Top 5 Business Assumptions Expats Make in Germany (And Why They’re Costly)
Why Assumptions Are Your Enemy When Starting or Running a Business Abroad
Starting or running a business as an expat in a new country is an exciting challenge. But it’s also a journey full of complexity. Many expats assume that “business is business” – meaning that what worked in their home country will automatically work in Germany. This could be a costly mistake, leading to legal issues, tax penalties, and missed opportunities.
In this article, we’ll dive into five common assumptions expats make when starting a business in Germany – and how to avoid them.
1. “Business is business - things work the same way as back home.”
It’s tempting to believe that running a business in Germany is just like back home. But the truth is: every country has its own rules, systems, and expectations.
From legal structures and taxes to paperwork and business culture, Germany is uniquely formal and structured. Assuming it’s just a translation exercise will cost you time, money, and trust. Understanding the local system -and your responsibilities in it – is the first step to building a sustainable business here.
2. “The fastest and cheapest legal form is always the best.”
Many freelancers default to the sole proprietorship (Einzelunternehmen) or even register under the Kleinunternehmerregelung just to “get started quickly.” While this can work short term, it can limit you later.
✅ The Kleinunternehmerregelung means you don’t charge VAT – but this also means you can’t deduct VAT on your own expenses and may appear less professional to corporate clients.
✅ A GmbH offers liability protection and often more credibility, but comes with higher costs and legal responsibilities.
✅ And even as a sole proprietor, how you describe your activity matters – one wrong word can lead to issues with the Finanzamt.
This is a strategic decision that should match your long-term goals – not just your current budget.
3. “If I’m running a side hustle, every extra euro I earn is profit.”
Earning extra income sounds great, but taxes in Germany don’t work that way. Many expats underestimate how side income affects their total tax liability. It can push you into a higher tax bracket or trigger additional reporting obligations. Plus, if your prices are too low at the start, raising them later can be difficult.
Plan your pricing and income with growth in mind – because once you’re “in the system,” undoing bad decisions is hard.
Ready to kick-start your freelancing in Germany?
Launch, Streamline, Establish and Scale your freelancing business.
4. “I’ll just figure things out as I go.”
Trial-and-error might work in some countries, but in Germany, it’s a risky approach – especially in business. From mandatory registrations and insurance to proper invoicing, Germany expects structure and compliance from day one. Mistakes aren’t easily forgiven, and “fixing it later” often comes with fines or missed opportunities. Yes, flexibility is nice. But clarity, planning, and understanding the rules give you real freedom to grow. “Just winging it” is not a strategy – it’s a liability.
5. “Any expert who speaks English will understand my situation.”
One of the biggest hidden risks? Choosing consultants, tax advisors, or service providers who speak English – but don’t think like an expat.
Many German professionals assume you already understand how things work – or that you’ll just follow the rules as a German would. They translate information, but they don’t explain context or clarify expectations. They won’t notice if your goals or questions are based on different assumptions.
And that’s the problem: if you don’t know what you don’t know, and they don’t question your logic, you’re both missing red flags.
Working with someone who has been through the process themselves, understands the expat mindset, and knows how to ask the right questions? That can make all the difference.
In a Nutshell: Local Context Beats Global Assumptions
Every country has its own business culture. Germany is no exception – it values structure, formality, and long-term planning. Assumptions might save time upfront, but they often lead to delays, extra costs, or even serious setbacks later.
Before jumping in, question your assumptions, do your research, and work with someone who truly understands the system – and your perspective as an expat.
