IHK is a three-letter abbreviation that refers to Industrie- und Handelskammer, aka The German Chamber of Commerce. No matter the case that you are from U.S, UK, Australia and other foreign countries - there is a similar organisation in your homeland. Every self-employed person will come across the IHK automatically, once they register as a business. Freelancers can also be involved with the IHK as they grow their trade. Both can be involved with the IHK because it is there to help business people create stronger communities in their local districts across Germany, provide correct advice on business activities and administration and in some cases, you will have to have your self employment visa approved by the IHK with a recommendation from them to the aliens office. Now, we can’t discuss IHK without mentioning the HWK, or Handwerkskammer, or The Chamber of Crafts. The difference? The IHK is responsible for professions in trade and industry, while the Chamber of Crafts is responsible for craft trades. So, how does this all help you, the self employed or freelancer?
Now, we are really going to focus on the IHK in this article. In the event you want to know more about the HWK, stay tuned on the blogs and newsletters because we may just tackle it a little more in depth! But, for this article, we have included below what you need to do as a first step with the HWK. It is also important to point out this article does lean towards advice geared to expats, foreign persons and people new to working in Germany and thinking about starting a business. The services of the IHK however, could still be of use to anyone from any background in this position. Expats, though, let me conclude these caveats by stating the most magical words to your ears: the IHK provide their services in English. Rejoice!
Comprehensive advice in regards to HWK
The Chamber of Crafts Berlin offers a wide range of services, ranging from technical, business and legal advice to a comprehensive education and training. What’s awesome about this is you can go to their contacts page for a direct, industry based connection. This is essentially mandatory if you are a foreign persons or company. Advice is best sought, in the beginning, via email. Expats, if your German is not up to standard, please be aware the employees of the Chamber of Crafts Berlin advise in German. If necessary, ensure you have a friend or person whom can act as your translator for these matters. But, for each of you with specific craft related specifications or certification - this is the place for you!
IHK - the fundamentals
Chambers of Commerce, colloquially known as IHK, are regionally organized, cross-industry associations of entrepreneurs and business enterprises. In Germany, the chambers of commerce and industry are a public corporation under public law . They include companies in a region. All tradesmen and companies with the exception of pure handicraft enterprises , agriculture and freelancers (which are not registered in the commercial register) belong to them by law. In Germany there are 79 chambers of commerce and industry responsible for regions of different sizes. They assume tasks of self-government of the regional economy. The foundations are laid down by the Act on the Provisional Regulation of the Law of Chambers of Commerce and Industry. The Chambers of Commerce and Industry, as autonomous public-law self-governing bodies, represent the interests of their associated companies as municipalities , state governments and regional government agencies. For example, the IHK Berlin would manage Berlin and the municipalities. They are subject only to the legal supervision of the country. So, federally regulated. They fulfill the following tasks for their respective region:
- Perception of the overall interest of the professionals associated with their district
- Promotion of the commercial economy, taking into account the economic interests of individual branches of industry or enterprises, in a balancing and balancing way
- Securing fair competition
- Working for the preservation of decency and custom of the honorable merchant
- Comprehensive service and support / advice for member companies
- Public appointment and swearing in of experts
- Preparation of expert opinions for courts and authorities (eg in relation to company names)
- Issuing certificates of origin and other certificates serving commercial purposes
- Certification of commercial bills
- Opinion on UK applications (for now, let’s see post-Brexit)
- Issuing the permission to broker insurance
- Supervision and promotion of commercial and vocational training, in particular in compliance with the Vocational Training Act
- Implementation of continuing education and training with recognized IHK degrees, eg. B. Training as a commercial specialist
Unlike other business organizations, the IHK organization represents the overall economic interest of all the companies it represents. The chambers of commerce and industry are operated by the economy, whereby companies are required by law. 3.6 million commercial companies are members of an IHK. Popular club to be apart of!
Kontist entwickelt für deine Selbstständigkeit genau so ein Geschäftskonto.Erfahre jetzt mehr
How you become a part of the IHK
After your notification with the Finanzamt about your business activities, the associated IHK office will also receive a notification from the Trade Licensing Office and then send you a registration form, which you should fill in and submit. In most cases, either the Chamber of Industry and Commerce (IHK) or the Chamber of Crafts (HWK) is in charge of you. Basically, there is a compulsory membership in the respective chamber in Germany and you can not choose to become a member. This IHK duty is often criticised, but the IHK is there to provide services and you may as well be educated and informed to use them to your advantage in business. The Chamber of Commerce and Industry regularly organizes business start-up networking events for entrepreneurs, where you can participate as a self-employed person free of charge. In addition, the IHK is responsible for the implementation of vocational training and is your first point of contact if you are looking for a trainee. The amount of the IHK contributions depends on your company size (turnover and profit) and must be paid annually. For small businesses the membership is free for a profit of up to 5200 EUR per year. Entrepreneurs also do not have to pay any contributions in the first two years if their annual profit is less than 25,000 EUR.
IHK can play a role in self-employment visas
Your local IHK will also be informed should you begin your self-employment or freelance visa process. This is often so the aliens office can verify your business ideas. It works like this:
Self employment requires a suitable entry visa and a residence permit pursuant to Art. 21 of the Residence Act are required. This applies not only to startup entrepreneurs and single traders, but also to managers and CEOs with equivalent status who also exercise an entrepreneurial role. The following documents must be submitted to the relevant authority (usually the Foreigner’s Authority) in German or in English. If they are written in English, you should make sure to present a short summary of your business plan in German. The application includes these documents:
- application for a residence permit
- business plan
- short (one page) summary of your business plan in German
- financing concept (includes profit and loss account, capital requirements and financing plan, liquidity plan)
- health insurance leaflet and certificate
- curriculum vitae and credentials
- These documents will be used by the IHK to evaluate whether
- a commercial interest or a regional need for the business idea exists,
- the activity can be expected to have a positive impact on the local economy
- the project has financial support through equity capital or a guaranteed loans.
Pro Tip: around once a month, local IHK offices will provide an information seminar on how to get started in business in your local area. This usually will cost around 25 EUR, but will save a world of confusion. It will also help you meet contacts from the IHK who will happily assist with questions and the progression of your application.
Thinking about your business from the IHK perspective
One certain thing about starting a business in a country like Germany, is that you should be clear in your ideas of what business you want to do and how to make a living out of it. You have to be prepared for this scrutiny. This is a great thing though: it will allow you to think around your business and your business plan in a unique way. Let’s define what the IHK assesses, because it may help your formulate your ideas.
Economic interests and/or regional need
An economic interest is given, if, for example, considerable investments and/or the creation or securing of a significant number of jobs, or the sustainable improvement in the sales or market opportunities of residing companies is recognisable, or the establishment of a production plant for qualified technical (sustainable) or particularly environmental friendly products is planned. It is possible that even the intensification of competition in a particular market segment, in which only a few companies were active, can justify the positive evaluation of a project and approve the economic interest. On the other hand, the acceptance of “economic interest” would generally be declined in the case of pure retail trade companies or service providers on account of their overall lesser economic significance for the region. Especially here, however, the “regional need” (to be examined as an alternative criteria) offers possibilities for reasons of supply or other local level political reasons to be included in the decision-making process. The question of supply (too little/too much) of the region with particular goods or services is the essential evaluation criteria.
Positive impact on the local economy
There is a key assumption here, that being, that a business which is successful and in which all parties pay and register for appropriate fees as per their legal obligations, will create a positive impact on the economy. However, certain criterion in rare cases can guide the IHK assessment away from this:
QUOTE ‘’Indications that give rise to fears of a lack of positive effects on the economy, can particularly lie within the applicant himself, i.e. he lacks the reliability required for the pursuance of a certain business (e.g. due to relevant criminal, fiscal, social security misconduct in the past) or he lacks the professional requirements (e. g. master certificate examination in a skilled trade or expert knowledge examination in road haulage is missing).’’
Basically, your background will play a role in such an assessment. Ideally, this is applicable to a very few and in very extreme circumstances.
Alongside the above clear guide points, IHK are also the go to experts when it comes to financing options and ideas for foreign business. Each IHK office will have a dedicated specialist who can assist you exploring these ideas. The IHK exist to ensure prosperity in business, and it is in your interests to ensure not only compliance but also a good understanding of the organisation if it is applicable to your self employment status.