The article explains the differences in business registration between France and Germany and their impact on the number of registered companies.
When exploring company data for France, there is a significant difference in the number of registered companies in comparison to other countries especially Germany. Our database features approximately 26 million registered companies in France, in contrast to about 5 million companies in Germany. This disparity in the number is primarily noticeable in the structure of the sole proprietorship type of company. This is mainly due to differences in how sole proprietorships/individual entrepreneurs are managed and registered in both countries. France’s centralized and mandatory registration system for Entrepreneurs Individuels (EI) contrasts with Germany’s selective registration approach for Einzelunternehmer. Understanding these differences is key to interpreting the data available in North Data.
France: Mandatory Business Registration for All Sole Proprietors
The business registration in France is mandatory for all Entrepreneurs Individuels (EI). In France, every individual entrepreneur, regardless of the business’s size or activity type, must register with the appropriate authority. This includes traders, artisans, liberal professions, and micro-entrepreneurs. Registration ensures that all entrepreneurial activities are part of the formal economy and recorded in public databases.
Centralized Registration System as of 2023: As of January 1, 2023, the registration process for all business activities has been centralized. Entrepreneurs no longer need to navigate multiple systems for different types of businesses. Instead, a single registration process streamlines compliance and ensures all businesses are uniformly documented. This reform simplifies administration and reinforces the accessibility of business data.
Germany: Selective Business Registration Requirements for Sole Proprietors
In Germany, the registration requirements for individual businesses vary based on their structure and activities, which can result in fewer entities being registered in the Commercial Register (Handelsregister):
Commercial Sole Proprietors (gewerbliche Einzelunternehmen):
- Small Traders (Kleingewerbetreibende): Small-scale sole proprietors are not obligated to register in the Handelsregister and therefore isn’t regulated by the German Commercial Code (HGB). They must register with the local trade office (Gewerbeamt) and the tax office (Finanzamt).
- Registered Merchant (Eingetragener Kaufmann): Larger sole proprietorships engaged in commercial activities may opt to register in the Handelsregister, gaining the "e.K." designation. This registration subjects them to the regulations of the German Commercial Code (HGB).
Liberal Professions as Sole Proprietors (Freiberufler):
- Professionals in fields such as law, medicine, engineering, and the arts are classified as liberal professions. They are not required to register with the Gewerbeamt or the Handelsregister. Instead, they register directly with the Finanzamt by submitting the "Fragebogen zur steuerlichen Erfassung" to obtain a tax number (Steuernummer).