Legal Framework
Key legislation
What key legislation and regulations are relevant to foreign individuals moving to or investing in your jurisdiction? What government bodies are charged with enforcing these laws and what is the extent of their powers?
Tax law is the most relevant legislation for German residents or investors, as the German tax level is high. Tax law is enforced by local German tax authorities.
Real property
Are there any particular rules or restrictions on foreign individuals purchasing or investing in real property in your jurisdiction?
In the case of transactions involving real estate located in Germany with foreign purchasers, a report to the Transparency Register may be necessary under the German Anti-Money Laundering Act.
Establishing a business
Are there any particular rules or restrictions on foreign individuals establishing a business in your jurisdiction?
For citizens of the European Union, the European Economic Area and Switzerland, the fundamental freedoms – freedom of establishment and freedom of trade – generally apply.
This means that anyone may establish a business in any member state and there is a right of free movement in the state of residence. Therefore, no restrictions apply to nationals of these countries/areas that do not also apply to German citizens.
Citizens from non-EU countries who wish to enter Germany to establish a business need a residence permit. The requirements for such a residence permit are generally fulfilled if
- there is an economic interest or a regional demand
- the activity is expected to have a positive impact on the economy and
- financing is secured by equity or a loan commitment.
Further, establishing a business must usually be reported to the responsible authority.
For certain areas of activity, a business licence is required that serves as proof of personalmreliability and orderly financial circumstances. The requirements for a business licence are significantly higher than those for a business registration. For business registrations and business licences, the municipal authority is charged with enforcing the decisive Trade, Commerce and Industry Regulation Act.
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This Q&A ist part of Panoramic (formerly Getting the Deal Through), which is a panoramic view of how laws and regulations vary across jurisdictions from the market-leading cross-jurisdictional comparison tool, written by leading practitioners globally. It was first published in: Lexology.com/Panoramic