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31.10.2016 08:00

Right of Residence in Germany - Self-employed Persons

The 4th and last part of this series explains the prerequisites subject to which a foreign national is permitted to live and work in Germany as a self-employed person.

By: RAin (Lawyer) Katharina Huber

For EU citizens and nationals of the countries belonging to the European Economic Area, the freedom of movement of workers applies in general, so that they are able to become self-employed in Germany without holding a residence permit.

Foreign nationals from third countries (i.e. countries not belonging to the European Union, the European Economic Area, and Switzerland) may obtain a residence title by exercising a self-employed activity. The general prerequisites for the granting of a residence permit for the purpose of exercising a self-employed activity are:

  • there is an economic interest or regional need for the execution of the activity,
  • the activity suggests that there will be a positive impact on the economy,
  • the financing of the activity is secured.

Whether these prerequisites are fulfilled in the individual case is also assessed on the basis of the viability of the business idea, the entrepreneurial experience of the foreign national, the amount of capital employed, the impact on the employment and training situation and the contribution to innovation and research. To enable the competent authority to examine the application, foreign nationals are as a rule obliged to submit many documents. Among these are the company profile, business plan, business concept, funding plan, CV describing the professional career, evidence of qualifications, proof of health insurance cover, and tenancy agreement or evidence of residential property.

When the foreign national is older than 45 years, s/he is moreover granted a residence permit for the time of execution of self-employed activity only, if s/he has made adequate provision for retirement. Adequate provision for retirement means a monthly retirement pension of EUR 1,109.88 for a minimum period of 12 years or assets in an amount of EUR 180,000.

The residence permit is limited for a maximum period of three years. In the event that the company successfully established itself and achieved its objectives, and the foreign national is able to provide sufficient means of subsistence for him/her and his/her family members from the income, a settlement permit may be granted. Sufficient means of subsistence in addition includes sufficient health insurance cover and sufficient living space. This settlement permit then grants the foreign national an unlimited right of residence in Germany.

The formation of a company for the purpose of becoming active as the managing director in Germany may under certain circumstances create the prerequisites for obtaining a residence title. It must be taken into consideration that the mere fictitious formation of a company is not sufficient and may lead to expulsion. Whether a self-employed person is granted a residence title is always a case-by-case decision. The formation of a Germany company which in fact can also be controlled from abroad is in itself not a basis for receiving a residence title.

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