy.

Depending on your field, you may need to come into contact with several different administrative offices, but the most important one is the Gewerbeamt (Trade Office). This is where you will register your business.

The key thing is to turn up with the right paperwork. The website Selbststaendig.de has a handy checklist on this, which includes ID, any relevant licences or qualifications and, for the non-Germans, your residence permit. Skilled tradespeople may also need a trade card.

Do your research

If this first step goes smoothly, the Trade Office should transfer your details to other departments such as the Tax Office or relevant trade association.

However, it is best to assume that nothing will be done for you, says Julian Boyce, an Australian restaurateur who has set up several businesses in Berlin.

“First and foremost: know the rules. Ignorance won’t help you in the face of German bureaucracy,” says Boyce. “Do your research on all the regulations and the various licences you need from the various administrative offices.”

Depending on your business, you may need to work with other offices such as the Ordnungsamt (Public Order Office), Bauamt (Planning Office) or Bezirksamt (District Office).

Knowing as much as you can about the various requirements you need to fulfil and which offices are responsible for them can help you avoid any nasty shocks.

“We once had to delay an opening and spend a huge amount extra on soundproofing because we weren’t aware it was required,” says Boyce. The Bauamt, in other words, are not going to give you a checklist.

“Ask people in the know, and find out everything you require before you open,” advises Boyce. “Ask a German, preferably someone with experience.”

Once you know what you’re looking for, the prospect of going to several different administrative offices for several different applications will be less daunting. All you’ll need to know is where to go, and for that, the Economy Ministry has a handy online tool which helps you find the offices you need in your local area.

Filling out your taxes can be a serious cause of headache. Photo: DPAPhoto: DPA

Keep on top of book-keeping

Just like freelancers, business people need to register with the Finanzamt (Finance Office). There are three key numbers you will need to acquire: an Identification Number, a Tax Number and a VAT number.

Your identification number will be assigned to you automatically by the Federal Office for Taxes (BZSt).

The Finance Office will provide you with your tax number once you have successfully registered with them. This involves filling in a form which is rather dauntingly entitled “Fragebogen zur Steuerlichen Erfassung”.

As Selbststaendig.de points out, filling in this form wrongly could lead to serious trouble down the line. If you fill it in wrongly, you could end up being burdened with advance payments which are far too high, or end up underpaying and being surprised by huge tax bills.

It is, therefore, highly advisable to get a Steuerberater, tax advisor or accountant, from the very beginning. With their help, you will not only avoid any major mistakes on the initial form, but you should be able to avoid any nasty surprises when things are up and running.

“Get someone who can speak to you in your own language, and with whom you can discuss sensitive matters,” says Boyce. This, after all, is somebody who will know every little detail of your business, and therefore your life. In the major cities, there are plenty of tax advisors who offer English-speaking services.

Health insurance

Last, but by no means least, comes health insurance. Regardless of where you come from, this is a legal requirement in Germany, and you will need to provide proof of it when you register as a business person.

Statutory health insurance can prove to be quite expensive for business people, as your monthly payments are calculated according to your income. Many people therefore choose to switch to private health insurance.

LOOKING FOR A JOB WHILE SETTING UP? Browse thousands of English-language vacancies in Germany

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WORKING IN GERMANY

EXPLAINED: The 25 most in-demand jobs in Germany

For those considering relocating to Germany - or looking for a new profession - here are the most in-demand jobs out there, according to a study by LinkedIn.

EXPLAINED: The 25 most in-demand jobs in Germany

Germany is desperate to fill jobs. In autumn last year, authorities said there was a shortage of 390,000 skilled workers. 

The new government plans to ease red tape and overhaul immigration policies to make it easer for non-EU nationals to come to the country. 

READ ALSO: What Germany’s coalition proposals mean for citizenship and immigration

But many people already within Germany might also be thinking about a change of career, or pivoting to a related sector, especially after the Covid pandemic changed the world of work. 

For those who are curious, international job search engine LinkedIn has published a list of jobs that are in-demand in Germany. Although lots of positions in Germany require that you speak German, many companies are international and encourage English speakers to apply.

What is the list?

The so-called LinkedIn Jobs in Trend 2022 list shows the 25 occupations that have grown the most over the past five years compared to other other positions. 

The list “allows insight into how the job market is evolving and the long-term opportunities it presents – whether you’re looking to change careers, re-enter the workforce or upskill for future challenges,” said LinkedIn. 

It’s based on LinkedIn data between January 2017 and July 2021. 

READ ALSO: How to boost your career chances in Germany

Here is the list of the top 25 positions, including the core skills required for each and the desired amount of experience for candidates according to LinkedIn.

In some of the descriptions below we haven’t translated the job name  to German – that’s because it is usually advertised in Germany with the English name.

1. Consultant for the public sector (Berater*in für den öffentlichen Sektor)

Responsibilities: Advising public and government institutions on the modernisation and digitalisation of administration and infrastructure

Most common skills: Public Policy, Management Consulting, Policy Field Analysis

Top regions hiring in: Berlin, Hamburg and Munich areas

Average years of experience: 2.8 

2. Product analyst (Produktanalyst*in)

Responsibilities: Product analysts use metrics to evaluate a company’s products to determine whether they meet current and future market needs

Most common skills: Tableau, Google BigQuery, SQL

Top regions hiring in: Berlin, Hamburg and Munich areas

Average years of experience: 3.7 

A man at his home office desk.

A man works at his ‘home office’ desk. Photo: picture alliance/dpa | Sina Schuldt

3. Business development specialist or consultant (Beschäftigte in der Geschäftsentwicklung)

Responsibilities: Business development employees develop companies, enter new markets and evaluate sales opportunities

Most common skills: salesforce, account management, inside sales

Top regions hiring in: Berlin Munich and Frankfurt areas

Average years of experience: 3.3

4. Sustainability manager (Nachhaltigkeitsmanager*in)

Responsibilities: Sustainability management employees are based in corporate social responsibility (CSR) departments and look after the social, environmental and economic aspects of a company

Most common skills: Sustainability reporting, corporate social responsibility, life cycle assessment management

Top regions hiring in: Munich, Berlin and Hamburg areas

Average years of experience: 3.8

5. Cyber Security Specialist (Cyber Security Spezialist*in)

Responsibilities: Unlike IT security, cyber security is not limited to the environment of your own company, but also keeps an eye on wider threats from the internet in order to ward off viruses, Trojans or ransomware

Most common skills: ISO 27001, Security Information and Event Management (SIEM), vulnerability assessment

Top regions hiring in: Munich, Frankfurt and Cologne-Bonn areas

Average years of experience: 7.1

6. Developer for machine learning (Entwickler*in für maschinelles Lernen)

Responsibilities: Machine learning developers create so-called artificial intelligence. They research and design models and algorithms that enable machines to recognise patterns in large volumes of data, among other things

Most common skills: TensorFlow, Python (programming language), Keras 

Top regions hiring in: Berlin, Munich and Cologne-Bonn areas

Average years of experience: 3.3 

READ ALSO: Working in Germany – 7 factors that can affect how much you’re paid

7. User Experience (UX) Researcher

Responsibilities: User experience researchers find out what users need and want and prepare these findings for developers, marketers, designers and others

Most common skills: Usability testing, design thinking, human-computer interaction

Top regions hiring in: Berlin, Munich and Cologne-Bonn areas

Average years of experience: 4.6

8. Real estate finance specialist (Spezialist*in für Immobilienfinanzierung)

Responsibilities: Real estate finance specialists accompany and advise clients from the initial property enquiries stage to closing the deal and agreeing on financial arrangements

Most common skills: Construction financing, finance, sales

Top regions hiring in: Munich, Frankfurt and Hamburg areas

Average years of experience: 5.3

9. Head of Public Affairs (Leiter*in Public Affairs)

Responsibilities: Public affairs is the strategic aim to integrate the interests of the employer into political decision-making processes. Also known as lobbying, the job description should not be confused with public relations (corporate communications)

Most common skills: Politics, international relations, strategic communication

Top regions hiring in: Berlin, Munich and Cologne-Bonn areas

Average years of experience: 7.2

10. Information security officer (Beauftragte*r für Informationssicherheit)

Responsibilities: Information Security Officers protect data in analogue and digital form. To do this, they ensure that sensitive data is only accessible to authorised persons at all times.

Most common skills: ISO 27001, Information Security Management System (ISMS), data protection management

Top regions hiring in: Frankfurt, Munich and Berlin areas

Average years of experience: 10.2

11. Specialist in talent acquisition (Spezialist*in für Talentakquise)

Responsibilities: Talent acquisition specialists identify suitable job candidates and take care of the strategic development of the Talent Acquisition department

Most common skills: Employer branding, sourcing, talent management

Top regions hiring in: Berlin, Munich and Frankfurt areas

Average years of experience: 3.8

12. Expansion manager

Responsibilities: Expansion managers accompany the growth of companies and take care of things like the purchase or leasing of business space in optimal locations

Most common skills: Business development, marketing, strategic planning

Top regions hiring in: Berlin, Düsseldorf and Munich areas

Average years of experience: 5.7

13. Test engineer (Prüfingenieur*in)

Responsibilities: Cars, wind turbines, lifts, amusement park rides and countless other technical constructions must be regularly checked for safety. This is where test engineers come into play

Most common skills: LabVIEW, Matlab, electrical engineering

Top regions hiring in: Munich, Hamburg and Tübingen areas

Average years of experience: 4 

14. Marketing (Marketingmitarbeiter*in)

Responsibilities: Marketing employees (Associates) support the planning and implementation of marketing activities for companies and organisations

Most common skills: Social media marketing, online marketing, content marketing

Top regions hiring in: Berlin, Hamburg and Munich

Average years of experience: 2.7

15. Data engineer (Dateningenieur*in)

Responsibilities: Data engineers deal with the collection, processing and checking of data

Most common skills: Apache Spark, Amazon Web Services (AWS), Apache Hadoop |

Top regions hiring in: Berlin, Munich and Cologne-Bonn areas

Average years of experience: 4.8 

16. Personnel officer recruiting (Personalreferent*in Recruiting)

Responsibilities: Recruiters use job advertisements and various channels to search for suitable candidates for open positions in the company and personally recruit suitable candidates

Most common skills: Active sourcing, e-recruiting, employer branding

Top regions. hiring in: Munich, Berlin and Cologne-Bonn areas

Average years of experience: 3.3 

A woman sits at a desk.

Are you looking for a chance in career? Photo: picture alliance/dpa | Finn Winkler

17. Manager in strategic partnerships (Manager*in Strategische Partnerschaften)

Job Purpose: Strategic partnerships managers are responsible for building and maintaining relationships with business partners to further the development and distribution of their own products and services

Most common skills: Business development, account management, product management

Top regions hiring in: Berlin, Munich and Frankfurt areas

Average years of experience: 6

18. Head of Software Development (Leiter*in Softwareentwicklung)

Responsibilities: Software Development Managers are responsible for all stages of software application development. They control and structure planning, organisation and execution

Most common skills: Agile methods, cloud computing, product management

Top regions hiring in: Berlin, Munich and Frankfurt areas

Average years of experience: 12.2 

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19. Data science specialist

Responsibilities: Data science experts or data scientists help companies to make data-based decisions. They build a structured database from raw data, analyse data and prepare it with business background knowledge

Most common skills: Python (programming language), R, SQL

Top regions hiring in: Berlin, Munich and Hamburg areas

Average years of experience: 3

20. Robotics engineer (Robotik-Ingenieur*in)

Responsibilities: Robotics engineers develop and programme robots and other intelligent assistance systems, whether for medicine, gastronomy, or future cars.

Most common skills: Robotic Process Automation (RPA), UiPath, C++ 

Top regions hiring in: Munich, Frankfurt and the Hanover-Braunschweig-Göttingen-Wolfsburg areas 

Average years of experience: 3.8 

21. Investment associate (Investmentmitarbeiter*in)

Responsibilities: Which areas are worth investing in, which companies are suitable for takeover? This is checked by investment managers through market observations, financial modelling and due diligence procedures

Most common skills: Private equity, corporate finance, mergers & acquisitions (M&A)

Top regions hiring in: Frankfurt, Munich and Berlin areas

Average years of experience: 2.7 years

22. Chief Information Security Officer

Responsibilities: Many companies are not only urgently looking for information security officers (see position 10), senior positions in this professional field are also in high demand

Most common skills: Information Security Management System (ISMS), ISO 27001, IT Risk Management

Top regions hiring in: Munich, Frankfurt and Berlin areas

Average years of experience: 14.3

23. Manager in strategic sales (Manager*in im strategischen Vertrieb)

Responsibilities: Strategic Sales Managers usually look after selected target and existing customers over a longer period of time. Duties include preparing quotations and negotiating prices

Most common skills: Solution selling, business development, account management

Top regions hiring in: Munich, Stuttgart and Frankfurt areas

Average years of experience: 9.3

24. Communications manager (Kommunikationsmanager*in)

Responsibilities: Communications managers take care of PR work inside and outside a company – this includes planning communication strategies as well as implementing campaigns on social networks or organising press appointments and events

Most common skills: Strategic communication, public relations/PR, internal/external communication

Top regions hiring in: Berlin, Munich and Nuremberg areas

Average years of experience: 5.4 

25. Specialist writer for medicine (Fachautor*in Medizin)

Responsibilities: Medical writers produce documents in a medical context, such as study reports for scientific journals, texts for regulatory authorities and information sheets for medicines – but also journalistic texts for websites or magazines

Most common skills: Clinical studies, scientific writing, life sciences

Top regions hiring in: Frankfurt, Berlin and Munich areas

Average years of experience: 5.2

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