The commencement, any change and termination of every established trade activity must be notified to the Trades Office responsible for the relevant place of business. This applies to every company regardless of its legal status. The registration of the business takes place at the Gewerberegister beim Ordnungsamt, Kleyerstraße 86, 60326 Frankfurt am Main if the business is to be located in Frankfurt. For the registration it will be necessary to take an ID-card as well as a valid visa including the permission to start a business in Germany with you. Furthermore, a company already listed in the Commercial register has to prove this by an up-to-date extract of the Commercial register.
An established trade (as against a travelling trade) is defined as when a tradesman conducts his trade permanently or regularly in premises fitted out for the conduct of day to day business. There is no requirement for particular premises to be used exclusively for trade or commercial purposes, an office can be run from a private home (provided local authority regulations do not rule this out).
If a trade is not exercised from fixed premises but is conducted on the move (travelling tradesman) a travelling tradesman’s permit must be applied for. A travelling tradesman’s permit can only be issued to individuals, not to legal entities.
Obtention of any approvals necessary
A small number of trades have to obtain approval from the authority which governs and regulates them before business can actually commence.
In particular approval is mandatory before any crafts trade is started. The trade has to be registered on the Roll of Craftsmen maintained by the Chamber of Craft for the region. The trade has to be in the hands of a master craftsman before it can be registered on the Roll of Craftsmen. There are only a few exemptions from the requirement to take the master’s proficiency examination.
Apart from this trades can be practised completely freely. In particular most commercial trades (wholesale and retail) are unregulated. Obviously certain particular trades are subject to a series of special regulations before they can be practised.
Trades Offices are official municipal or local authority bodies. The task of a Trades Office is to collate data on the conduct of trades and businesses. A trade register notification enables all the competent authorities to monitor and supervise the conduct of trades and businesses. On notification of a trade a check is made to see whether the necessary permits have been obtained. For example a crafts trade must produce the craftsman’s certificate issued by the Chamber of Craft.
On notification the Trades Office will complete a standard form with various duplicate copies.
Gewerbeanmeldung, Gewerbeummeldung, Gewerbeabmeldung (Stadt Frankfurt)
To comply with its duties the Trades Office forwards data from a trade register notification to the following authorities:
Tax Office, Chamber of Industry and Commerce, Chamber of Craft, Environmental Standards Authority, official Trades Inspectorate, Weights and Measures Office, Employment Office, Trade Associations, General local health insurance offices and Commercial Register.
In addition to notification of a trade, any change in the business e.g. a move, changes to the nature of the business or staff recruitment must be notified to the Trades Office. If several businesses (even if they are all in one town) are being conducted, each one must be notified separately. There are standard forms for notification of trades which can be requested in writing from Trades Offices. On request a tradesman can receive a written confirmation of the notification of trade. No fees are payable in cases of refusal. In some major cities notifications of trade are nowadays processed electronically.
The object of the trade or business must be described as accurately as possible.
If the competent authority or a court has been through valid legal procedures to ban an individual from exercising a particular trade, that individual may not engage in self-employed activity (not even through the use of a third party („business stooge“)).
Documents to be submitted for trade notifications
For a trade notification the following documents must be submitted to the Trades Office:
a) Proof of identity of the applicant:
-Proof of identity by means of ID card or passport:
-if appropriate evidence of power of attorney for a third party (individuals or legal entities) in written form;
- in the case of a director, board member or authorised signatory: extract from Commercial Register;
-any permits required (e.g. craftsman’s certificate, broker’s licence etc);
-a foreign national must produce a residence permit issued by the appropriate aliens office which incorporates permission to engage in self-employment.
b) Documents to be submitted by legal entities:
-Any company registered in the Commercial Register must produce a duly certified copy of that entry to prove its status.
-A company registered in a foreign Commercial Register likewise must produce the relevant registration documents. A German translation of them must also be submitted.
-A foreign company must nominate someone with power of attorney in Germany and an address in Germany. The proxy acting in this way must submit a power of attorney in his or her name.
-Proof that the premises exist in the form of a copy of the lease does not have to be submitted to the Trades Office unless there are doubts about the company.
-Submission of a business licence or information from the Central Trades Registry may be required in certain instances.
Chamber of Industry and Commerce/Chamber of Craft
All those in business are statutory members of the local Chamber of Industry and Commerce unless the trade in which they are involved comes under the responsibility of another chamber (e.g. the Chamber of Craft). Dual memberships of two chambers are possible (e.g. for mixed businesses (craft/industry, commerce/craft)). Trades Offices inform all the chambers by sending them a copy of the trade notification.
A trade notification also acts as a notice to the Tax Office. Tax Offices are kept informed by Trades Offices. In addition to this the relevant Tax Office ought to be informed once business actually commences.
The Tax Office will send the trader a questionnaire for tax assessment purposes. This also contains information on VAT procedures.
A company must deduct income tax from wages and salaries paid to its employees and forward it to the Tax Office for the place of business. Even though it is the employee who owes the tax, the employer/trader is liable for proper deduction and forwarding of income tax. He is liable for the income tax which he has to deduct and forward.
The company must deduct solidarity tax and forward it to the Tax Office. Solidarity tax is 5,5% of income tax.
If the employee is a member of a church public law entity which levies church tax, the employer must deduct church tax and forward it to the Tax Office together with the income tax and the solidarity tax. Depending on the Federal state in question, church tax amounts 8% or 9% of income tax.
Foreigners who are not citizens of an EU member state, an EEA state , the USA or Canada must apply for a residence permit allowing a business or trade to be taken up by approaching the relevant German mission overseas (Consulate etc) before coming to Germany. Citizens of EU member states are normally allowed to practise a trade or profession of their own in Germany.
residential right questions
Trades Offices inform the relevant Employment Offices by forwarding a copy of the trade register notification.
A businessman or employer needs a socalled company number as soon as he takes on anyone as an employee - regardless of the wage or salary level. This therefore applies to low earners as well. A company number can normally be ascertained by telephoning the Employment Office. Regardless of the number of employees only one company number is allocated per business. It is only used for employment and professional statistics and must be notified to the medical insurance scheme office (AOK) for social security purposes.
A work permit must be obtained from the Employment Office if it is the intention to take on employees who are not citizens of the EU.
Social security institutions
Trades Offices inform compulsory medical insurance scheme offices (AOKs) when a new business starts trading by forwarding them a copy of the trade register notification.
The business must register all staff (employees) who are liable for social security contributions with the local medical insurance scheme office, an alternative medical insurance scheme office or with other medical insurance offices. Every time an employee who is liable for social security contributions is taken on (Notification by the employer is compulsory) the medical insurance scheme office which has been chosen must be notified within 14 days. An employee must produce his or her membership certificate in the medical insurance scheme selected for the employer. The definition of employee includes persons on low or part-time wages i.e. including employees earning less than 325 Euro per month. If an employee leaves employment the medical insurance scheme office must be notified of the fact within six weeks.
In addition every employer must submit a return to the medical insurance scheme office by 15.4. every year listing all employees on the payroll as at 31.12. of the previous year together with their wages or salaries (using the „DEVO“ data compilation scheme). If there has been any change to the medical or pension insurance scheme institutions involved or a break in employment the medical insurance scheme office must also be informed.
The employer pays all contributions on behalf of the insured parties. Contributions are paid to medical insurance scheme offices acting as collection agencies for medical, nursing care, pension and unemployment insurance. They in turn forward these to the appropriate social security institutions.
Trade associations (Berufsgenossenschaften) are responsible for health and safety at work insurance. Every business is by law a member of the trade association for its particular trade or profession. When a business is started or taken over the appropriate trade association must be notified immediately. However the Trades Office also sends trade associations a copy of the trade register notification.