Running an online business in Germany: the complete setup guide

Freelancer or trader: the fork that decides everything (Freiberufler vs Gewerbe)

Your very first decision shapes your registration, your taxes and your paperwork. Germany splits the self-employed into two boxes:

• Freiberufler (liberal profession): the "catalogue" professions of §18 EStG - writers, journalists, many designers, consultants, teachers, doctors, lawyers, engineers, and similar knowledge work. Freiberufler do not register a Gewerbe, deal only with the Finanzamt, and pay no trade tax (Gewerbesteuer). Pure online coaching, consulting or writing can qualify. See the freelancing in Germany guide for the full Freiberufler path.
• Gewerbe (trade/commercial business): almost everything else online - running a shop, dropshipping, selling physical or most digital products, affiliate sites, influencer/creator income, apps, SaaS. A Gewerbe must be registered and is liable for trade tax above a profit threshold.

The official Make it in Germany self-employment overview covers both routes. The line matters because the Finanzamt, not you, has the final say - and "I sell things online" almost always lands in Gewerbe. If you are genuinely unsure (e.g. a developer who also resells software), a one-off Steuerberater consultation is worth it, because getting reclassified later triggers back-dated trade tax.

Getting your site online: no-code builder or self-hosted

Two routes, depending on whether you want to touch code:

• No-code builder - fastest to a working store or booking site, hosting and checkout included, no server to manage. Best if you are not a developer and want to be selling this month.
• Self-hosted / your own server - full control, WordPress/WooCommerce or a custom stack, and the ability to keep everything on German infrastructure. Best if you (or your developer) want to own the stack, or you run client sites and resell hosting.

A German-specific advantage of the self-hosted route: hosting inside Germany keeps customer data under German and EU jurisdiction, which is both a GDPR simplifier and a real trust signal to German customers.

Registering: the Gewerbeanmeldung and the tax questionnaire

If you are a Gewerbe, two steps put you legally in business:

1. Gewerbeanmeldung at your town's Gewerbeamt (often online now). It costs roughly €20-60, takes minutes, and you describe your activity in plain terms ("online retail of X", "affiliate marketing"). The office automatically notifies the Finanzamt, the IHK (chamber of commerce - mandatory membership, small annual fee, often waived the first years under a turnover threshold) and others.
2. Fragebogen zur steuerlichen Erfassung - the tax-registration questionnaire, filed through ELSTER within about a month of starting. You estimate turnover and profit, choose the Kleinunternehmer option (below), and the Finanzamt issues your Steuernummer (and, if you request it, a USt-IdNr VAT ID for EU trade). Freiberufler skip step 1 and go straight to this questionnaire.

Keep the Gewerbeschein (registration certificate) - payment providers and wholesalers ask for it. Your personal tax ID (Steuer-ID) is separate and you already have it.

The Kleinunternehmer decision: charge VAT, or not

At registration you choose whether to use the Kleinunternehmerregelung (§19 UStG) - the small-business VAT exemption. Since 2025 the limits rose: you qualify if your turnover was under €25,000 last year and stays under €100,000 this year (up from the old €22,000/€50,000). What it means:

• As a Kleinunternehmer you charge no VAT (Umsatzsteuer) on your invoices, file no VAT returns, and your prices look cheaper to private customers. The trade-off: you cannot reclaim the VAT you pay on your own costs (Vorsteuer), and invoices must carry the "kein Ausweis von Umsatzsteuer gemäß §19 UStG" note.
• Waiving it (charging VAT) makes sense if you have heavy start-up costs (equipment, ads, stock) whose VAT you want back, or you sell mainly B2B where the VAT is neutral to your clients. You are then locked in for five years.
• New in 2025: if you exceed the €100,000 mid-year, you must start charging VAT immediately on the sale that breaks the limit - not from next year as before. And the new §19a EU-Kleinunternehmer scheme lets you extend the exemption to sales in other EU states.

Most solo online businesses start as Kleinunternehmer for simplicity, then switch to standard VAT as they scale.

VAT when you sell online across the EU: OSS (the part that trips everyone)

The moment you sell to consumers in other EU countries, German VAT rules stop being simple - this is the single biggest compliance surprise for online sellers:

• There is an EU-wide €10,000 net threshold (all cross-border B2C sales combined). Below it, you charge German VAT as usual.
• Above €10,000, you must charge the VAT rate of the customer's country on B2C sales of goods and digital products - 27 different rates in principle.
• To avoid registering for VAT in every country, you use the One-Stop-Shop (OSS): register once with the Bundeszentralamt für Steuern (BZSt), then declare and pay all your EU B2C VAT through one quarterly OSS return. Essential for anyone selling digital products or shipping goods across the EU.
• B2B inside the EU works differently: with valid VAT IDs on both sides it is reverse charge (you invoice net, the buyer accounts for VAT), reported in a Zusammenfassende Meldung.

If you sell digital products (courses, templates, software) to EU consumers, assume OSS applies early - the €10,000 threshold is tiny for a growing shop.

The legal pages your site legally must have (and the Abmahnung risk)

Germany polices website compliance hard, and competitors or Abmahnung law firms send cease-and-desist letters (with fees) for missing pages. Before you take a single order, your site needs:

• Impressum - the legally required publisher identification, now under the Digitale-Dienste-Gesetz (DDG), the 2024 successor to the TMG. Full name, address (a real one, not a P.O. box), email, and for some activities a VAT ID and register details. A missing or incomplete Impressum is the most common Abmahnung trigger.
• Datenschutzerklärung (privacy policy) under the GDPR/DSGVO - what data you collect, cookies, analytics, payment processors, newsletter, plus a compliant cookie consent banner for anything non-essential.
• AGB (terms and conditions) - not strictly mandatory but strongly advised for a shop, and they must be legally correct for the German market (generic English templates fail).
• Widerrufsbelehrung (right of withdrawal) - consumers get a 14-day right to return on distance sales, and you must inform them of it in the prescribed form. Getting the wording wrong extends the period to a year.
• Price transparency (PAngV) - prices must show as gross, include VAT status and, for goods, base prices where relevant.

Use a German-market legal-text generator or a lawyer for these - this is not the place to improvise, and the freelancing guide covers the business-registration side that feeds your Impressum.

Getting paid: banking, payment processors and invoicing

• A separate business account. Not legally required for a sole trader, but it keeps your bookkeeping clean and most tax advisors insist on it. See German bank accounts for expats; several digital banks offer freelancer/business accounts with easy setup.
• Payment processors. Stripe, PayPal, Mollie and Klarna cover cards, wallets and German favourites like SEPA-Lastschrift and "Kauf auf Rechnung" (invoice payment), which German shoppers expect. Each charges per-transaction fees - factor them into pricing.
• E-Rechnung (mandatory from 2025). Since 1 January 2025, every German business must be able to receive structured electronic invoices (EN 16931 formats like XRechnung and ZUGFeRD) for domestic B2B. Sending them is phased in through 2028, but set up an invoicing tool that handles the format now. Invoices must also meet GoBD rules (unalterable, archived for 10 years).

Bookkeeping and the taxes you will actually owe

For a solo online business the accounting is lighter than people fear, but four taxes can apply:

• Bookkeeping: the EÜR. Most sole traders and Freiberufler use the simple Einnahmenüberschussrechnung (income-minus-expenses), filed with your annual return. Only GmbHs and larger traders need double-entry bookkeeping. Tools (smartsteuer, sevdesk, lexoffice) automate it.
• Income tax (Einkommensteuer). On your profit, at your personal rate, with quarterly prepayments (Vorauszahlungen) once the Finanzamt estimates your income. This is the big one - see the tax return guide.
• VAT (Umsatzsteuer). If you are not Kleinunternehmer: monthly or quarterly advance returns (Umsatzsteuervoranmeldung) plus an annual one, all via ELSTER.
• Trade tax (Gewerbesteuer). Gewerbe only, and only on profit above €24,500 (the allowance for sole traders and partnerships). For sole traders it is largely credited back against income tax, so the real burden is small except in high-Hebesatz cities. Freiberufler and most GmbHs handle it differently.

Insurance and social security for the self-employed

Going self-employed means you carry what an employer used to cover:

• Health insurance. Mandatory, and you pay the full contribution yourself - voluntary GKV or private PKV. The maths is different for the self-employed, so read health insurance for freelancers before you choose.
• Pension. Most online-business owners are not compulsorily insured, so retirement saving is on you (Rürup/private) - though some trades and one-client situations can trigger mandatory Rentenversicherung.
• Business insurance. A Betriebshaftpflicht (business liability) protects you if a client or customer claims, and cyber/professional cover matters once you hold customer data or give advice.

When to incorporate: sole trader, UG or GmbH

You start as an Einzelunternehmen (sole trader) by default - no minimum capital, but you are personally liable for business debts. As you grow:

• UG (haftungsbeschränkt) - the "mini-GmbH", foundable from €1 of capital, gives you limited liability and must retain profits until it builds up to €25,000. Popular for cautious online founders.
• GmbH - the standard limited company, needs €25,000 share capital (half paid in to start), full limited liability, more credibility with partners, but notary costs, double-entry accounting and mandatory Gewerbesteuer.

Incorporate when liability exposure or partners justify the extra cost and admin - not on day one for most solo businesses.

Physical goods, and other traps to know

• Verpackungsgesetz / LUCID. If you ship physical products with any packaging, you must register with the LUCID packaging register (Zentrale Stelle Verpackungsregister) and join a dual-system scheme before you sell - a frequently-missed legal duty with fines and sales bans attached.
• Scheinselbständigkeit (bogus self-employment). If almost all your income comes from one client who directs your work like an employer, the Rentenversicherung can reclassify you as an employee, with back-dated social contributions owed by the "client". Keep multiple clients and control your own work.
• Non-EU founders need the right permit. A residence permit that allows self-employment is not automatic - the freelance/self-employment route (§21 AufenthG) is its own process. See the freelance visa guide.
• Product and sector rules. Selling food, cosmetics, electronics or regulated goods brings extra labelling, safety and licensing duties - check your niche before you list.

Frequently asked questions