Germany is the land for translation businesses whether it’s a sole proprietorship, a big translation business or a small business in Germany. In fact, small and medium-sized translation enterprises (SMEs) are commonplace and the German government likes all types of businesses. When starting a business in Germany for translations, there are various things that need to be considered, such as the process for hiring translators, how taxes are paid, whether self-employment is tolerated and how corporations are treated.
German Business in Germany Facts
The types of companies for translation business opportunities in Germany are typically Gesellschaft mit beschränkter Haftung (GmbH) which is a limited liability company. The shareholders are not themselves responsible for the debts of the company. You only need one person in order to set up a GmbH, and the share capital has to be no less than €25,000.
A notarized agreement is required to be drawn up between all the shareholders, and the legal status of the translation company only begins when it has been entered into Germany’s commercial register (Handelsregister).
The GmbH name must represent the purpose of the translation business or the shareholder’s names, and has to include “mit beschränkter Haftung.” GmbH shares are not in a certificate and cannot be quoted on a stock exchange. However, they are only transferable through a correctly notarized document. A GmbH is required to appoint at least one managing director (Geschäftsführer), who can also be the translation company’s shareholders who are the only people who are entitled to be representatives for the company.
An Aktiengesellschaft, or Joint-stock company, can be set up if there are at least 5 members. The minimum amount of €50,000 is required for share capital and it’s these shares that are the ones that can be listed on stock exchanges. Articles of association, processed by a notary or by a court are initially required when setting up an AG. It is only a legal entity once it has been placed into the Commercial Register.
The AG name is typically taken from the translation business’s purpose and the words Aktiengesellschaft need to be shown. The AG is required to have a board of management called a Vorstand which can make all decisions to do with the translation business and it can be appointed and is expected to be accountable to the supervisory board or Aufsichtsrat. An AG shareholder exercises his or her power to control any policies at meetings which are held regularly.
Hiring Workers when Starting a Business in Germany
If you are starting a business in Germany for translations you as an employer is required to deduct the correct amount of tax and insurance premiums from your employee’s pay and observe any laws that protect the employees from being dismissed. The premiums paid for German national retirement, unemployment and health insurance benefits are paid equally by both employers and the employees. 50 percent of each premium is taken out of the employee’s pay, the remaining 50 percent will be paid by the business and forwarded to the relevant agency and health insurer.
Taxes and Premiums when Starting a small German Translation Business in Germany
There are various taxes that translation businesses taking advantage of international business opportunities in Germany need to consider. These include municipal trade taxes or Gewerbesteuer and value-added tax known as Mehrwertsteuer On top of those taxes, income tax needs to be deducted from the translator’s income and a solidarity surcharge as well as a church tax. Some translation businesses may be required to pay corporate tax or Körperschaftsteuer if the business has been incorporated.
Gewerbesteuer is determined by a translation business’s profits, which are calculated by local authorities, so may vary in percentage depending on the community, but are typically around 18 percent. VAT is assessed and levied at each phase of both production and delivery. It is either 19% or 7%. The percentage depends on the item.
The solitary charge is 5.5% of an individual’s income tax, and covers the overheads of integrating former East Germany’s states. The church tax at between 8% and 9% has to be paid if the taxpayer decides to be affiliated officially with one of the established church’s in Germany. The translation business is responsible for deducting the different taxes from each employee’s pay packet and forwarded to the taxation office.
If you select AG or GmbH for your translation company you will be responsible for paying Körperschaftsteuer which is calculated at 15% of earnings. There are a few advantages when incorporating, typically the most important is limiting your liability if the translation business runs into debt. The Gewerbesteuer is a translation’s business expense, and so is deducted from Körperschaftsteuer.
Self-Employed Translators in Germany
If you wish to relocate to Germany as a self-employed translator and you meet the required criteria, you will probably get a residence permit if you provide the proof that starting a business in Germany for translations will bring about a positive influence on Germany’s economy. When a decision is made on whether you can take up this position it is based on the business type, the translator’s qualifications and whether there is a German available to do the job.
The Foreigners Office will probably request certain documentation and could check with the Chamber of Commerce in the specific area or other relevant organization to see if the translation business is considered to be sufficiently specialized and viable economically. If your translation business is deemed acceptable you could be issued a residence permit so you will be well on the way to start a small business in Germany.
Who can Assist with Starting a Business in Germany?
Any individual translator or translation company that wishes to put down their roots in Germany needs to seek advice on accounting, legal and taxation matters. Some German government agencies provide information on the web in English on their websites. These provide advice and tips for easy translation company set-up, features of self-employment and many other areas related to business opportunities in Germany.
Because Germany is used to inviting people to settle in its country it’s easy to find information about business opportunities in Germany and the right process for starting a business in Germany. A website provided in English which is operated by 3 Federal Ministries which are Economic Affairs and Energy, the Labor office and the Labor and Social Affairs provides the necessary information for starting a business in Germany