In Germany people who want to have full control of their enterprise can open a sole proprietorship
, which can be easily registered with the local trade office. In matters of taxation, one of our consultants in company formation in Germany
can help you with details about your tax responsibilities
, the amounts you need to pay and the authorities you need to address for obtaining a tax number
Tax registration and reporting for sole proprietorships in Germany
When an entrepreneur opens a sole proprietorship in Germany
he/she can apply for a tax number (Steuernummer) with the local Finanzamt. If the owner will provide mainly services through freelancing, the tax registration will be enough to confer to the firm the structure of a sole proprietorship. However for small businesses, the owner needs to register as well with the Trade Office
Our consultants in company formation in Germany help investors to obtain all necessary documents for the application. You will need documents proving your ID as well as a statement concerning the activity you intend to perform and the address from where you will run your business. Along the fiscal year sole traders in Germany are not required to file tax returns. The only document required is a profit and loss paper in which to include the costs and income in your firm.
Starting a company in Germany implies for anyone engaged in commercial activity to be seen as a trader, and as such, one is required to register a business. The freelancer is an exception to this rule, as such persons can use simpler legal forms, such as the sole proprietorship. However, this business entity is subject to more risks.
Tax amounts of sole proprietorships in Germany
do not pay trade or corporate taxes in Germany. Any sole proprietorship will have to pay the income tax, because sole traders are, in fact, self-employed persons. The income tax system is a progressive one. Entrepreneurs can benefit from exemption up to 8000 euros, Germany has a progressive income tax system
. There is an annual tax-fee exemption of EUR 8,130. Depending on the amount of income, the tax can vary from 14 up to 45 %.
Those who want to be self-employed but who do not want to bear the entire liability for their sole proprietorship, can also set up a limited liability company
with only one employee. However you need to keep in mind that a one-person GmbH requires a minimum capital of 25.000 euros.
Feel free to contact
our specialists in company formation in Germany
who can give you more details on the characteristics of the sole proprietorship
in this country and on the provisions of the taxation system in Germany