The world’s fourth-largest and Europe’s best-performing and most stable economy, Germany continues to be number one among the world’s favorite investment locations. Studies such as the recent Ernst & Young European Attractiveness Survey, A.T. Kearney’s FDI Confidence Index and the UNCTAD World Investment Prospects Survey have all placed Germany in the world’s top five FDI locations and as the number one FDI location in Europe across numerous categories.
Entrepreneurs from non-EU countries require a residence permit (Aufenthaltserlaubnis) or a settlement permit (Niederlassungserlaubnis) if they want to run a business in Germany on-site or if they are employed in Germany.
The relevant residence title depends on the entrepreneur’s nationality and particularly on the specific area of business activity intended in Germany. A residence permit is not generally required for the setting up of a business in Germany – provided that the business has a local representative on-site in Germany. However, a residence permit is required in those cases where the foreign national intends to run the business on-site in Germany.
Business operators who are from non-EU countries and who manage their company on location in Germany as a self-employed person require a residence permit for the purpose of self-employment (Aufenthaltserlaubnis für selbständige Tätigkeit).
This is generally issued if
- An economic interest or a regional need regarding the intended business activity exists,
- Positive economic consequences are to be expected from the investment project,
- The planned investment has secure financing in place.
The local immigration office (Ausländerbehörde) individually assesses to what extent these criteria are met. It takes into account the following aspects:
- Viability of the underlying business idea
- Investor’s entrepreneurial experience
- Level of capital investment and availability of capital
- Effects on the regional employment and (employee) training level
- Contribution towards innovation, research, and development in Germany
The immigration office consults the local trade office (Gewerbeamt) as well as local trade and business associations, e.g. local Chambers of Industry and Commerce (Industrie- und Handelskammer) or the Chambers of Skilled Crafts (Handwerkskammer).
Schengen Business Visa
A Schengen business visa is sufficient for most of the activities in the formation phase of a company. It enables its holder to stay in Germany for up to 90 days, during which time all fundamental establishment activities can be performed. These include, amongst other things:
- Signing and notarization of the articles of association
- Application for registration with the commercial register (submitted by a German notary)
- Trade office registration (provided at least one representative on-site in Germany is available)
- Other preparatory activities during the business establishment phase (such as opening a bank account or the conclusion of lease contracts)
- Negotiations and the conclusion of contracts with business partners
Setting up a company in Germany using a Schengen visa does not alone warrant residence permit issue at a later date. If necessary, a residence permit for self-employment or employment should be applied for in due time. A residence permit must generally also be applied for if the stay in Germany for setting up a company exceeds 90 days.