It is generally possible for foreign entrepreneurs to obtain a residence permit for the purpose of setting up a company in Germany. The legal basis is found in § 21 of the Residence Act (Aufenthaltsgesetz). This is a residence permit for the purpose of self-employment.
However, there are relatively strict requirements for granting such a residence permit. Unlike in other countries, German laws do not, for example, provide for the granting of residence permits for the mere acquisition of real estate or a mere capital participation in companies. The legislator's idea is to grant a residence permit for Germany only to those entrepreneurs and investors who require actual residence for the exercise of their activities and who, through their investment, provide an advantage to the economy.
If a foreign (= non-EU) citizen wishes to enter Germany for the purpose of taking up an activity as a self-employed person, he must submit a corresponding application to the German mission abroad (embassy or consulate) responsible for him in his home country.
In contrast to the issuing of visas for business trips with a maximum duration of stay of three months (Schengen visa), a visa for taking up (self-employed) employment requires the approval of the Aliens Authority at the intended place of stay.
The application is forwarded by the German mission abroad to the Aliens Authority at the intended place of stay. It is therefore advisable to consider in which city/municipality in Germany the applicant actually wishes to reside before submitting the application.
A precondition for the approval of the Aliens Authority is that a partnership agreement or founding agreement for a newly founded company or the branch of a foreign company in Germany is available. A residence permit for a foreign entrepreneur can therefore only be considered in principle after the establishment of a company or branch in Germany.
Nationals of non-EU countries can also set up a company in Germany. The conclusion of articles of association for the establishment of, for example, limited liability companies (GmbH) or stock corporations (AG) is carried out before a German notary public. Depending on the chosen legal form of the company, a certain amount of share capital must be available (e.g. in the case of a GmbH at least 25,000 euros, of which in the case of a cash foundation at least 50% must actually be paid in when the company is founded). A business address that can be registered is also required. The share capital is at the free disposal of the company after registration of the company in the company register.
However, at the time of application for a residence permit, the company does not have to be registered in the company register yet. It is also not necessary that the business has already been started at the time of the application. If the actual commencement of business activities depends on the granting of a residence permit, since the object of the company by its very nature requires the personal presence of the managing director on site, this is therefore not detrimental to the application for a residence permit.
The locally competent Aliens Authority then forwards the application to the institutions responsible for commenting on the prospects of economic success of the applicant's business. These are usually the local chambers of industry and commerce. Their opinion is decisive for the Aliens Authority's decision on the application.
Essential preconditions for a positive decision on the application are that there is an economic interest, a regional need or the expectation of positive effects on the economy for the foreign entrepreneur's establishment in Germany and that the financing of the project is secured. On the one hand, the applicant must therefore demonstrate in a manner as comprehensible as possible that the activity he intends to pursue is beneficial to the German economy. On the other hand, he must justify that his permanent personal presence is required for this activity. This should be done by means of a business plan in which the business idea is described in detail, if possible, by submitting supporting documents for the explanations given.
It is of decisive importance which activity the person wishing to enter the country will carry out (e.g. managing director of a limited liability company, manager of a branch office etc.), because a purely capital-based participation in a company established in the commercial government is not sufficient.
Rather, it must be demonstrated that the applicant's permanent presence in Germany is necessary, e.g. because the person entering the country is required to manage business in Germany himself on the basis of his specialist knowledge and personal experience.
The business plan should contain statements on the business concept, strategy and positioning, market potential and competitive situation, legal form and organisation, as well as the applicant's CV and business experience and qualifications. Finally, a financial plan should clearly show how the business of the company will develop at least in the first three years from the start of operations, showing that the applicant is familiar with the price level and tax burden prevailing in Germany.
A business plan (together with supporting documents) and a financial plan should also show how much capital will be used to implement the business activities and that the financing for this is secured. In contrast to the legal situation prevailing until 2012 (until then, at least 250,000 euros in investments per applicant were stipulated), no minimum values for the use of capital are prescribed by law. However, experience from application procedures in recent years also shows that an investment sum of at least 200,000 euros should be available for a smooth decision.
Further advantages are, for example, the demonstration that new jobs will also be created in the first years of the applicant's business activity, or the presentation of references from German business partners for business transactions conducted with the applicant in the past.
As soon as a positive decision has been made with regard to the economic viability of the applicant's business idea, the Aliens Authority will generally agree to issue an entry visa. A refusal is only possible due to special circumstances in the person of the applicant (such as previous expulsion from Germany with continuing ban on re-entry or criminal record).
As soon as the Aliens Authority has given its approval, the embassy can issue the entry visa.
As soon as the person entering Germany has received a residence permit, the family members can follow suit. For this purpose, a visa for family reunification must be applied for at the German mission abroad. However, the procedure is usually completed within a few weeks.
In principle, the applicant's spouse and children can follow suit. The only prerequisite is that the family members' livelihood is secured by the applicant's own gainful employment. Furthermore, the existence of sufficient living space must be proven.
From the submission of the application documents to the German mission abroad to the granting of the entry visa, the authorities currently expect a processing time of approx. 6 months.
Our services for foreign investors in Germany
The lawyers of our firm have been active for over a decade in advising and representing foreign entrepreneurs and investors in the establishment of companies in Germany and in applying for and obtaining residence permits for the investors and their family members.
Our services include:
Support in the establishment of the company by assisting in the drafting of the articles of association, assistance at notary appointments, assistance in opening a bank account for the company, support in tax registration and business registration
Draft of the management contract, in particular with regard to the subsequent application procedure for a residence permit
Participation in the preparation of business plan and financial plan for submission in the application procedure
Accompaniment of the procedure for the granting of a residence permit vis-à-vis all the authorities involved at home and abroad (in particular German diplomatic mission abroad, Aliens Authority, Chamber of Industry and Commerce, Trade Licensing Office)
Examination and drafting of rental contracts, employment contracts, commercial contracts
If you have any questions in this context, please contact us to arrange a meeting. You can reach us by phone at +49 69 24751999 0 or by e-mail at mail@wynlegal.com.