+49 69 71 67 2 67 0


+49 69 71 67 2 67 0
Company Formation Germany



Taxation of Sole Proprietorships in Germany

Updated on Thursday 05th January 2023

Rate this article
5 5 1
based on 1 reviews


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

Sole proprietorships 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

Meet us in Germany

Marco Rössel is a Partner at Liesegang & Partner and an experienced Attorney at Law. He is specialized in commercial and corporate law and can help you open your company in Germany as fast as possible.


Call us now at +49 69 71 67 2 67 0 to set up an appointment with our company formation experts in Germany. Alternatively you can incorporate your company without traveling to Germany.

As our client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Germany.

Contact us

Video Testimonial

Bridgewest recommends Liesegang & Partner
to all clients who need company formation services in Germany.

Testimonial for Liesegang & Partner

Our endorsement

Our website was created by Clientpedia, a company which offers excellent web design services.