How to open a shisha bar: Everything you need to know to get started in Germany

The dream of opening your own shisha bar can come true if you plan it well. That is, you need to know about formation, costs, location, marketing and government regulations.


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Andreas Munck

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Do you have questions about setting up a business in Germany?

  • Startup expert
  • 10+ years experience

Hi, I’m Andreas and I’ve been advising businesses in Germany for over a decade. I’d be happy to call you and answer any questions you have in a one-on-one consultation.


How to structure a shisha bar business: Which legal form is right for me?

If you want to form a company in Germany, you have to decide which legal form you want to use. For hookah bars and shisha cafés, the UG (haftungsbeschränkt), GmbH or GbR legal forms are the most frequent choices. When opening a shisha bar, you could also think about establishing an Einzelunternehmen (sole proprietorship). Be aware that the individual legal forms also differ from a tax perspective. Here’s a brief overview of the legal forms suitable for running a shisha bar:

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Forming a shisha bar as a UG (haftungsbeschränkt)

The UG (haftungsbeschränkt) stands for Unternehmergesellschaft (haftungsbeschränkt) – in English, entrepreneurial company (limited liability) – and is a special form of GmbH (see below). It’s particularly suitable for shisha business founders who want to set up a limited liability company with little start-up capital.

Advantages: A UG only requires a share capital of at least one euro, which means the total formation costs are lower than those of a GmbH.

Liability: A UG has limited liability. That means that partners are generally liable exclusively with the company assets and not with their private assets.

Forming a shisha bar as a GmbH

The abbreviation GmbH stands for Gesellschaft mit beschränkter Haftung, which in English means ‘company with limited liability’. The main feature of the GmbH is its limited liability – shareholders cannot be held liable for damages with their private assets. The share capital required to structure your business in this way is €25,000 – making it a trusted company type in the German market.

Advantages: The GmbH is a very popular and highly respected form of business, in Germany and also abroad.

Liability: The partners do not assume any personal liability, but are liable with the company assets.

Forming a shisha bar as an Einzelunternehmen (sole proprietorship)

The Einzelunternehmen (sole proprietorship) is the simplest way of forming a company with simple registration and no accounting obligation.

Advantages: No capital contribution is required.

Liability: Careful, a sole proprietor is also liable with his or her private assets.

Forming a shisha bar as a GbR

The GbR, or partnership under civil law, is a variant of the Personengesellschaften in which all partners are also managing partners.

Advantages: There’s no required minimum capital and a notary is not necessary.

Liability: The partners are also liable with their private assets.

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Where do you have to register your shisha bar?

Depending on the legal form you have chosen, you will have to register your shisha lounge at various offices and institutions during or after its establishment. You can find out which registrations you’ll need for which legal form right here.

Gewerbeanmeldung (trade registration)

Regardless of the legal form you have chosen, you must register at the Gewerbeamt (trade office) responsible for your company headquarters. If you open your shisha bar as a sole proprietorship or as a GbR, a simple business registration is sufficient.

After registering with the trade office, the Finanzamt (tax office) will contact you for tax registration. After submitting the documents, you’ll receive your tax number and may issue invoices.

Entry in the Handelsregister (commercial register)

The Handelsregister (commercial register) is a public register that records registered merchants in district Handelsgericht (district register courts). If you set up your business as a GmbH or UG, you have to enter it in the commercial register.

IHK membership (chamber of commerce & industry)

The IHK will be informed by the trade office and will send you the necessary documents. When registering a business, membership in the IHK responsible for your business is mandatory.

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Andreas Munck

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Want to open your own shisha bar in Germany?

  • Startup expert
  • 10+ years experience

Hi, I’m Andreas and I’ve been advising businesses in Germany for over a decade. I’d be happy to call you and answer any questions you have in a one-on-one consultation.


Berufsgenossenschaften (employer’s liability insurance associations)

Berufsgenossenschaften (employer’s liability insurance associations) are the providers of statutory social accident insurance (called gesetzlichen Unfallversicherung ) for companies and their employees in Germany. Be sure to register at the right association – with or without staff the obligation to do so still stands. If you are unsure which of the associations you need to register with, the Deutsche Gesetzliche Unfallversicherung (DGUV) can help you (but probably only in German).

Hotel & catering association

If you want to be self-employed with your shisha bar, you can become a member of the Deutscher Hotel- und Gaststättenverband e. V. (DEHOGA) (hotel & catering association). DEHOGA represents the interests of hotels and restaurants in public and in politics.

What are the special requirements?

The Gaststättengesetz (hospitality law) regulates what you may and may not do as a shisha bar operator. It contains legal requirements that every gastronome must follow. Be sure to consider these requirements before opening your bar. Let’s go through the most important ones below.

Nichtraucherschutzgesetz (non-smoking protection act)

There are different regulations for the protection of non-smokers in restaurants throughout Germany. The choice of your location is therefore particularly important. In Bavaria, Saarland and North Rhine-Westphalia, smoking is totally prohibited in restaurants. Nevertheless, according to a court decision of the OVG Münster, water pipes may still be smoked in restaurants in NRW if they are filled with fruit or shiazo stones. All other federal states currently still allow smoking in restaurants but in separate rooms. Some others have exemptions for one-room smoking bars.

In principle, you may not sell prepared food in smoking establishments. Separate non-smoking areas are one way of circumventing this restriction. Be sure to inform yourself about the legal situation in your federal state.

Ausschankgenehmigung (hospitality license)

Since your guests are thirsty, a licence for serving alcohol is particularly important for any bar. Although offering hookahs is your core business, you will probably generate a large part of your profits by selling drinks. To do this, you’ll need a Schanklizenz (liquor license) to sell alcoholic beverages. You have to apply for an Ausschankgenehmigung (a license to serve food/drinks) or a Gaststättenerlaubnis (hospitality/restaurant license). The application usually has to be submitted to your local Gewerbeamt or Ordnungsamt.

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What legal pitfalls should I look out for?

Laws change quickly. So it’s important to stay up to date. Currently, there are no EU bans on the flavours in shisha tobacco. However, a regulation for pipe tobacco could be introduced in the future.

Over the years, the non-smoker protection laws have continued to tighten. Yet some derogations concerning smoking water pipe tobacco could be repealed.

An amendment to customs legislation could also restrict or increase the price of tobacco imports.

Forward-looking planning, e.g. for agreements and contracts with suppliers, is important as an independent gastronome. Inform yourself regularly with news from your industry.

What does it cost to open a shisha bar in Germany?

Before opening your shisha lounge, prepare a business plan and calculate all fixed costs. These include the lease of your premises, electricity and heating costs, various insurance policies and taxes. Of course, you’ll also want to play music for your guests. That means you’ll also have to pay royalties (GEMA). If you need to redo the interior of your bar, this cost must also be considered. Otherwise, there are costs for your products, drinks and staff.

If you need assistance with accounting and taxes, including these items in your cost planning is important. In principle, outsourcing your accounting is recommended. By having your accounting done by experts, you avoid mistakes and don’t have to waste your time or that of your staff.

How do you find suppliers for your shisha bar?

Ideally, you should create a network of suppliers before opening your shisha bar. Beverage wholesalers can help you to keep acquisition costs low and to calculate them correctly. Find out about the different types of tobacco and their advantages and disadvantages. Tobacco shipping services can help you make the right choice for your location. Once you’ve decided on the best suppliers, obtaining your goods can operate more smoothly.

Where can I open a shisha bar?

The location of your shisha bar is one of the most important factors for your success. Think carefully about the nature of the competition in the area and whether your target group will be able to find your desired location. The easier your shisha bar can be seen from the street, the more casual customers will take an interest.

Do I need previous experience?

Know-how is always important on the path to self-employment. However, even without special training, you can realise your dream of owning your own restaurant. Knowledge of the gastronomy sector is not absolutely necessary, but it is certainly an advantage. If you only have a little prior knowledge of the subject yourself, you can catch up with the help of guidebooks. Exchanging practical knowledge and experience with founders from the industry is invaluable. You can put most of your experience into practice. Work in a shisha bar, get to know important processes up close and learn first-hand what’s important.

How do I develop a successful concept?

Be different from the rest and try to distinguish yourself. That starts with the name of your bar. Check out the competition. If there are already several shisha bars and cafés in your immediate vicinity, you should work to distinguish yourself, e.g. with the thematic design of your bar. Be creative and formulate a concept for your business idea.

Differentiate yourself from others & offer additional benefits

What makes your shisha lounge special? Their unique selling point – starting with their names – should be a central theme in all decisions concerning the furnishings and selection of products. Align everything with this concept.

As a new company, you want to achieve a high degree of awareness quickly. Why should shisha lovers come to your bar? Promotions such as changing events, specials and discounts appeal to new customers. For example, offer free WiFi to encourage guests to stick around. You have to communicate these special features in a clever way using targeted advertising activities.

Don’t forget to advertise!

Advertising on one’s own behalf is enormously important for every new company. If your budget is tight, you can reach many people cost-effectively through social media channels. Create your own website using free templates. Advertise especially where your target group is and in media that uses them. The opening of your new shisha bar, in particular, should be intensely promoted with posters, flyers and stickers. Promotions with free drinks, free shishas, etc. are also well received and ensure a positive image right from the opening. And don’t underestimate the power of word of mouth.

Now all you have to do is put your business idea into practice. We wish you the best of luck in opening your own shisha bar!

[BEGIN: Insert an Image between this tag]

Andreas Munck

[END insert Image]

Got questions about setting up a business in Germany?

  • Startup expert
  • 10+ years experience

Hi, I’m Andreas and I’ve been advising businesses in Germany for over a decade. I’d be happy to call you and answer any questions you have in a one-on-one consultation.


Want to know more about opening a business in Germany?

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