Information Paper: Doing Business in Germany
In accordance with the governing international agreements between the US and Germany, profitable activities of US personnel in Germany are generally subject to German trade, business activity, and tax law. It does not matter whether the activity only serves American citizens or whether it is performed on a military installation.
1. Business Registration
There exists no general licensing requirement for businesses in Germany. However, many profitable activities - not all -require registration with the local trade office (Gewerbeamt). Whether registration is required or not, depends on the type of activity. The trade office is either located at the municipality town hall (Rathaus) or at the district administration (Landratsamt or Verbandsgemeinde) and personnel in the trade office will determine whether registration is required.
At the trade office, you will be asked to fill out a questionnaire. If your profitable activity requires registration, the trade office will also inform the finance office (Finanzamt). The trade office will furthermore inform you if any permits (see below 4.) are required to perform your profitable activity.
A registration fee will be charged.
2. German Taxes
Persons engaged in profitable activities are generally required to pay German income tax (Einkommensteuer) and may be subject to value added tax (VAT - Umsatzsteuer). They may also be subject to trade tax (Gewerbesteuer) if they are considered a trade business that requires registration and generates earnings beyond a certain threshold. Therefore, in any case, a profitable activity must be registered with the local finance office and be assigned a tax identification number (Steueridentifikationsnummer).
The German finance can provide information regarding exception amounts and income thresholds and will answer general questions. However, you may consider hiring a German tax advisor (Steuerberater). The US Government does not have authority to provide advice on the individual obligation to pay German taxes.
It is illegal to use privileges deriving from NATO SOFA status for your private business. For example, using an APO mailing address, a USAREUR plated car, or customs and tax-free items for your private business constitute a punishable violation of customs regulations.
If you have SOFA status because you are an active duty military member, a dependent, or member of the civilian component, you do not need to obtain a residence permit (Aufenthaltsgenehmigung) or works permit (Arbeitsgenehmigung) to operate your business. However, once you lose your status, you must obtain these permits.
Depending on the type of activity, other permits may be required. For example, if your business is considered a handicraft, you may also want to consult the chamber of handicraft (Handwerkskammer) to get more information. If your business is dealing with food items, you should contact the German Health Office (Gesundheitsamt).
This information paper provides only general guidance regarding the obligation and process for registering a profit making activity in Germany. It is not intended for specific legal advice regarding those obligations and should not be used as such. If you have specific legal questions, consult an attorney.