German immigration law: How to obtain a German residence title by investment in Germany - MTH Rechtsanwälte Köln
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Rechtsanwalt Helmer Tieben
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Immigration law
von: Helmer Tieben

Can I obtain a residence permit in Germany as a foreign entrepreneur?

In principle, foreign entrepreneurs can be granted a residence permit for the purpose of starting a business in Germany according to the provisions of section 21 of the German Residence Act (Aufenthaltsgesetz – AufentG). This is therefore a visa and residence for the purpose of self-employment.

However, since immigration restrictions apply in Germany, rather strict requirements must be met to obtain a residence permit for the purpose of gainful employment. This applies in particular to persons entering Germany from third countries

What is the procedure for obtaining a visa and what requirements need to be met?

If a foreign national wishes to enter Germany for the purpose of self-employment, he must submit an application to the German embassy in his home country.

Unlike with visas for business trips with a maximum term of three months (Schengen visa), a visa for the purpose of (self-) employment requires the consent of the foreign citizens’ authority (Ausländerbehörde) at the envisaged place of residence.

The embassy forwards the application to the foreign citizens’ authority.

In order for the foreign citizens’ authority to grant its consent  Articles of Association or a Memorandum of Association for a newly established company or branch office in Germany must have already been concluded.

This means that the granting of residence for a foreign entrepreneur is only possible after the company has been established in Germany.

The foundation of a company (e.g. a GmbH (private limited company)) by a foreign national is also possible in Germany. The conclusion of Articles of Association in Germany takes place before a German notary public. Depending on the form of association chosen, a certain amount of start-up capital must be available (e.g. in the case of a GmbH, at least 25,000 euros, of which at least 12,500 euros must actually be paid up if there are several shareholders). After its entry in the register of companies (Handelsregister) the company can freely dispose over the start-up capital.

However, it is not required that such an entry in the register of companies has already taken place. Nor does the company or branch office already need to have started operating in Germany.

The foreign citizens’ authority will then forward the application for residence to the competent regional economics ministry (Wirtschaftsministerium) or chamber of industry and commerce (Industrie- und Handelskammer – IHK) for their appraisal.

Normally, the actual decision on the application will be made there.

Decisive criteria for the consent of the competent economics ministry include that there is an economic interest or regional need for the foreign entrepreneur’s establishment in Germany, that positive impacts on the economy are expected, and that the venture’s financing is secured. Firstly, therefore, the applicant must demonstrate as transparently as possible that his intended business will be beneficial to the German economy. And secondly, he must specify why his long-term physical presence is required for this activity.

He should do this by submitting a detailed written presentation (business plan) and relevant supporting documents.

In this context, it is crucial which function the applicant intends to assume (e.g. managing director of a private limited company, head of a branch office, etc.). Thus, equity interests in a company founded in Germany will not be sufficient. Rather, evidence must be provided that the applicant needs to be present in Germany constantly, for example because there is no suitable representative in Germany, or because the applicant has to manage the business in Germany himself due to his expertise and personal experience.

To prove an economic interest, the applicant must submit documents detailing the (parent) company’s business abroad: sales and profit development, balance sheets, etc.

The reasons  for the relocation or expansion to Germany  need to be specified and evidence provided (e.g. profitability considerations, constantly growing demand in Eastern European countries for Western European goods, etc.).

The company’s specific  intended field of business  (e.g. trade in consumer electronics), as well as the intended form of the company’s organisation or expansion in Germany (e.g. establishment or expansion of a retail chain, etc.) need to be specified. Another important question in this context is  what investments are planned, and on which scale, and how sales of German products will be promoted.

The creation of new jobs by the new company is a major advantage. Therefore one should demonstrate that the company will employ German workers or other foreign workers who are already resident in Germany (As a guideline one can say that the foreign entrepreneur should have plans to employ 5 workers in Germany (Decision of the administrative court of Berlin, 11,09.2020, no. 31 K 462/19 V).

Previous business activities of the foreign company in Germany are of great relevance for the assessment of a regional need. Documents should be submitted on the business development of the company via which commercial transactions have been carried out in the past. Testimonials from other business partners, especially major German companies, are also relevant.

The regulation according to which investors “would” receive a residence permit for an investment of at least €250,000 was abolished with the implementation of the “Blue Card” Directive. Hence smaller investments may also be sufficient. Even small entrepreneurs can obtain a residence permit if they meet the requirements outlined above. Nevertheless, intended investments on the scale of €250.000 are always beneficial and increase your chances of obtaining the coveted permit (Decision of the administrative court of Berlin, 11,09.2020, no. 31 K 462/19 V). However, a mere intention to invest will not suffice. Evidence must be provided that the entrepreneur owns the required capital.

If the competent economics ministry comes to the conclusion that there is an economic interest in the applicant’s business activities, it will notify the foreign citizens’ authority. The latter will then usually consent to the issuance of a visa. It can only refuse if there are special reasons relating to the applicant, e.g. if the foreign citizen has already been expelled from the Federal Republic of Germany or has otherwise committed a criminal offence.

However, if no economic interest can be established, the foreign citizens’ authority will refuse its consent.

As soon as the foreign citizens’ authority has given its consent, the embassy can issue the visa.

Duration of the procedure, legal representation

Unfortunately, experience shows that the procedure for the review and approval of a residence permit takes a long time. First, the applicant must wait for an appointment with the German embassy, then the German embassy forwards the application to the relevant foreign citizens’ authority in Germany. The latter in turn forwards the documents to the relevant chamber of industry and commerce. Taking into account the processing time of the foreign citizens’ authority and the embassy, the applicant can expect a  processing time of at least 12 months.

For a smooth implementation of the procedure, the local authorities require that a contact  be appointed. This also helps expedite processing, as it means that the required documents can also be submitted directly in Germany.

Can my family join me?

As soon as the immigrant has received a residence permit, his family members can join him. To this end, a visa for the purpose of family reunification must be applied for at the German embassy. This is followed by the consent procedure outlined above via the foreign citizens’ authority.

Of course, an economic interest is not required for family reunification.

Normally the foreign citizen’s spouse and children can join him in Germany. The only prerequisite is that the applicant can secure the livelihood of his family members from his own gainful employment. Moreover, evidence of sufficient living space must be provided.

Lawyer services for foreign investors in Germany

  • Support for the company’s establishment through assistance with the drafting of the Articles of Association (company contract)
  • Assistance with opening a bank account for the company
  • Procurement and cooperation with competent notaries for the purpose of notarial certifications, entry in the register of companies
  • Drafting of the managing director’s contract, taking particular account of the subsequent visa procedure
  • Accompaniment of a lawyer to the trade office (Gewerbeamt)
  • Procurement of a German tax consultant for drafting a business plan to be submitted in the visa procedure
  • Legal representation in the visa procedure with all authorities involved in Germany and abroad (German embassy, foreign citizens’ office, chamber of industry and commerce, trade office, other authorities involved)
  • Accompaniment of a lawyer for police registration in Germany
  • Accompaniment of a lawyer to the foreign citizens’ authority

Important Note: This article has been prepared by lawyer Helmer Tieben for general information purposes only. Mr. Tieben does not accept any liability to any person or organisation for the use or reliance of the information contained in this article. On any specific matter, kindly contact us by dialing 0221 – 80187670 or sending us an email to info@mth-partner.de

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