How to open or buy a business for a foreigner in Germany
A businessman from Leipzig, Dmitry M. tells his story of coming to Germany by opening his company.
At the beginning of the year, an entrepreneur from Leipzig Dmitry M. contacted me with questions on various topics. I, in turn, asked to write an article in the section on migration histories. For some reason, business usually does not go beyond promises from businessmen. But this time it worked out. I am pleased to publish the story of an experienced businessman who has created his business in Germany from scratch.
I have been in the cosmetics business since 1999. September 7th is another anniversary. He started in Russia, like everyone else at that time, with the organization of retail outlets. At the same time, he opened several educational centers for nail service masters. I bought the products in Moscow from various representatives of foreign companies and from other wholesalers working in the field of beauty business.
By 2021, I had already expanded my network in southern Russia to 18 stores and organized the first licensed training center in the region. My business also included the largest manicure studio in terms of the number of jobs.
Working with suppliers and intermediaries, I had to deal with dishonesty, irresponsibility and simply outright rudeness more than once. As a regional leader in the field of activity, this touched and tired me. In the end, a crazy, as it seemed, idea was born: creating a cosmetic brand, producing finished products at home, entering the Russian market and, in the future, other countries.
For this, since 2021, my wife and I began to study the market for the production of raw materials, containers and finished products in our area. We had a lot of meetings. It turned out to be very difficult to find real manufacturers. There were also real scammers, even in European countries. But we are persistent people! After a long search, we still found worthy partners and suppliers.
Business in Germany
Given the situation in those years, it was unsafe to import products and raw materials directly from suppliers to Russia. We tried to organize the main production of products at home. And in Germany they created a company through which orders from Russia were sent. It was she who supplied everything necessary for enterprises. This is how the German part of my story began. I'll tell you more about this.
On October 24, 2021, a GmbH was incorporated in Cologne. My wife and I acted as founders, and our relative, a German citizen, was appointed as the general director. At that time, the conditions for opening a German business for foreigners were such that it was necessary to have at least one German on the board. We then permanently lived on the territory of Russia.
For 3 years the company worked in the “export-import” system only for my business, in order to shine as little light as possible at the Russian customs of a real supplier. Indeed, at the very beginning it was very important that the database of importers, which fell into the hands of competitors due to the venality of customs officials, did not contain links to my main partners. If this had happened, the business would have suffered irreparable harm at the initial stage.
Features of small businesses in Germany
Features of small businesses in Germany.
Government support for small businesses in Germany
Part-time entrepreneurs "
Setting up a business in Germany
Benefits of starting a business in Germany
Forms of small business in Germany
Small and Medium Business Development in Germany: Lessons for Kazakhstan.
List of used literature
The importance of small business in a market economy is very great. Without small business, the market economy is unable to function or develop. Its formation and development is one of the main problems of economic policy in the context of the transition from an administrative-command economy to a normal market economy. Small business in a market economy is the leading sector that determines the rate of economic growth, the structure and quality of the gross national product; in all developed countries, small businesses account for 60–70 percent of GNP. Therefore, the vast majority of developed countries in every possible way encourages small businesses. A huge number of small firms, companies and enterprises operate in the world economy. For example, in India, the number of small businesses exceeds 12 million, and in Japan, 9 million. This small business, for example, in the United States alone, provides almost half of the increase in the national product and two-thirds of the increase in new jobs. But this is not the only point ... Small business, responding quickly to changes in market conditions, gives the market economy the necessary flexibility. Small business makes a significant contribution to the formation of a competitive environment, which is of paramount importance for our highly monopolized economy. It should also not be forgotten that small businesses have less impact on the environmental situation. To get a deeper and more detailed understanding and understand the need for small business, of course, it is necessary to consider the experience of leading foreign countries in the development of small businesses. In all foreign countries with normally developed market economies, there is strong government support for small businesses. For example, in Germany, subsidies to small businesses amount to about 4 billion marks annually. There are two committees in the US Congress with small business issues. It is headed by the Small Business Administration.
Each state has regional offices of 30-40 people. The purpose of the Administration is to support small businesses at the state level.
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Today, Germany is the sphere of interests of many entrepreneurs who are looking for ways to start a private business outside their country.
It attracts, first of all, a favorable climate for the development of small and medium-sized businesses, state policy aimed at maintaining private initiative, stability of political and economic systems, high rating indicators.
Features of German business organization
Entrepreneurs from different countries who decide to open their own business in the territory of the Federal Republic are guided by various reasons: the desire of those who are looking for profitable deals to form a positive image of their institution and attract partners; migration on official terms; access to the markets of the EU countries, etc.
Federal law allows both individuals and legal entities-foreigners to open their own company here.
Before you set up your business in Germany, you need to decide what organizational form will be the most rational for the implementation of the idea and the functioning of the company.
In Germany, you can find about four dozen pure and mixed forms, which are used in different sectors of business - large, medium, small.
If a foreign entrepreneur is looking for an opportunity to create a large business in Germany, he should pay attention to the two most effective forms:
GmbH is considered the most optimal for foreigners. When registering this type of company, you need to pay 125 thousand euros. If there is only one founder, without partners, he must pay the entire amount at once.
To relieve the financial burden from those who are looking for more profitable options on how to open a large business in Germany, a “mini-GmbH” can be considered an interesting idea.
Its authorized capital is 1 euro. For foreigners, this form is attractive, since due to the low amount of the authorized capital during registration, the amount of costs and duties is reduced.
Each country has its own laws governing business. Also, states differ in the level of development and degree of competition. There are other factors that determine the country's business climate. These nuances should be taken into account before starting your own business. Consider how to do business in Germany, what are the advantages of entrepreneurship in this country.
The advantages of Germany are quite clear. The general level of how people live in Germany significantly exceeds the indicators of the Russian Federation. The German economy is more developed. She is less prone to crises. Germany has fewer problems with corruption and artificial barriers to business development. The government of the country is implementing an extensive program to support entrepreneurship. That is why the number of companies in Germany is constantly growing. This in turn increases competition, as a result of which only the most efficient companies remain on the market.
European countries are actively attracting investors who inject capital into their economies. The requirements for potential migrants are decreasing from year to year. For example, today, business immigration to Germany does not imply the obligatory investment in the German economy of a certain amount or the creation of jobs. To obtain a residence permit in the country, only the following conditions must be met:
- the business must be profitable;
- the owner must independently bear all the costs and support his family, without using government subsidies;
- must be made timely tax payments;
- the business plan is studied by the Federal Chamber of Commerce and Industry for the positive impact of the business being developed on the local economy;
- the personal qualities of the owner, as well as the level his qualifications.
The listed conditions are most often taken into account when issuing a permit to open a company and obtaining a right of residence in Germany.
List of documents
The best option for business immigration is obtaining a Category D visa. To complete the official procedure, you will need to submit:
- 3 photos 3.х4. see;
- internal and foreign passports;
- a description of the business with a detailed indication of the scope of activities and expectations from the project (in German);
- original certificate of business establishment (Gründungsurkunde);
- notarized list of members and shareholders;
- contract for the hiring of a commercial director;
- extract from the Commercial Register (Handelsregisterauszug);
- certificate of knowledge of German;
- medical certificate of the absence of infectious diseases;
- financial documents confirming the owner's ability to support his business and family (you need to have at least 160 thousand Euro).
Documents should be brought to the German visa center in Moscow or the diplomatic authorities of the republic in other regions of Russia.
Choosing the organizational and legal form of the enterprise
Profit repatriation allowed
This permission allows owners of any type of business to transfer funds freely to our country after taxes are paid. If we consider America, Russia and other large states, then in them such conditions are available only to transnational companies. These business formations provide a lot of jobs, replenish the treasury with a tax on personal income, so countries make such concessions to them. In Germany, however, small business is still the backbone of the state, so it is not surprising that full repatriation of profits is allowed for it.
Your product will become a German mark
The “Made in Germany” brand makes the product competitive and attracts more consumers. In addition, goods manufactured in Germany bear the CE mark - Communauté Européenne. This designation is a demonstration that the product complies with the standards and directives of the European Union, is safe for consumer health and the environment. Such labeling will make the product competitive not only within Germany, but throughout the European Union. You can get a document yourself or with the help of a special center.
To receive it yourself, you need to visit a certification laboratory, where the goods will be checked in all parameters and reports will be drawn up. After that, it will be tested by a senior expert and, if it complies with all regulations, will receive a CE certificate. This procedure will cost a businessman 1,750 euros (129,500 rubles).
The state grants subsidies and subsidies to businesses
The German government issues subsidies for business in the form of concessional lending: the interest rate is from 3 to 10% and is reduced for the entire term of the loan. Moreover, if necessary, there the entrepreneur can be exempted from payments for the first two years. So the business will develop in a more comfortable financial environment. If the company has found funds outside the bank, but has already received a loan, the manager has the opportunity to repay the entire amount at a time. In some cases, it even turns out to avoid the accrual of interest. It is worth noting that such loyalty on the part of the state does not apply to enterprises selling tobacco and alcoholic beverages.
Also, when starting a business, subsidies are allocated there, which practically cover consulting services for the promotion and development of the company. The situation is similar with small businesses going through difficult times: an amount of up to 4 thousand euros is given, which should cover the services of a consultant to overcome a crisis situation. Such subsidies give a second chance to start-up entrepreneurs and are subsequently paid off by successfully realizing the economic potential of the rescued company.
The state refunds VAT to small businesses
This privilege applies to partnerships, entrepreneurs, freelancers and business limited companies. If the income for the year does not exceed 17,500 euros, and the next - 50,000 euros without tax deduction, then the state does not collect value added tax from business. There is also a list of goods and services, the proceeds of which are not taxed. This list includes medical services from doctors, dentists and trauma specialists, insurance services, summer schools, theaters, museums and land rentals.