I would like to set myself up as a sole-trader in Germany. As I already know, more than 80 % of my income will come from one client only, I do not classify as a freelancer. Therefore, I would need to know what other types of sole-proprietorship I can look into, considering it will be a one-person business collaborating and working from Germany with one client only.
In Germany, there are two ways of setting up a business: you can either work as a freelancer (“Freiberufler”) or set up a business as a self-employed entrepreneur (“Gewerbe”).
Please note the following information on whether your business might be considered as a freelance (“Freiberufler”) or self-employed profession.
Freelance (“Freiberufler”):
Numerous professions are known as “liberal professions” (“Freie Berufe”). If you wish to set up a business in one of these professions, you usually work as a “Freiberufler”. These include:
Self-Employed business (“Gewerbe”):
If you would like to set up your own crafts or retail business, you will need to register your business. You need to do that in the town or municipality where your business headquarters will be. For some occupations, you will need to fulfil certain admission requirements. These kinds of occupations are subject to prior authorisation (“erlaubnispflichtiges Gewerbe”). This applies to handicraft businesses, financial service providers and nursing services, as well as many others.
Being self-employed or a freelancer makes a difference with regard to certain formalities and has an impact on your company’s legal structure. The legal structure provides a framework for dealing with legal matters. The decision on the legal structure of your business has significant implications - for example, it will determine how much equity you need and whether you are personally liable for your business. Before you choose a legal form for your business, it may make sense to consult a lawyer or tax advisor. You will also find out more about taxes, insurance and laws on “Make it in Germany”.
Information on residence requirements:
As an EU citizen, you are free to be self-employed and run a business in Germany.
As a third country national, in order to set up your own business you will need a residence permit that allows you to exercise a self-employed activity (“selbstständige Tätigkeit”). This may be a residence permit according to § 21 Immigration Law (AufenthG) or a permanent settlement permit. If you are not yet living in Germany, you will first need to apply for a visa for the purpose of a self-employed occupation at the competent German Mission in your home Country. Information on visa process are also available on “Make it in Germany”.
We hope you find the information useful and we wish you all the best for your future plans.
* Please note: The information presented here is a general service offering. Only the German missions and the foreigners’ authorities are responsible for the issuance of visa and residence permits. For further questions, please contact directly the respective authority.
Reference: Justina Godesberg
Projekt „Make it in Germany“
Institut der deutschen Wirtschaft Köln e.V.
Juli 2020
