I already wrote about the 14 steps required for founding a company in Germany, and I also wrote up all my notes and hacks for running a German company efficiently. Those two posts turned out to be some of the most popular posts on my blog, and I seem to have this weird thing of diving into startup-related bureaucracy (which all founders do) and then writing up my findings (which no founders do).
So here’s another one. I’m currently in the process of founding another company in Germany.
Here’s the TLDR spoiler first: It looks like founding this company is going to take around 3 months. 3 months! That’s an insane time to wait. 3 months is a time in which other people build and sell their first project.. hell, I’m sure people have actually founded and sold their company in three months.
But no, in Germany, 3 months can be the time it takes for your company to become operational. Yes, you heard that right: During this time, it’s not possible to actually do anything with your company, notably you can’t create any invoices, can’t make any sales and therefore can’t make any revenue. You’re left twiddling your thumbs, waiting for the friendly bureaucrats to “process” your company registration.
I truly wonder what people would do if they actually needed this company urgently.. like, you know, because this is their first company and they want to actually send invoices to clients. I’m in the fortunate position of already having two companies in Germany which I can use, but.. I suppose it’s fair to say that Germany is not a friendly country for entrepreneurs, and particularly not for first-time founders.
But.. where was I. Here’s a quick timeline.
A Timeline of Founding a GmbH & Co. KG
Okay okay, a relevant disclaimer: This is about founding a GmbH & Co. KG which is the more complex version of a GmbH, which roughly equals a US LLC. The TLDR of a GmbH & Co. KG is that it’s so complex that no human on this planet has fully understood how it works yet, tax advisors and financial authorities included. It’s a combination of a US Limited Partnership (LP) and a Limited-Liability Company (LLC).
But all of this is actually irrelevant because the founding process is very similar to founding a GmbH.
Step 1: Go to Notary (1 week)
As always, founding a company in Germany begins by going to a Notary Public. No, you can’t just found a company online like in the US an other developed countries.
Germany doesn’t trust you with this, because you could be impersonating someone. Instead, you go to a Notary Public, who usually doesn’t know you, and you show them your government ID, which usually is not electronic, and they henceforth perform a very safe identity verification by comparing your photograph on your ID with how you look in their office. They also photocopy your ID because they have a photocopier.
After this important identify verification, they proceed to read out the articles of incorporation of your company to you. Note that it’s usually you who drafted those, but they “author” them, which usually means they type them out themselves in Microsoft Word and sometimes provide some feedback which is sometimes helpful.
Reading them out loud, even though everyone knows their contents, turns out to be very useful, because it enables everyone to find and fix any typos which the notary made. And it turns out that notaries make a surprising amount of typos (sample size n=4 notaries).
Note that this takes around one week, because you have to find a notary first who will give you an appointment (after you’ve filled out their crappy PDF form with no form fields). Getting an appointment within one week is considered “very short notice” for German notaries.
Note also that there’s now a so-called “online notary” service in Germany which solves exactly zero of these problems. You still need to make an appointment with a notary, you still need to fill out crappy PDF forms, but now you can have a video call with your notary instead of meeting them in person. Note that they also bill your extra for this video call service.
Step 2: Wait for Corporate Registry (2-3 weeks)
Next, you wait for the corporate registry to actually list your company. The process here is that your notary uploads your company information into the registry via a fancy “XML Upload” (which they bill you for).
Relevant quote:
- “If you do this at the beginning of December, it likely won’t be entered into the registry in the same year because people are on holiday starting mid-December.. unless your notary provides a relevant reason for expediting it.”
This usually takes 2-3 weeks. For my company, it took 1 week (!!!) which can be considered lightspeed for German bureaucracy. Maybe because the company wasn’t incorporated in Berlin, as the Berlin registry seems to be notoriously slow, understaffed and dysfunctional (like most things in Berlin).
Indeed, a hardly-known startup hack in Germany is to not incorporate in Berlin.
An even lesser-known life hack in Germany is to not live in Berlin.
Jokes aside, moving forward..
Step 3: Fill out “Fragebogen zur steuerlichen Erfassung”
Your company is now listed, but the tax office doesn’t know about it. Sounds crazy, but that’s how it is. So you have to fill out a registration form in which you notify your relevant tax office that your company has been created.
It’s called “Fragebogen zur steuerlichen Erfassung”, it has 10 pages, here’s the PDF. The good news is that you can also do this electronically via the ELSTER software, in which case the 10-page PDF form turns into a 24-page multi-step HTML form. Cool.
I’ve done this twice, for two companies back in 2020. It seems the form has become more complicated since then. My personal highlight was the form asking you for the exact usernames of accounts you intend to use for selling goods, e.g. on eBay.
This took me an entire afternoon with ChatGPT even though I’m German, I’ve already done this twice, and I consider myself well-versed in German bureaucracy and taxes. I can barely fathom how a foreigner would manage to do this who doesn’t speak German and doesn’t have any prior experience with German bureaucracy. Insane.
Step 4: Wait for Tax ID
After filling out and (electronically!) submitting the 24-step “Fragebogen zur steuerlichen Erfassung”, you’re waiting for your tax ID. The tax ID is important because you need it to actually create invoices. You’ll also get a EU VAT ID which you need when e.g. registering for Stripe and the Apple App Store. So, in short, you can’t really use your company until it has its tax ID.
And this is where I’ve been stuck for 2 months now. The good news is that the company is not incorporated in Berlin, which means that you can actually reach the tax office via phone.
(Every day 9am until 3pm, except Wednesdays, when no phone calls are taken, and Fridays, when phone calls are only taken until 12pm)
The one thing I have to say is that the people at the tax office are always extremely helpful and friendly, even in Berlin.
Still, here are some of my favorite quotes:
- “I see, you’ve been waiting for 4 weeks.. well, I’ve processed it just today (what a coincidence), and I’ve handed it off to the other department now which usually takes two more weeks to process it. I can’t reach them right now because they’ve already gone home (it was 1:30pm).”
- “I tried reaching multiple colleagues who are responsible, but it seems they’ve all gone to lunch already (it was 11:50am).”
- “We processed a total of three companies today! But.. (checks notes).. your company wasn’t part of that batch today.”
- “Today’s Dec 30th.. tomorrow, on Dec 31st, no one will come into the office – it’s not a holiday, but it’s New Year’s Eve. Then, Jan 1st is a public holiday. Jan 2nd no one will come in again because it’s a Friday after a public holiday. Jan 5th is a Monday, but probably no one will work because Jan 6th is a holiday again. Maybe try again on Jan 7th.”
(I tried on Jan 5th and, indeed, no one answered the phone)
So here we are. I’m 2.5 months in, no tax ID, and no operational company.
The city in which I’m incorporating is currently making millions of Euros in losses every year.
Attracting new tax-paying businesses would be a good way to solve that.
But I’m not sure whether they’re aware of that yet.
Leave a Reply