Starting a business from abroad
hire a lawyer now

Different requirements for EU and non-EU citizens when setting up a business in Germany

As an EU citizen, you have the opportunity to start a business in Germany, but you must comply with certain specific rules and regulations. For founders from outside the EU, the process is generally more challenging, as additional bureaucratic hurdles must be overcome.

We set
your demands
through.

Enforce legal claims in just 3 steps
Simple, convenient & fast – we enforce your rights.

commissioning

Give us your mandate easily and conveniently via online form from home.

lawsuit & trial

We will take care of all the remaining steps for you. Sit back and relax.

Success

We will successfully enforce your claim and you can enjoy the success immediately.

Company formation in Germany for EU and EEA citizens

In principle, every EU citizen, as well as citizens of EEA countries (Iceland, Norway, Liechtenstein), and Switzerland, can set up a business in Germany quickly and without red tape. These countries benefit from special regulations, such as the right to freedom of movement, freedom of establishment, and freedom of trade, which significantly simplify starting a business. Therefore, self-employed individuals can work in Germany both as freelancers and with commercial intent.

Despite the uncomplicated conditions for setting up a company, there are still some formal requirements that must be observed, such as possession of a valid residence permit, for example a settlement permit.

Hire us now

Company formation in Germany for third-country nationals (non-EU citizens)

In structures that include German real estate—for example, a "Christmas tree" of BVs with a GmbH at the top—it is crucial that a restructuring is correctly assessed from a German perspective. A change in the shareholding at the top of the structure, such as the contribution of a holding company, can trigger a real estate transfer tax liability in Germany. The same applies if the shareholding ratio at the top of the group changes, for example, through a sale, gift, or inheritance. This demonstrates that the absence of tax consequences in the Netherlands by no means means that no taxes are due in Germany.

For citizens from third countries (non-EU countries), starting a business in Germany is not as easy as it is for EU citizens, as self-employment requires a residence permit or settlement permit. These must be applied for at the relevant immigration office. While the residence permit is temporary, the settlement permit is permanent.

Requirements for a residence permit
A residence permit can be granted if there is an overriding economic interest in the planned business establishment or if there is a specific regional need. Further criteria include the expected positive impact of the activity on the economy or secured financing, such as equity or a loan commitment.

Requirements for a settlement permit
The settlement permit for third-country nationals requires the fulfilment of the following conditions (Residence Act Section 9 Paragraph 2 Sentence 1):

To obtain a settlement permit in Germany, third-country nationals must meet several requirements. First, the applicant must have held a residence permit for at least five years. Furthermore, the applicant's livelihood must be secure and they must have paid contributions to statutory pension insurance for at least 60 months. A clean criminal record is also required, as is a valid work permit that allows for either employment as an employee or self-employment. Furthermore, the applicant must be able to demonstrate sufficient German language skills and basic knowledge of the German legal and social system, as well as living conditions.

Management from abroad
A non-EU citizen can, in principle, serve as managing director of a company in Germany. However, the managing director must be able to perform his or her duties without restrictions. The specific tasks and responsibilities can be stipulated in a managing director's contract. However, establishing a company does not automatically grant an unrestricted residence permit for managing directors or shareholders. It is important to clarify beforehand whether the immigration authorities approve the position as managing director in Germany, as otherwise legal problems may arise.

Founding without personal presence in Germany

Founding by foreign citizens without a notary appointment
The notary appointment often presents a challenge, as the personal presence of all managing directors is required to sign the founding documents. However, the shareholders do not have to be present at the appointment. It is sufficient for them to be represented by an authorized representative (usually a managing director).

If a shareholder from abroad cannot attend the incorporation meeting, they must submit a notarized power of attorney. This power of attorney must generally be in German, which may require a translation. Depending on the country of origin of the power of attorney, additional authentication, such as an apostille or legalization, may be required to validate the documents for German legal purposes.

Founding without a notary appointment for German citizens
German citizens who are abroad at the time of company formation and cannot appear in person at the notary appointment have the option of appointing an authorized representative to sign the founding documents on behalf of the founder. Once these documents have been signed, the founder will receive copies of the relevant documents either by mail or email. The founder must then take the (printed) documents to the German embassy in the respective country to obtain authorization to sign them. It is important that the signature actually takes place at the embassy, as only the embassy can perform the authentication. After signing, the original documents are sent to the German notary, who will initiate the next steps in the company formation process.

Do I need certified documents (apostille or legalization)?

If documents from abroad are relevant to your company formation (for example, if foreign companies act as shareholders), it may be necessary to have them certified with an apostille or legalization. This ensures that the documents are recognized in Germany. It is advisable to find out in advance exactly which of your documents issued abroad require additional certification.

For initial consultation

What should I consider when opening a business account?

Opening a business account can be challenging for foreign founders, as the requirements vary considerably depending on the country and bank. For citizens of an EU country, opening a business account in Germany is generally straightforward. Founders from third countries, however, often have to meet stricter requirements to open an account. Further information can be found here.

We also offer you a comprehensive checklist for setting up a GmbH or UG.

Do I need German language skills to start a business?

Generally, founders who want to start a business in Germany are not required to speak German. However, lacking sufficient language skills can significantly complicate your business operations. For example, it will be difficult to present your business concept to a bank and apply for a loan. Analyzing competitors in the German market or contacting German-speaking customers can also be problematic without sufficient German skills.

When is an interpreter required at a notary appointment?

If your German skills are insufficient, ask in advance whether the notary can offer the appointment in another language. Many notaries offer appointments in English or French. If this is not the case, or your language skills are insufficient, you will need to bring an interpreter to the notary appointment. Please note that some notaries only accept sworn interpreters.

Do I have to prove my professional qualifications?

In some cases, you may be required to provide proof of your professional qualifications. This applies, for example, if you want to start a craft business that requires a master craftsman's certificate. Therefore, find out about the specific requirements and prerequisites in your chosen industry early on.

Conclusion

Starting a business from abroad requires thorough planning and a good understanding of the legal framework. While citizens of the EU and EEA generally have it easier, founders from third countries must meet additional requirements. Professional start-up advice is essential to avoid bureaucratic errors and ensure an efficient start-up process.