Tue, 9 February 2010
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Many expatriates are choosing to set up businesses in Germany, despite its bureaucracy and flatlining economy. Expatica looks at how expats can start companies here, and the opportunities and pitfalls that await them.Sick of working for other people? Fancy getting your hands on some of the money in what is still the world's third-largest economy? Ever thought about setting up a business in Germany and being your own boss?
Plenty of English speakers have taken their chances starting a business in Germany, ranging from relatively small companies such as English-language schools, Irish pubs and English-language bookshops, to bigger investments in the high-tech sector.
Opportunities for the ambitious
With German law making no distinction between Germans and foreigners in the establishment of companies and no restrictions on the repatriation of profits, nothing stands in the way of ambitious expatriate entrepreneurs with a little capital.
The basics of German company law have many similarities to those in English-speaking countries. It distinguishes between limited liability companies (equivalent to a British limited company), joint stock companies (equivalent of a British Public Limited Company), and various forms of partnerships. It is normally advisable to have a lawyer help you decide which is the most suitable for your needs and to go through the necessary official rigmarole.
Jumping the hurdles
Whatever form of company you choose, there are a number of bureaucratic hurdles to be jumped. The first important steps are to hire a notary and to register the business at the local court (Amtsgericht). Shortly after this the chamber of commerce should contact you, having received your details from the commercial register.
The next step is to organise two sets of tax registration, one for commercial tax at the so-called Gewerbesteueramt and one at the local tax office (Finanzamt). After this it is possible to obtain a certificate of registration (Gewerbeanmeldeschein) and to commence business.
Expat entrepreneurs
And how do expatriate founders of companies deal with this system? Paul Gurner runs St. George's Bookshop (Wörther Strasse 27 in Prenzlauer Berg), one of the best places in Berlin for second-hand English-language books. He says that bureaucracy was one of the biggest obstacles they faced when they set up the company around three years ago.
Getting hold of permits to open a business was a problem, as was taking on staff. "Employing non-Germans can be tricky. You have to show that you aren't taking a job away from a German," he says. "You have to inform the job centre about the vacancy and they send people round - even if you have someone lined up."
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