How Foreigners Can Start a Business in Germany: Registration, Visa, and Taxes

A foreigner can start a business in Germany, but the process depends on citizenship, residence status, and the type of activity. Citizens of the EU, EEA, and Switzerland usually only need to register their residence and meet the normal business requirements. Third-country nationals need an Aufenthaltstitel that allows self-employment or entrepreneurial activity.

This article is suitable for people who live in Germany and want to start a small business, work as a Freiberufler, or register a Gewerbe. If you are setting up a company entirely from abroad, buying a stake in a larger structure, or launching a regulated activity, it is better to involve a tax adviser, lawyer, or the relevant IHK/HWK early on.

First Decide: Freiberufler or Gewerbe

In Germany, self-employment is divided into two large groups.

Freiberufler are liberal professions. These include, for example, doctors, lawyers, engineers, architects, translators, journalists, teachers, artists, tax advisers, and similar intellectual or creative professions. The reference point is §18 EStG, but the final decision on a specific activity is made by the Finanzamt.

Gewerbetreibender means an entrepreneur engaged in trade or commercial activity. An online shop, marketplace business, agency selling services, cafe, craft workshop, and some IT and consulting models may require a Gewerbeanmeldung at the local Gewerbeamt.

The main difference at the start is this: a Freiberufler usually registers directly through the Finanzamt, while a Gewerbe is first declared at the Gewerbeamt and then still has to go through tax registration.

Who Can Start a Business

Status	What is usually needed
EU, EEA, and Swiss citizens	Anmeldung at the place of residence, registration of the activity, and compliance with tax and professional requirements
Third-country nationals already in Germany	Check whether the current Aufenthaltstitel allows self-employment; if necessary, get permission from the Ausländerbehörde
Third-country nationals outside Germany	Apply for a self-employment or entrepreneur visa before starting the activity in Germany
Students and employees	Check restrictions in the residence permit and employment contract; sometimes a separate Nebenbestimmung or permission is needed

Do not start issuing invoices until it is clear that you are allowed to carry out this activity. For third-country nationals, violating the conditions of the Aufenthaltstitel can create immigration problems.

Visa and Residence Permit for Self-Employment

For entrepreneurs from third countries, the key legal basis is self-employment under §21 AufenthG. In practice, the authorities look not only at the idea itself, but also at its connection to the German market.

They usually assess:

an economic interest or regional need for the product or service;
the expected positive effect on the economy;
realistic financing through own capital or a credit commitment;
the business plan, experience, qualifications, and viability of the model;
health insurance;
sufficient retirement provision if the applicant is older than 45.

For Freiberufler, the logic is similar, but the focus usually shifts to qualifications, clients, contracts, portfolio, income, and professional suitability. The requirements and document list depend on the consulate or Ausländerbehörde, so check the current Merkblatt specifically for your city or country of application.

Choose the Legal Form

For a small business, a few legal forms are most often considered.

Form	When it fits	Liability and capital
Einzelunternehmen	One person starts a simple commercial activity	Personal liability with all assets; no minimum share capital
Freiberufliche Tätigkeit	Liberal profession without a Gewerbe	Personal liability; registration through the Finanzamt
GbR	Two or more people run a small business together	Usually personal liability of the partners; a clear agreement between the partners is needed
UG (haftungsbeschränkt)	Limited liability is needed, but there is not enough capital for a GmbH	Possible with low capital, but the capital must be fully paid in; there is an obligation to build a reserve
GmbH	Startup, hiring employees, investment, higher risks and turnover	Minimum Stammkapital of 25,000 euros; incorporation, accounting, and reporting are more complex and expensive

For a GmbH and UG, you need a notary, founding documents, and registration in the Handelsregister. For an Einzelunternehmen and a Freiberufler, the start is simpler, but personal liability is higher.

Step-by-Step Business Registration

1. Register Your Address

If you live in Germany, first complete the Anmeldung at the Bürgeramt. The address is needed for the tax office, the bank, public authorities, and business correspondence.

2. Check Your Right to Be Self-Employed

Third-country nationals need to check the wording in their Aufenthaltstitel. If it does not allow Selbstständigkeit or Erwerbstätigkeit to the required extent, contact the Ausländerbehörde before launching the business.

3. Check for Special Permits

Some activities cannot be started with simple registration alone. Additional licenses, qualifications, or entries in registers may be required for gastronomy, transport, taxis, craft professions, security, insurance mediation, financial services, medical professions, and other regulated activities.

For crafts, check with the Handwerkskammer; for trade and service businesses, check the IHK; for recognition of foreign qualifications, use the official Anerkennung in Deutschland portal.

4. Register a Gewerbe if the Activity Is Commercial

The Gewerbeanmeldung is submitted to the Gewerbeamt or Ordnungsamt for the place of business. In many cities, this can be done online, but the process, documents, and fee depend on the municipality. After registration, you receive a Gewerbeschein or confirmation of the Gewerbeanmeldung.

Freiberufler usually do not submit a Gewerbeanmeldung, but they must still notify the Finanzamt about the start of the activity.

5. Submit the Fragebogen zur steuerlichen Erfassung

After starting the activity, you must send the Fragebogen zur steuerlichen Erfassung to the Finanzamt through ELSTER. Since 2021, tax registration for a new business has been handled electronically. ELSTER states that the form must be submitted without a separate request within one month after the start of the activity.

The form usually includes:

type of activity;
expected revenue and profit;
bank details;
choosing or declining the Kleinunternehmerregelung;
whether a Umsatzsteuer-Identifikationsnummer is needed for intra-EU transactions;
information about partners or the company, if the business is not an individual one.

After processing, the Finanzamt assigns a Steuernummer for the business. The USt-IdNr. is requested separately or together with tax registration, if it is needed for your business model.

6. Open a Separate Account

For an Einzelunternehmen, the law usually does not require a separate business account, but in practice it makes accounting much easier. For a UG and GmbH, a separate account is needed to deposit capital and run the company.

Check the bank’s terms: many personal accounts prohibit commercial use. Among solutions for small businesses, you often see Finom, Kontist, N26 Business, and accounts at ordinary German banks, but the right choice depends on the legal form, turnover, cash operations, and accounting requirements.

7. Set Up Accounting and Invoicing

From day one, keep contracts, incoming and outgoing invoices, receipts, bank statements, and correspondence that matters for taxes. For Buchungsbelege in 2026, the general retention period under AO/HGB is 8 years; for books, records, inventories, annual financial statements, and certain organizational documents it is 10 years; for business correspondence it is usually 6 years.

If you are not sure which category a document belongs to, keep it longer and clarify with a Steuerberater. For a business with VAT, employees, imports, stock, or several countries involved, it is better to set up the accounting before the first sales.

How Much It Costs to Start a Business

For a simple Gewerbe, startup costs are often limited to the municipal registration fee. The exact amount depends on the city and the type of activity, so check the website of the local Gewerbeamt.

For a Freiberufler, tax registration itself is usually not the main cost, but you may need professional insurance, qualification recognition, chamber membership, or advice.

UG and GmbH are more expensive: you need a notary, Handelsregister registration, account opening, founding documents, and ongoing accounting. For a GmbH, the minimum Stammkapital is 25,000 euros; at incorporation, usually at least half must be paid in, but the capital obligations and share payments must be structured correctly. A UG can be created with less capital, but capital that is too low increases the risk of insolvency in the first months.

Taxes: What to Check in Advance

Einkommensteuer for Einzelunternehmen and Freiberufler

The profit of a sole trader or Freiberufler is taxed with personal Einkommensteuer. The tax is progressive: in 2026, the Grundfreibetrag is 12,348 euros, and after that the rate rises according to §32a EStG. Very high income can fall under the 45% rate. Not everyone pays Solidaritätszuschlag on Einkommensteuer: after the reform, it mainly affects high tax bases.

Gewerbesteuer

Gewerbesteuer is paid by commercial businesses, but Freiberufler are usually not subject to this tax. For individuals and Personengesellschaften, a Freibetrag of 24,500 euros applies to Gewerbeertrag. The rate is made up of the Steuermesszahl of 3.5% and the municipal Hebesatz, so the final burden depends on the city.

For an Einzelunternehmen and partnerships, part of the Gewerbesteuer can be credited against Einkommensteuer, but the calculation depends on profit, the Hebesatz, and the personal tax situation.

Umsatzsteuer and Kleinunternehmerregelung

If you use the standard VAT regime, you charge Umsatzsteuer on invoices, file returns, and can claim Vorsteuer on expenses. The standard VAT rate in Germany is 19%, while 7% applies to some goods and services.

The Kleinunternehmerregelung under §19 UStG exempts you from charging German VAT if the limits are met. In 2026, the main reference points are these: total turnover in the previous calendar year did not exceed 25,000 euros, and in the current calendar year it does not exceed 100,000 euros. This is not the same as Kleingewerbe, and it does not exempt you from Einkommensteuer or income recordkeeping.

If you voluntarily opt out of the Kleinunternehmerregelung, the decision usually binds you for several years. For B2B clients, international services, and large startup expenses, the choice of VAT regime is worth discussing with a tax adviser.

Körperschaftsteuer for UG and GmbH

UG and GmbH pay Körperschaftsteuer on company profits. Under the KStG, the rate for periods up to 2027 is 15%; Solidaritätszuschlag and Gewerbesteuer also apply. When profits are paid out to the owner as salary or dividends, separate tax consequences arise.

Insurance and Risks

Health insurance is mandatory for living in Germany. Self-employed people should compare gesetzliche Krankenversicherung and private Krankenversicherung in advance, because contributions and access depend on income, status, age, family situation, and insurance history.

Besides health insurance, check:

Berufshaftpflicht or Betriebshaftpflicht for professional liability;
Vermögensschadenhaftpflicht for advisory and financially sensitive services;
insurance for equipment, office, or warehouse;
retirement provision, especially if it is a visa requirement or part of the profession;
mandatory contributions to the Berufsgenossenschaft or chambers, if they apply.

When You Need a Steuerberater or Lawyer

You can start a simple activity on your own if the income is clear and the risks are small. But advice becomes almost essential if you:

are a third-country national and are changing your immigration status;
are setting up a UG or GmbH;
work with VAT in several countries;
hire employees;
buy a stake, raise investment, or take out a loan;
work in a regulated profession;
are not sure whether you are a Freiberufler or a Gewerbe;
plan significant turnover already in the first year.

Short Launch Checklist

Describe the activity and check whether it is a Freiberufler activity or a Gewerbe.
Check your right to be self-employed in your Aufenthaltstitel.
Choose the legal form and assess personal liability.
Clarify licenses, chambers, and qualification recognition.
Submit the Gewerbeanmeldung if the activity is commercial.
Send the Fragebogen zur steuerlichen Erfassung through ELSTER.
Decide on VAT and the Kleinunternehmerregelung.
Open a suitable account and set up bookkeeping.
Arrange insurance and document retention.
Set aside money for taxes and advance payments.

FAQ

Can You Start a Business Without German Citizenship?

Yes. Citizenship itself is not a barrier. What matters more is the right of residence and the right to carry out self-employed activity in Germany.

Does Everyone Need to Register a Gewerbe?

No. A Freiberufler usually registers with the Finanzamt without a Gewerbeanmeldung. If the activity is commercial, a Gewerbeanmeldung is required.

Can You Use a Personal Bank Account?

For a simple Einzelunternehmen this is sometimes possible, but it depends on the bank’s terms and is inconvenient for bookkeeping. For a UG and GmbH, a separate company account is required.

Which Is Better: Kleinunternehmerregelung or VAT?

The Kleinunternehmerregelung simplifies the start if turnover is small and clients do not need invoices with VAT. The standard VAT regime can be more advantageous for B2B clients, large expenses, and international work. The decision affects pricing, bookkeeping, and cash flow.

Can You Start a Business Before the Finanzamt Responds?

In many cases, the activity starts before you receive the Steuernummer, but the Fragebogen zur steuerlichen Erfassung must be sent on time, and invoices and VAT have to be handled correctly. If there are immigration restrictions, first obtain permission for self-employment.

Bottom Line

Starting a business in Germany is realistic if you divide the task into four blocks: the right to be self-employed, the correct business form, registration with the authorities, and tax accounting. The most common mistakes are starting without checking the Aufenthaltstitel, confusing Freiberufler with Gewerbe, using outdated Kleinunternehmerregelung thresholds, and postponing bookkeeping until the first tax return.