Trade-Based Self-Employment (“Gewerbe”)

A trade is a self-employed activity in which you sell goods, manufacture products or offer craft services – e.g. as the operator of a shop, restaurant, workshop or as a hairdresser or craftsperson.

Before you start, you must register your business with the Trade Licensing Office (“Gewerbeamt”), pay taxes, obtain any necessary permits and keep accounts.

Freelance activities such as those of self-employed doctors, lawyers, journalists, artists or teachers are not considered businesses. They do not have to be registered with the Trade Licensing Office, but directly with the Tax Office. You can find out more about this topic under ‘Freelance self-employment’.

In order to start a business and become self-employed, you need a residence permit in accordance with Section 21 (1) of the Residence Act. Other requirements must also be met. You can find out more on our topic page ‘Can I become self-employed?’.

The business plan is the foundation of your path to self-employment– you need it to make any progress with authorities and banks. You can find out how to write a good and convincing business plan on the website wir-gruenden-in-deutschland.de. Free business plan templates are available at unternehmenswelt.de.

• Your first point of contact is ‘Wir gründen in Deutschland’ (Starting a business in Germany). This multilingual website is specifically designed for migrants who want to start their own business in Germany. Here you will find lots of useful information in more than 10 languages. There is also a network of free advice centres in your federal state.
• The start-up portal of the Federal Ministry for Economic Affairs and Energy offers a wealth of knowledge and tips on self-employment. It also offers free advice via its information hotline.
• Detailed start-up advice from a management consultancy or start-up advisor usually comes with a fee. However, in some federal states, you can receive subsidies to cover the costs of consulting. You can find out what services are available in your federal state on the website deutschland-startet.de.
• Online start-up seminars can be found at gruenderplattform.de
• If you are unemployed and want to become self-employed, you can apply for an AVGS (§45 SGB III) at the employment agency. This entitles you to free advice, e.g. on marketing, accounting or the preparation of a business plan and financial concept. You are eligible if you have been receiving ALG I for at least six weeks. You can apply in person or informally in writing, stating your unemployment number and the start date of your unemployment. Important: The AVGS must be redeemed before you start your self-employment.

The German Federal Agency for Female Entrepreneurs (bga) supports women in starting, managing and developing their businesses. It is active in all federal states and connects female entrepreneurs with over 500 counselling centres, 1,300 experts and 350 networks. The services range from initial advice to specialised consulting across all industries. Topics include business succession, skilled trades and household-related services.

You can find further services for women on our topic page ‘Can I become self-employed?’.

Start-up grant

If you have been unemployed for at least one day and are still entitled to unemployment benefit I for at least 150 days and would like to be self-employed as your main occupation, you can apply for the so-called ‘start-up grant’ from the Employment Agency. You can do this directly at your local employment agency.

To receive the start-up grant, you must submit a sound business plan, a copy of your registration with the Tax Office and a so-called ‘viability certificate’ (“Tragfähigkeitsbescheinigung”) – this is a confirmation from business consultants or experts from a start-up centre that your business plan is well-thought-out. You must also submit a CV and all your certificates and evidence proving your qualifications to the Employment Agency.

If you receive the start-up grant, you will continue to receive your unemployment benefit I every month for six months and an additional €300 for your health insurance and pension. You will also have the opportunity to participate in seminars and workshops on various topics (accounting, marketing, etc.) free of charge. After the first 6 months, you have the option of receiving a monthly subsidy of €300 for a further 9 months. Whether you receive the start-up grant depends on your caseworker. It is their decision, as you are not entitled to the start-up grant.

Start-up allowance

If you receive basic income support from the Job Centre and would like to become self-employed full-time, you can apply for what is known as ‘start-up allowance’ (“Einstiegsgeld”). To receive start-up allowance, you must submit a good business plan, your CV and a copy of your registration with the Tax Office. The caseworkers at the Jobcenter may also request an expert opinion on your business plan.

The amount of the entry allowance depends on the duration of your previous unemployment and the size of your household and is usually assessed on an individual basis. You also have the option of applying for additional money for essential purchases (e.g. a computer) that you need for your work. You can receive support for up to 24 months in total. Whether you receive the entry allowance depends on your caseworkers. It is their decision, as you are not entitled to the start-up allowance. 

Subsidised loans from a development bank

A loan from a development bank such as KfW-Förderbank is usually cheaper than a normal loan. Development banks charge lower interest rates. In addition, you can usually agree on a grace period, which means you don't have to start repaying the loan right at the start of your business. You must apply for these subsidised loans in advance. You cannot apply for it directly through the development bank, but must contact your regular bank. Your bank will then forward the loan application to the development bank.

Guarantees for loans from guarantee banks

Here, a so-called guarantee bank (“Bürgschaftsbank”) assumes liability for the loans you apply for. In order to obtain a loan, you usually have to prove that you can repay the loan even if you fail. If you do not have any collateral yourself, a guarantee bank can take over for you. This increases your chances of being approved for a loan. You cannot apply for this guarantee directly through the guarantee bank, but must contact your regular bank.

You can search for funding for your business idea on the websites deutschland-startet.de and fuer-gruender.de. Depending on which federal state you live in and your personal situation, there are various funding programmes that may be suitable for you. Both websites feature a short questionnaire. Once you have completed the questionnaire, you will receive a list of suitable funding programmes free of charge.

Further information on the various financial support options offered by banks or the state can be found at unternehmenswelt.de.

• Tips and funding opportunities specifically for women can be found on the ‘Perspektiven schaffen’ (Creating Perspectives) portal of the Federal Ministry for Gender Equality.
• In addition to general funding, there are special programmes for women, e.g. the Gründerinnenbonus (Founders' Bonus) in Berlin. Other regional offers are also available – e.g. via Trading Twins.
• Founderland supports BIPoC women with financing – e.g. with training in pitching and negotiation to attract investors or business angels. Good to know: Business angels are wealthy individuals who invest money, knowledge and contacts in young companies.

Chamber of Industry and Commerce (IHK) or Chamber of Crafts (HWK)

In some areas, you can start a business without specific training or a licence. This is the case, for instance, if you want to start your own car rental business. For other areas of activity, you need a special licence. Without this licence, you are not allowed to work in this area. This applies, for instance, to restaurateurs, who need a so-called restaurant licence, catering companies, which must provide training in accordance with the Infection Protection Act, or taxi drivers, who need a passenger transport licence. Craftspersons (carpenters, bakers, butchers, car mechanics, hairdressers, bricklayers, etc.) usually require a master craftsman's certificate to open a craft business. Ask your local Chamber of Industry and Commerce (IHK) or Trade Office (“Gewerbeamt”) whether you need a permit for your trade. If you want to open a craft business, you must register with your local Chamber of Crafts. The Chamber of Crafts will then check whether you have the necessary qualifications. You can check whether your qualifications acquired abroad meet the requirements in Germany on the internet portal anerkennung-in-deutschland.de. 

Trade Registration Office (“Gewerbeamt”)

You must register your business with your local trade registration office. The location of your new business determines which trade registration office is responsible for you. You can find this using Behördenwegweiser: Select "Gewerbeamt" on the left and enter the postal code of your business location on the right. Make an appointment there and bring the following documents with you:

• Your passport and residence permit, including confirmation that you are allowed to work as a self-employed person
• If necessary: ​​the special permit
• A reference from the Central Trade Register (“Gewerbezentralregister”) or a certificate of good conduct (“Führungszeugnis”)
• If you are a tradesperson: your tradesperson's card

Check the website of your local trade registration office in advance for information about the documents required. Registering with the trade registration office comes with a fee. This is usually around €50. Detailed information about the fees charged by your local trade registration office can be found on their website.

The trades registration office will then inform all other authorities, such as the Tax Office, the employers' liability insurance association, and, if applicable, the local court, about your business registration. These authorities will then contact you by letter and request that you complete certain forms or submit additional documents. If you do not want to wait for these authorities to contact you, you can also contact them in person or by letter. Be sure to submit your business registration when you do so.

Tax Office

The Tax Office will send you the so-called "Tax Registration Questionnaire" (“Fragebogen zur steuerlichen Erfassung”.) Make sure you complete this questionnaire fully and correctly. Here you must decide whether you can and want to use the small business regulation (“Kleinunternehmerregelung”) and what type of accounting you will use. If in doubt, seek help from a tax advisor. However, their service comes with a cost. You can find tax advisors, for instance, on the website steuerberater.de.

You can also pick up the questionnaire directly from the Tax Office and then return it completed to them. This saves you time. You can find your responsible Tax Office using Behördenwegweiser. Select "Finanzamt" on the left and enter the postal code of your business location on the right.

Once you have completed the questionnaire and sent it to the Tax Office, they will issue you a tax number. You can find help completing the questionnaire, for instance, on the website www.fuer-gruender.de. You can also request assistance from a tax advisor for a fee.

You will need your personal tax identification number (IdNr.) for the tax registration questionnaire. You will automatically receive the ID number by mail when you first register your address in Germany. This number is valid for life. Every child born in Germany also automatically gets a tax identification number (IdNr.). If you have lost yours, you can request a new one from the Federal Central Tax Office.

Commercial Register (“Handelsregisterbuch”)

If you operate a commercial business, you must register your company in the commercial register in addition to registering with the Trade Office. For this, you will need the assistance of a notary public. You can find notaries in your area at notar.de.

Mandatory membership in the Chamber of Industry and Commerce (IHK) or the Chamber of Skilled Crafts (HWK)

You must become a member of the Chamber of Industry and Commerce (IHK) or the Chamber of Skilled Crafts (HWK). The amount of your membership fee depends on your annual turnover, legal form, and location. You can find the relevant Chamber of Industry and Commerce on the IHK website. You can find the relevant Chamber of Skilled Crafts (HWK) at handwerkskammer.de.

The general rule is: Allow sufficient time for the various registrations and administrative procedures. Gather detailed information beforehand and seek advice. Your decisions will have a major impact on your business.

You must provide a name for your business when registering with the Trade Office. If your business is registered in the commercial register, it must include the legal form in the name. Furthermore, you are not permitted to choose a name that has already been taken. The general rule for all businesses is that the name must not mislead customers. It is generally advisable to use your full name for your company name. You can seek advice on naming your business from the Chamber of Industry and Commerce (IHK) or the Chamber of Crafts (HWK).

As a business owner, you can choose between a partnership (sole proprietorship, GbR, OHG, KG, GmbH & Co KG, UG & Co KG) and a corporation (GmbH, UG, gGmbH, gUG, AG, Ltd., KGaA, eG).

The most crucial difference between a partnership and a corporation is that with a partnership, you are liable for any debts not only with your business assets but also with your personal assets. With corporations, liability is limited to your business assets. Partnerships have the advantage that you don't require a minimum capital to establish a business, and accounting is easier. Furthermore, partnerships and corporations differ in terms of the taxes they are liable for.

You can learn more about the different legal forms on the websites fuer-gruender.de, gruenderplattform.de and “Wir gründen in Deutschland. If you're unsure, you should consult a tax advisor or your local Chamber of Industry and Commerce (IHK) or Chamber of Crafts (HWK) to find the right legal form for your business. You can find tax advisors, for instance, on the website steuerberater.de. Choosing a legal form has far-reaching legal and financial consequences.

If your annual turnover in the previous year is not expected to exceed €25,000 (since January 1, 2025) and your turnover in the current year is not expected to exceed €100,000, you can take advantage of the so-called small business regulation. As a small business owner, you do not have to pay any VAT to the Tax Office. This also exempts you from submitting an advance VAT return. Furthermore, simple bookkeeping and profit calculation are usually sufficient.

You can indicate that you wish to take advantage of the small business regulation in the tax registration questionnaire when registering with the Tax Office. Please note: As a small business owner, you are not permitted to state VAT on your invoices, but you must indicate this, e.g., as follows: “„Gemäß § 19 UStG wird keine Umsatzsteuer berechnet.“” ("According to Section 19 of the German Value Added Tax Act (UStG), no VAT is charged.") And of course, you cannot deduct input tax either.

As soon as your sales increase or you wish to waive the small business regulation for other reasons, you can informally notify the Tax Office and switch to standard taxation.

Please note: If you earn more than €100,000 as a self-employed person in the current year, the small business regulation ends immediately, and you must calculate and pay VAT from that point on.

You can find out more about the small business regulation on the website fuer-gruender.de.

Health insurance:

As a self-employed person, you can choose between voluntary statutory health insurance or private health insurance. You can learn more about this on our "Health Insurance" topic page. Health insurance is mandatory in Germany. This means you must be insured. In addition to statutory and private health insurance, artists and journalists have a third option: You can also register with the Artists' Social Insurance Fund (KSK). With the KSK, half of your health, long-term care, and pension insurance contributions are paid from the tax revenue, and by other companies. However, you do not automatically become a member upon registration. The KSK will first verify your self-employment status.

Pension insurance:

Pension insurance is voluntary. You can take out voluntary pension insurance or make private provisions. However, you should definitely make some kind of provision for your retirement. You can learn more about this on the German Pension Insurance website.

Unemployment insurance:

Under certain conditions, you can voluntarily take out unemployment insurance. You can do this within three months of starting your own business at the local Employment Agency. You can learn more about this on existenzgruender.de.

Occupational Accident Insurance:

Generally, you are required to have occupational accident insurance. To get this insurance, you must register with the professional association responsible for your profession. If you have an accident at work or contract an occupational disease, the professional association will support you. If you have employees, you must also insure your employees through the association. The professional associations will also provide you with advice on occupational safety.

Occupational Disability Insurance:

Occupational disability insurance is not mandatory, but may be advisable. If you can no longer perform your job due to an accident or illness, occupational disability insurance will pay you a monthly pension. You can compare various occupational disability insurance policies on the Check24 portal.

Other Insurance:

Depending on your field of work and the products or services you offer, the following types of insurance may be useful:

• Professional Liability Insurance: This covers you if you cause financial loss, property damage, or personal injury to customers due to an error or incorrect advice.
• Business liability insurance: This covers personal injury or property damage caused by your business. This is important, for example, if a customer trips over a cable in your store and injures themselves, or if you damage a customer's floor while assembling a machine you've delivered.
• Property insurance (e.g., equipment insurance): This allows you to insure work equipment such as machines, computers, or tools against damage. This is worthwhile, for example, if you, as a café owner, want to insure your coffee machine, or if you, as a tradesperson, want to insure your specialised tools against theft or defects.

You can compare the services and costs of various insurance providers on finanzchef24.de.

If you, as a business owner, sell a product to a person or company and/or provide a service for them, you must issue an invoice. You must generally do so within 6 months of delivering the service. You must keep all invoices you issue for 10 years. The Tax Office can request these invoices at any time to verify that you are taxing everything correctly.

Your invoices must contain certain information. These are:

• Your name and address
• Name and address of the invoice recipient
• The invoice date
• Service period, i.e., the date on which you provided the service
• Type, scope, and date of the service provided
• Your tax number or VAT identification number
• The invoice number
• The VAT rate and the net and gross amounts (or, if you are a small business owner: the amount to be paid and a note that you do not charge VAT in accordance with Section 19 of the German VAT Act (UStG))

It is also advisable for your invoice to include the invoice recipient's customer number, the payment deadline you have specified, and your bank details. You can find further information on fuer-gruender.de.

The type of accounting you must maintain depends on your legal form and the amount of your revenue or profit:

If you are a sole proprietorship or a GbR (German Civil Code) and generate less than €800,000 in annual revenue or less than €80,000 in profit per year (as of 2025), you may maintain your accounting using a simple EÜR (income and expenditure account). With an EÜR (income and expenditure account), you must record all income and expenses in an analogue or digital cash book. You can learn more about this on the website fuer-gruender.de.

If your sole proprietorship or GbR generates more than €800,000 in annual revenue or more than €80,000 in profit, or your company is registered in the commercial register, or you have chosen a corporation as your legal form, you must prepare a balance sheet (“doppelte Buchführung”). You can learn more about this on wir-gruenden-in-deutschland.de.

If you want to do your own bookkeeping, you should take an accounting course. You can find corresponding courses at your Chamber of Industry and Commerce (IHK) or Chamber of Crafts (HWK). Alternatively, you can hire a tax advisor to do your bookkeeping.

Important: You must keep all invoices you issue and receive for 10 years. If the Tax Office audits your bookkeeping, they can request all invoices and documents from you.

The taxes you have to pay depend on the legal form you choose.

If you have chosen a partnership, you generally have to pay income tax, input tax, sales tax, and trade tax.

• The amount of your income tax depends on your company's profit. The higher your profit, the higher your income tax. You can deduct business expenses such as the cost of a company car and a home office, or advertising costs. As a freelancer, you generally have to pay your income tax in advance. You only exempt from advance payments if your expected annual income tax is less than €400. Advance payments are also not necessary if your income is below the basic tax allowance of €11,604 (as of 2025) or €12,348 (from 2026). Advance payments are due on March 10, June 10, September 10, and December 10. You will receive a notice from the Tax Office in advance stating the amount of the advance payment. This depends on your estimated profit in the "Tax Registration Questionnaire" or “„Fragebogen zur steuerlichen Erfassung“” (if you're just starting out) or your previous profit (if you've been working as a freelancer for at least a year). Once you've submitted your tax return for the entire year, a calculation will be made to determine whether you've paid too much or too little in advance. If you've paid too much, you'll get a refund. If you've paid too little, you'll have to pay the remaining taxes within one month. If your profit is below €11,604 (for 2025) and €12,348 (for 2026), you do not have to pay income tax. However, you must still file a tax return. You can find more information on tax returns in our "Tax Return" chapter.

• Anyone who generates financial revenue from their work generally has to pay taxes. These taxes are called value-added tax (VAT). If the small business regulation does not apply to you, you generally have to pay 19% tax on the income you earn in Germany. Some freelance professions, such as writers, artists, and similar professions, pay only 7% VAT (Section 12 of the VAT Act). Certain services in the healthcare field are exempt from VAT (Section 4 of the VAT Act). You must generally pre-register your VAT with the Tax Office by the 10th of each month. To do so, you must calculate your VAT liability. You calculate the VAT by deducting the VAT you paid for goods or services provided by other companies as part of your self-employment (known as input tax) from the VAT you invoice, and then submitting this result to the Tax Office. This is called an advance VAT return (“Umsatzsteuer-Voranmeldung”). You must submit the advance VAT return using the programme www.elster.de. If the VAT you invoice is higher than the input tax you paid, you must pay money to the Tax Office. If your input tax is higher than your VAT, you will receive a refund from the Tax Office. The annual statement is then submitted with the VAT return in the following year. You must submit this by July 31st. Please note: Small businesses can be exempt from VAT (small business regulation). In this case, you do not have to submit advance VAT returns. However, you must still submit a VAT return.

• All business owners must pay trade tax. The amount of trade tax depends on your profit and the municipality in which your business is located. Each municipality sets its own trade tax rate. As a rule, the trade tax rate is lower in rural areas than in large cities. You can find out how to calculate your trade tax on debitoor.de. However, partnerships only have to pay trade tax if their profit exceeds €24,500. If their profit is less than this, partnerships are exempt from trade tax. If you are required to pay trade tax, the Tax Office will send you a notice stating the amount of trade tax you must pay. This notice will also state the date by which you must remit the trade tax to the Tax Office.

If you have opted for corporation as your legal form, you must pay corporate income tax, input tax, VAT, trade tax, and withholding tax. If you receive a salary as a managing director, you must also pay income tax on your salary.

• A corporation does not pay income tax, but rather pays what is known as corporate tax or “Körperschaft­steuer”. The amount of corporate tax you pay depends on your profit. 15% of your company's profit goes to the Tax Office as corporate tax. Unlike income tax, there is no tax-free allowance for corporate tax, meaning that you must pay 15% of it to the Tax Office even if your profit is small. You must pay corporate tax in advance. The advance payment is due on March 10th, June 10th, September 10th, and December 10th. You will receive a notice from the Tax Office in advance stating the amount of the advance payment. That depends on the profit you estimated in the "Tax Registration Questionnaire" (if you are new to the business) or your previous profit (if you have been self-employed for at least one year). Once you have submitted your tax return for the entire year, a calculation will be made to determine whether you have paid too much or too little in advance. If you have paid too much, you will receive a refund. If you have paid too little, you must pay the remaining taxes within one month. Please note that you must submit your tax return by July 31 of the following year.

Consult a tax advisor before filing your first tax return at the latest. While the consultation service comes with a fee, it's challenging to do everything correctly without expert help. You can find tax advisors in your area on steuerberater.de.

Please note: During the Coronavirus pandemic, the federal government has extended some deadlines. Currently, extended deadlines still apply: Filing your tax return for 2024 is possible until April 30, 2026. But only if you have your tax return prepared by a tax advisor.

You can only file your tax return electronically. You can do so either on the official portal www.elster.de or by using other paid tools such as smartsteuer, taxfix, wundertax, etc. The elster.de portal explains what you need to do, but it can sometimes be challenging to understand. Paid tools, on the other hand, are easier to use. You can, of course, also file your tax return with the help of a tax advisor. While the consultation comes with a fee, a professional tax return may help you save taxes. You can find tax advisors, for example, on steuerberater.de. You can find more information on tax returns on our "Tax Return" topic page.

If you officially work as a self-employed person but actually work for a single company and are not truly independent in your work, you are probably considered "bogus self-employed." That means that you are only self-employed on paper, but are actually treated as an employee. In this case, the company would have to employ you regularly and pay social security contributions and income tax. Bogus self-employment is a criminal offence in Germany. This applies to both clients and contractors. You can learn more about the difference between bogus self-employment and genuine self-employment on the website of the Chamber of Industry and Commerce.

Whether you hire your employees full-time, part-time, or for a mini-job is your decision. You can, of course, also pay other freelancers for specific projects. Please note that you must pay social security contributions for employees who earn more than €520 per month. These contributions amount to approximately 21.9% (2025) of the gross salary you pay to your employees. For mini-jobbers, you do not pay social security contributions, but rather a flat-rate contribution of approximately 31% (2025) of the salary to the Mini-Job Centre.

If you hire employees, you must observe the following:

• You must apply for an employer's number (Betriebsnummer) for employees from the Employer Number Service (BMS) of the Federal Employment Agency. You will need this number to register your employees with Social Security or the Mini-Job Centre.
• The employment contract should be in writing. This is the only way to avoid misunderstandings and labour law disputes. There are specific rules you must follow when drafting an employment contract. More information on this can be found on the website of the Federal Ministry of Labour and Social Affairs. A sample employment contract can be found on the website of the Chamber of Industry and Commerce.
• You must register your employees with Social Security or the Mini-Job Centre and make contributions on their behalf. This applies even if you employ is a family member. Failure to do so constitutes a criminal offence. You must register electronically via the Social Security Registration Portal.
• You must register your employees with the statutory accident insurance scheme.
• You must pay your employees at least the statutory minimum wage, i.e.  €12.41 per hour in 2025. An increase to €12.82 per hour is planned for 2026. If you have any questions, you can call the Citizens' Hotline of the Federal Ministry of Labour and Social Affairs. The staff can be reached Monday to Thursday at +49 30-60280028. Advice is free of charge.
• You must withhold income tax and, if applicable, church tax monthly and pay it to the Tax Office. You can find out more about it on the website fuer-gruender.de.

Yes. You can work as a freelancer part-time alongside your job as an employee. For part-time self-employment, the same rules apply as for full-time self-employed individuals. Please note that you must pay taxes on both your salary as an employee and your profits as a self-employed individual.

If you wish to cease your business, you must deregister with the Trade Office. The relevant form can be found either on the website of your Trade Office or directly at the Trade Office. You must submit the form in person to the trade office. When deregistering, you must also present your trade licence, registration certificate, ID card, and – if applicable – an extract from the commercial, cooperative, or association register. The Trade Office will then inform the Tax Office and the professional association.

If your company is registered in the commercial, cooperative, or association register, you must also commission a notary to delete it in addition to deregistering with the Trade Office.

Please note: If you are unsure whether you want to permanently deregister your business, you can also submit a so-called "dormant registration" (“Ruhendmeldung”) to the Tax Office instead. This will pause your business for a certain period of time. If you then decide to continue, you do not have to reapply for all permits.