07/03/2023
DOING BUSINESS IN GERMANY – FOREIGN INVESTORS/FOREIGN ENTREPRENEUERS/FOREIGN COMPANIES
The enthrallment and lure to start a business garners many small and mid-size foreign companies and individual entrepreneurs to Germany. Obtaining a visa/residence permit for starting a business in Germany entails understanding of basic legal information listed here.
1. A foreigner intending to start a business in Germany is permitted to apply for a residence visa for self-employment when the following main three criteria are met.
• A regional requirement for the proposed business or the business activities should be of commercial interest to the region.
• The business must be favourable to the German economy.
• The proposed business must be financially secured by own financial means or by an approved credit facility.
The relevant German authorities will examine and analyse the business concept in regard to relevant experience of the entrepreneur, the amount of investment, possible growth on employment, training and possible contributions to areas of innovation and research.
If the above parameters are met, the person is deemed acceptable to be granted a residence permit in this category.
2. An investor is also deemed to be granted a residence permit in this category if his/her country has a reciprocal arrangement with Germany in this regard.
3. Further, foreigners who have consummated their education in Germany are also entitled to a residence permit in the reasons stated below
• A person who has, successfully completed a study program from a public institution in Germany.
• A person who has, successfully completed a study program from an institution recognised by the German Government.
• A person who has, successfully completed a study programme from any comparable training institution in Germany.
• A person who possesses a German residence permit as a researcher.
It stands to reason, that the proposed business activities are in the field of knowledge acquired under relevant study or research programmes.
A person above 45 year of age, require substantiating that they have sufficient pension funds or financial means to cover their living expenses in old age (after retirement).
4. A person, who possesses a residence permit for employment in Germany, maybe allowed carrying out self-employment, if under the issued residence permit to him/her states it.
Duration of the residence permits
Such visas/residence permits will be issued for three years at the first instance. After three years, a settlement permit may be granted to the entrepreneur and his family:
• If the business has been successful, and if the cost of living of the entrepreneur together with his family members is secured through enough financial means.
• If the entrepreneur and his family have adequate accommodation as required by local requirements.
My Suggestions and Advice
• It is important to prepare a structured business concept/ business plan and have it cross checked by local regional economic institutions prior to submission of the visa application.
• Make a right choice of place for the business carefully considering requirements of your proposed business.
• Various service providers offer their services in Germany for back office requirements, with marketing and networking facilities, tax services, etc. they are valuable assistance in business in the early stages.
• It is essential to fulfil all legal requirements for the formation of the business entities in accordance with relevant laws.
• It is vital to talk to various service providers in advance and before deciding on whom to work with, contingent to comfort levels.
• It is strongly advisable for entrepreneurs, not fluent in German, to take support and assistance from German-speaking local service providers, who are proficient in English and will enable you to communicate with them properly.
• In my 25 years of legal experience in Germany, I have seen many foreign entrepreneurs going through a lot of trouble and in financial distress due to unawareness, unfamiliarity, and lack of proper of knowledge of respective German rules.
• In many such cases, we can analyse, determine and resolve their problems.
• In my opinion, an entrepreneur should be fully aware of all the legal, tax and other related rules and structures of the business appropriately right from the start of the business itself. This will enable them to concentrate on their business once it is established then worrying and stressing over this at a later stage.
Finally, please do not fall prey for any misleading information.
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