Setting up a firm in Germany: what lawyers, tax advisers and others need to do before they start

Liberal profession, trade or public office?

Tax law sets the first course. Lawyers, notaries, tax advisers and auditors are expressly listed among the liberal professions (§ 18 para. 1 no. 1 EStG, Income Tax Act). For them this means: no trade registration, no trade tax (Gewerbesteuer), no IHK (Chamber of Industry and Commerce) membership, but compulsory membership of their own professional chamber instead. Notaries also hold a public office, and their profession is expressly not a trade (§ 2 BNotO).

It is different for self-employed bookkeepers: the courts classify the activity as commercial. They register with the trade office (Gewerbeamt), become IHK members and may pay trade tax. For mediators the classification is not uniform and often depends on their source profession. A lawyer who mediates remains a liberal professional; others are best advised to clarify the question with a tax adviser when filling in the tax registration questionnaire.

Admission and appointment at a glance

For lawyers, admission brings a duty that many underestimate: within the first year they must attend a course on professional law lasting at least ten hours (§ 43f BRAO). For notaries, as in Austria, a notary post is not founded but advertised and filled after a needs assessment. Even so, notaries also set up an office, hire staff and need secure IT.

Office location and place of business

Where you open your firm is not purely a matter of taste. Lawyers must set up an office in the district of their chamber (§ 27 para. 1 BRAO); this office requirement is currently under discussion but still applies. Auditors establish a place of business immediately after appointment (§ 3 WPO). Tax advisers are appointed by the chamber in whose district their place of business will be. Notaries are assigned an official seat (Amtssitz) and keep their office there (§ 10 BNotO).

When choosing premises, discretion and accessibility count for more than prestige. A waiting area where nobody can overhear phone calls from the office matters more than a marble reception desk. A virtual office with just a postal address is usually not enough for a firm. Also plan where you will grow: an additional advisory office of a tax adviser must generally be run by another tax adviser based locally; for one additional office the chamber can grant an exemption on application (§ 34 para. 2 StBerG).

Legal form: more freedom since the reform

Since the major reform of the law on lawyers' companies in 2022, all legal forms under German law are open to lawyers, from the GbR (civil-law partnership) through the PartG mbB (partnership with limited professional liability) to the GmbH and AG (§ 59b BRAO). One-person companies are also allowed. Lawyers may join forces across professions with tax advisers, auditors and other liberal professions (§ 59c BRAO). The Steuerberatungsgesetz (Tax Advisers Act) is similarly open (§§ 49 et seq. StBerG).

• Limited liability costs insurance: a lawyers' professional practice company with limited liability needs €2.5 million per claim, or €1 million with no more than ten professionals (§ 59o BRAO). Tax advisory companies with limited liability need €1 million (§ 55f StBerG).
• Admission of the company: the Rechtsanwaltskammer admits law firm companies with limited liability (§ 59f BRAO), the Steuerberaterkammer recognises tax advisory companies (§ 53 StBerG), and the WPK recognises audit companies.
• Names are protected: only a company in which tax advisers hold the majority of voting rights and governing bodies may call itself „Steuerberatungsgesellschaft“ (§ 55g StBerG).
• Notaries may only join with colleagues at the same official seat (§ 9 BNotO); there is no notary GmbH.
• Bookkeepers cannot form a partnership company (Partnerschaftsgesellschaft), because they are not a liberal profession. Sole proprietorships, GbR, UG or GmbH are common.

Versorgungswerk and health insurance

If you belong to a chamber profession, you become a compulsory member of your state's professional pension scheme (berufsständisches Versorgungswerk), such as the Versorgungswerk for lawyers or for tax advisers. Contributions are based on income, and many schemes reduce them for newcomers. To avoid paying twice, you apply to the Deutsche Rentenversicherung (German Pension Insurance) for exemption from the statutory pension insurance (§ 6 para. 1 SGB VI). Do this early: the exemption applies to the specific activity and must be reviewed again on a change, for example from employment as an in-house lawyer (Syndikus) to your own firm.

Bookkeepers and mediators without a chamber profession have no Versorgungswerk; they organise their pension provision themselves. Everyone needs health insurance, either voluntary statutory or private. The general duty to be insured follows from § 193 para. 3 VVG (Insurance Contract Act).

Tax office, VAT and e-invoicing

Within one month of starting work you notify the tax office (Finanzamt) (§ 138 AO). This is done through the tax registration questionnaire (Fragebogen zur steuerlichen Erfassung) in ELSTER. In it you state your expected turnover, decide on the small business scheme (Kleinunternehmerregelung) and, if needed, apply for a VAT identification number. You count as a small business if your turnover was no more than €25,000 in the previous year and is no more than €100,000 in the current year (§ 19 UStG). If you mainly advise businesses, you will often waive the scheme, because you can then reclaim the input tax on your start-up purchases.

Electronic mailboxes and practice software

Every chamber profession now has its own mailbox for communicating with courts and authorities: the special electronic lawyers' mailbox beA (§ 31a BRAO), the tax advisers' mailbox beSt (§ 86d StBerG) and the notaries' mailbox beN (§ 78n BNotO). The Bundesrechtsanwaltskammer (Federal Bar) sets up the beA, but the first registration and the cards or tokens are your responsibility. Lawyers must file pleadings with the courts electronically (§ 130d ZPO). So without a working mailbox you cannot file a claim on day one.

When it comes to practice software, the profession determines the usual choice: in tax advice, DATEV with portals such as DATEV Unternehmen online is widespread; in law firms, programs such as RA-MICRO, Advoware or DATEV Anwalt; for Anwaltsnotar:innen, solutions such as AnNoText. More important than the name is that deadlines, file management, billing under the RVG or StBVV fee scales and data exchange with clients all work together smoothly.

Confidentiality, including towards service providers

The duty of confidentiality (§ 43a para. 2 BRAO, § 57 para. 1 StBerG, § 18 BNotO) is backed by criminal law: § 203 StGB (Criminal Code) protects secrets entrusted to professionals bound by secrecy. You may only involve service providers such as IT support, cloud or website hosting if you select them carefully, give them only the access they need and bind them to confidentiality by contract in text form (§ 43e BRAO). On top of that comes the data processing agreement under Art. 28 GDPR.

Funding: start-up grant, KfW, taking over a firm

If you start out while receiving unemployment benefit, you can apply to the Agentur für Arbeit (Federal Employment Agency) for a Gründungszuschuss (§ 93 SGB III). When you become self-employed, you must still have at least 150 days of entitlement left, and you need an opinion from a competent body on the viability of your plan; professional chambers are expressly included. You receive your previous unemployment benefit plus €300 for six months, then up to €300 for a further nine months (§ 94 SGB III). There is no legal entitlement: the agency decides at its discretion.

For investment in premises, equipment and start-up costs, the KfW (Germany's state development bank) offers the ERP-Gründerkredit StartGeld, which you apply for through your own bank. Taking over an existing firm is often cheaper than starting from scratch, especially in tax advice, where many owners are looking for a successor. The professional code has its own rules for this, for example on the transfer and contribution of a practice (§ 28 BOStB).

Getting found: registers, website, Google

Your first clients check you out before they call. They search for your name in the official directory, open your website and look at what others write on Google. So make sure these three sources match:

Advertising is permitted for lawyers (§ 43b BRAO) and tax advisers (§ 57a StBerG) as long as it informs factually; for notaries the limits are tighter, and the Bundesnotarkammer considers search engine ads, for example, to be impermissible. The details are in the guide to the advertising rules for your profession, for example for lawyers or notaries.