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German payslip codes & abbreviations explained in plain English

Contents Payslip basics Key abbreviations Tips Conclusion   What is a payslip? This payslip in Germany goes by several names: Mainly Gehaltsabrechnung but also Entgeltabrechnung and Lohnabrechnung. As the name suggests, this document clearly shows the gross and net values of an employee’s remuneration and proves the employee’s financial entitlements. Once a month, the employer …

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What is a small business in Germany? VAT regulation explained

Summary Small businesses in Germany are allowed to use a simplified VAT scheme, if their annual turnover stays below legal thresholds. This reduces administrative work and accounting costs, but it also means you cannot deduct input tax from business expenses. The decision to use this rule should balance simplicity against the potential tax advantages of standard …

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What is USt-IDNr? The German VAT ID explained

Summary The VAT ID number 💬USt-IdNr. identifies businesses across the EU for B2B transactions. It is required for companies trading goods or services within the EU, except for those under the small business regulation. The German VAT ID begins with DE followed by nine digits. It must appear on invoices and the company imprint and can …

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The managing director of a GmbH: Everything you need to know

Summary The role of a managing director in a German GmbH is to act as the legal representative, managing all business operations and representing the company both internally and externally. The appointment is made by shareholder resolution, and the person must be a natural, fully legally capable individual—minority status and certain criminal convictions are disqualifying. Although …

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German commercial register explained: What it is and how it works

Summary The commercial register in Germany records all merchants and corporate entities with legally relevant details such as company name, managing directors, shareholders, and share capital. Registration is mandatory for all trading businesses and limited liability companies, while voluntary registration is possible for smaller enterprises. All filings, including amendments or deletions, must be certified by …

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Business license in Germany: Legal requirements

Summary A business license 💬Gewerberlaubnis is an additional permit required for certain trades in Germany, beyond standard trade registration. It confirms professional qualifications, factual requirements (e.g., premises, financial standing), and personal reliability. Many regulated sectors—such as finance, healthcare, real estate, and hospitality—must obtain approval from the relevant authority before operating. Responsibilities for issuing licenses vary …

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Entrepreneur in Germany: Navigating your first year in business

Summary Take your first steps as an entrepreneur in Germany after the official registration process is done: Usually there are some organisational and administrative tasks to do. You must handle registrations, apply for tax and business numbers, join the right chambers, and set up your accounting and insurance. Careful planning and compliance with legal requirements …

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MD Contract in a German LLC: Appointment, Duties, and Legal Essentials Explained

 Summary The managing director (MD) contract for a German GmbH is structured as a service agreement rather than an employment contract. The contract should clearly define duties, remuneration, duration, and termination terms in line with corporate and employment law boundaries. Under the separation principle, the director’s appointment and the service agreement remain legally independent. When …

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What is a sole proprietorship in Germany? A guide for founders

Summary A sole proprietorship in Germany links the business directly to its owner, with no separation of assets and full personal liability for debts and obligations. It is quick to establish, with residency in Germany as the main requirement. In practice, sole proprietors are usually classified either as commercial traders or as liberal professionals, each …

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What is a Freiberufler? Liberal professions in Germany

Summary In Germany, Freiberufler are self-employed professionals who work independently in intellectual, scientific, educational, or creative fields. Their status comes with significant advantages, such as exemption from trade tax, simplified accounting, and more autonomy. However, they also face full personal liability and must manage their own insurance and pension arrangements. Contents Intro Freiberufler vs. freelancer …

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Freelancer in Germany: Everything you need to know

Summary Setting up as a freelancer in Germany means you work independently on contracts, typically for multiple clients, without being treated as an employee. You must choose whether you qualify as a liberal professional / Freiberufler or a commercial trader, since this distinction impacts tax and registration obligations. The risk of false self-employment is real …

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