Meaning of Trade License

By | June 9, 2021

The trade license is the trade registration certificate. This is the official confirmation of receipt that entitles you to operate a business. The trade license has to be issued as this is provided for by the freedom of trade in Germany. However, a trade license must be applied for by a person who wants to start a commercial activity (Section 14 (1) GewO). In order for the trade license to be issued, additional requirements and certificates may be necessary, depending on the type of trade. However, it is important to obtain such a permit before commencing business, otherwise fines and tax back payments can result.

Where do you get a trade license from?

The trade license is issued by the local competent trade registration office of the public order office or the municipal administration. The relevant application can usually be obtained by telephone or online. The data that are deposited with the office are then forwarded to the responsible Chamber of Commerce and Industry or the Chamber of Crafts. In addition, the tax office and the trade supervisory authority are informed about the registration of the trade, which then contacts the company founder.
The trade license is the first step towards self-employment. In addition, a distinction is first made here as to whether it is a sole proprietorship or a company – be it a partnership or a corporation.

The name of the trade on the trade license

The exact description of the exempted trade is particularly important. In a few words it has to be defined and formulated which trade is involved. In individual cases it is helpful or even necessary to provide more detailed explanations on a supplementary sheet. Because those who are officially informed about the registration of the trade will receive a copy of the trade license and they must be able to recognize what the activity started is about. This applies above all to the tax office, the Chamber of Industry and Commerce and also the employers’ liability insurance association, whereby the trade license ensures the correct assignment.

The other information on the trade license

In addition, it must be stated on the trade license whether it is a main or ancillary trade and when the commercial activity will start. The company headquarters and the number of employees without the owner must also be specified.

Can a minor apply for a trade license?

For people who have not yet reached the age of 18, some special rules apply when registering a business. Those who are not yet 18 are minors and therefore only have limited legal capacity. This means that a business registration is not as easy as it is for an adult, because a minor is usually only allowed to carry out so-called pocket money transactions. But work as a hobby, such as creating a website, is of course also okay. However, according to the law, a trade is a “recognizable, planned, long-term and independent, profit-oriented or at least economic activity on the market”.

According to dictionaryforall, you can apply for a trade license under these two conditions :

1. A legal representative “allows” it

This means that the minor needs the authorization of his legal representative, i.e. usually his parents. Authorization means “permission” in the colloquial language and is a one-sided and informal declaration of intent – a nod or a “yes, you may” are sufficient here. Once granted, this authorization to start a commercial activity can only be withdrawn with the approval of the Guardianship Court.

2. Approval by the Guardianship Court

In addition to the legal guardian, the guardianship court must also give its approval and this is only given if the young person has the skills and knowledge required to run the trade and has the necessary maturity.
This is to protect minors from carelessly assuming obligations and responsibilities that could lead to financial difficulties.
The result: unlimited legal capacity!

The cost of a trade license

Business registration and the issuing of a trade license are not free in any municipality. This means that the responsible trade office charges a processing fee, which in Germany is between 15 and 65 euros. In Berlin , for example, it costs 26 euros and in Göttingen 40 euros. This means that the processing fee in Germany is still comparatively low, because in Austria up to 150 euros must be turned over.

It is important that this processing fee is unavoidable and whoever conceals his independence from the trade office may be fined. In addition, the tax office will then demand additional tax payments and the income will be estimated retrospectively and this estimate is mostly to the detriment of the taxpayer.

The re-registration of a business, on the other hand, is a bit cheaper, because it costs 10 to 20 euros, although in some municipalities the business re-registration is free. Unsubscribing, on the other hand, is always free of charge and can easily be done by post.

Trade License