German residence permit as a self-empoyed:
Fatal mistakes that lead to rejection
Johanna decided to move to Germany. She read on the internet that if she opens a company in Germany, she will easily receive a residence permit in Germany for herself and her family. She spent thousands of euros and almost a year for opening a company, writing a business plan, preparing and submitting the documents. What a shock it was for her when she was refused a German residence permit. Let's look at the main misbeliefs that often lead to rejection of a residence permit as a self-employed.
Watch this video to learn about top mistakes of foreign entrepreneurs that lead to rejection of a German residence
As per Section 21 of the Residence Act (Aufenthaltsgesetz) A foreigner may be granted a temporary residence permit for the purpose of self-employment if
1. an economic interest or a regional need applies,
2. the activity is expected to have positive effects on the economy and
3. the foreigner has personal capital or an approved loan to realise the business idea.
Nexus-Europe GmbH: There is no such thing as automatically having the right to get a residence permit in Germany. All three conditions must be met. The difficulty is that there are no clear lists of activities that fall under regional needs and economical interest.
Johanna: Who decides if the activity of my company will be beneficial for Germany?
Nexus-Europe GmbH: To decide if the company business activity is beneficial for the region, each application case for a German residence permit is examined by competent authorities. The main factors to be considered are: foreigner’s entrepreneurial experience, the level of capital investment, the effects on the employment and training situation and if the products/services are considered to be beneficial for the region. Therefore the value of the business idea and a correctly developed business plan are two of the most important points of the application for a residence permit in Germany. Even the best ideas fail if the provided business concept and business plan don’t show a clear explanation and proof of these points.
Good business consultants who specialize in working with foreign entrepreneurs and § 21 help evaluate the concept, develop the business plan that shows the benefits for the region. This significantly minimizes the risks of being denied a residence permit in Germany.
Johanna: Is there a minimum of investments that guarantees me a German residence permit as a self-employed?
Nexus-Europe GmbH: Until 2012 there were clear requirements that had to be fulfilled in order to get a residence permit in Germany as a self-employed: to ensure an investment volume of 250 000 euros as well as to create at least 5 jobs. Now, there are no precise requirements. On the one hand, this gives more opportunities. On the other hand, each case is open for interpretation and therefore the value of the business idea, a well-developed business concept and business plan become even more crucial for the application not to fail.
Johanna: But how can it be! I opened a company, but I can’t get a residence permit in Germany! I can’t run my business without it!
Nexus-Europe GmbH: In most cases you are allowed to open and run a GmbH/UG based on a business visa. If the authorities decide that, to run your business, your personal presence in Germany is not required for more that 90 days within 6 months, they will decline your application for a German residence permit.
Johanna: But I need to be in Germany all the time to successfully run my business!
Nexus-Europe GmbH: In this case, you need to provide a solid proof to the authorities that your presence is absolutely required in Germany for more than 90 days within 6 months and why. The reasons must be clearly shown in business plan you submit when applying for the residence permit in Germany. For example, the most authorities don’t consider running such businesses as online shops and import-export companies to be a sufficient reason for granting a residence permit. Those activities can be run remotely or within the period of 90 days that a business visa provides.
Good business consultants can help prepare a business plan so that the risks of rejection are minimized or suggest alternative ways to apply for a German residence permit. However the final decision is up to the authorities.
Johanna: I consider to have a company in Germany together with my Partner. Which percent of the shares must I have to be able to apply for a German residence permit as a self-employed?
Nexus-Europe GmbH: To be considered a self-employed for a GmbH or a UG, you need to hold at least 50% of the shares and be the managing director of the company.
Johanna: Does it mean that if each of us has 50% of the shares and we are both managing directors, both of us can apply for a residence permit in Germany as a self-employed?
Nexus-Europe GmbH: In theory, yes. However in practice one must clearly prove that the company needs a permanent presence in Germany of two managing directors. Again, this must be clearly shown in the business plan. The decision will be made by the immigration authority. Business specialists who precisely know the specifics of decision-making can evaluate the chances of a positive decision about the German residence permit and help with a correct presentation of the situation based on their experience.
Johanna: And if I have someone as a shareholder without any functions in the company. Is this person entitled for a residence permit as an investor?
Nexus-Europe GmbH: Generally, just being a shareholder in not sufficient for applying for a residence permit in Germany. Depending on the situation this person might be granted a business visa.
Johanna: I see. Already before applying for a German residence permit I had to plan the structure and activity of my company correctly, and also think the business plan through!
Nexus-Europe GmbH: If the possibility of obtaining a residence permit in Germany as a self-employed is an important factor in the decision of opening a business in Germany, then it is necessary to plan the process already before forming the company in Germany. It is necessary to decide which one of the shareholders-directors will apply for a German residence permit. It is also important to decide on the type of activity, compare it with the existing experience of the directors and other factors that affect the positive decision on the residence permit.
Johanna: How can Nexus-Europe GmbH help foreign entrepreneurs get a residence permit as a self-employed in Germany?
Nexus-Europe GmbH: Especially for investors and entrepreneurs who are willing to get a residence permit in Germany we have developed special package. The risk of rejection is minimized because of the 5-step Nexus Smart Immigrate Technology. It is a complex approach to the preparation, finalization and approval of the application documents. Nexus Smart Immigrate Technology was developed by Premium class experts: Doctors of Law, economists with support of government officials. It helps foreign entrepreneurs who plan to relocate to Germany make the residence permit application process maximally smooth.
Johanna: Is it true that the managing director of Nexus-Europe GmbH received a residence permit in Germany many years ago?
Nexus-Europe GmbH: Yes, the Founder and CEO of Nexus-Europe, Dr. Mamkina, has got not only the German residence permit for business but also the German citizenship. We know the whole process not only of getting a residence as entrepreneurs, but establishing a successful business in Germany. It gives our clients an undeniable advantage over document preparation by theoreticians who have never travelled this path themselves.
Johanna: Who works on the projects?
Nexus-Europe GmbH: During 11 years Dr. Mamkina personally assembled a team of German experts from all over Germany. Each of them is an expert in their profession: lawyers, economists, business consultants, project management specialists to name just a few.
If you register a company with one provider and plan to obtain a German residence permit through a lawyer of another provider, you often get a controversial approach. Very often, clients come to us with companies already registered independently or in other places and after having received a refusal of a residence permit in Germany for one of the above reasons. Unfortunately, correcting the mistakes of others is much more expensive than the correct planning from the very beginning. And sometimes correcting such mistakes is impossible at all.
Unlike getting services from different providers, with us you get a solution where all steps are coordinated with each other: we plan and implement the whole process from application for the German residence permit to company formation. We can even Project Manage your business. The smoothness of the process is ensured because all the projects are coordinated by a certified Project Management Professional (PMP) according to the strict international PMI PMBOK® standards.
This document (and any information accessed through links in this document) is intended for general informational purposes only and is not a substitute for professional advice. The information is written with the greatest care. However, we cannot guarantee the accuracy of this information. We assume no liability for damages caused by errors in the texts. Each situation is unique and professional advice should always be obtained before taking or refraining from any action.