Beginning self-employment in Germany as a non-European citizen

The fundamental right of professional freedom stated in the German Constitution (Art. 12 sub-section 1 German Constitution) ensures free access to exercising a professional independence to a great extent. However, it is a so-called “citizens’ right” - i.e. it only applies to German nationals. This fundamental right is supplemented by the national law directive of § 1 sub-section 1 of the Trades Regulation Act (GewO), which regulates the principle of freedom of trade. Exceeding the protective area of the fundamental right from Art. 12 of the Constitution, this directive applies to “all and sundry”, i.e. also to foreign traders in the Federal Republic of Germany. However, limitations for the latter do result from foreigners’ law.


Prerequisites under foreigners’ law

General regulations on questions of residence law can be found above all in the “Act concerning Residence, Employment and Integration of Foreigners in the Federal Republic of Germany (Residence Act/AufenthG)", which took effect on 01.01.2005.


For foreigners who would like to undertake self-employed activity in the Federal Republic of Germany, there is a limitation of access as a matter of principle. Foreigners from the member states of the EU on the other hand are subject to the same rights and duties as German citizens when exercising a self-employed activity. They have a legal claim to issue of a residence permit. In addition, citizens of Norway, Iceland and Liechtenstein enjoy freedom of establishment.


As a matter of principle, the foreigners’ authorities are responsible for all questions of foreigners’ law and decisions. Regional competence of the foreigners’ authority is based on the foreigner’s factual or intended place of residence. The application for self-employed activity is to be made to the foreigners’ authority responsible for the place of residence.


In the Frankfurt CIC area, the following are responsible:


In the city of Frankfurt:

Stadt Frankfurt am Main
Ordnungsamt
Ausländerbehörde
Rebstöcker Straße 4
60326 Frankfurt am Main
Tel.: +49 (0)69 212 42485
Tel.: +49 (0)69 212 44133
Telefax: +49 (0)69 212 42216


In the “Hochtaunus” District:

Allgemeine Landesverwaltung
Ludwig-Erhard-Anlage 1-4
61452 Bad Homburg v.d. Höhe
Tel.: +49 (0) 6172/999-0
Einreisestelle: +49 (0) 6172/999-3231


In the “Main-Taunus” District:

Allgemeine Landesverwaltung
Am Kreishaus 1-5
65719 Hofheim
Tel.: +49-(0) 6192-201-0

 

 

Start up-Support

 

If an application is made to one of the foreigners’ authorities, we urgently recommend submitting a business plan including the necessary attachments at the same time, in order to accelerate the proceedings. 

(Checklists and Overviews, Federal Ministry for Economic Affairs an Energy)  

 

The website of  iQ Fachstelle Migrantenökonomie provides support to both foreign students and academics in Germany, as well as professionals who live abroad, who want to start a business in Germany.iQ Fachstelle Migrantenökonomie

http://www.wir-gruenden-in-deutschland.de/


In the course of the proceedings, the Chamber of Industry and Commerce or the Chamber of Trades is also questioned on the application.



Independent employment for a gain


Any activity aimed at achieving profit or any activity for which a payment is agreed is to be classified as “independent activity” to the extent that it is not a question of an employment relationship. In addition, the general partners of a limited commercial partnership, any shareholder in a general partnership or a civil-law partnership are independent. Holders of a limited commercial power of attorney and managerial employees can also be treated as independent workers.


The executive organs of legal entities entitled to representation, e.g. the managing directors of a GmbH or the members of the board of stock corporations, do not exercise any independent activity, but are treated as independent workers due to their functions. Likewise, holders of a limited commercial power of attorney - whatever the form of the enterprise - and managerial employees with a general power of attorney are treated as employed persons comparable with independent workers. Likewise, dependent activity in the travelling trade (an individual duty to obtain a travelling trade card exists here) are treated as independent work - without regard for the nationality and the duration of the stay in the country.


Capital holdings


As a matter of principle, a mere capital holding in enterprises is not to be classified as employment for a gain. This applies to “silent shareholders” just as much as a limited partner in a limited commercial partnership. The same applies accordingly as a rule for minority shareholders in an LLC. But to the extent that a foreigner can exercise a considerable influence on the passing of resolutions as a result his holdings in the enterprise, foreigners’ law presupposes a “comparable independent activity for a gain”. To this extent, a majority shareholder, even without being a managing director himself, must be treated as an independent entity under foreigners’ law. Foreigners who obtain holdings in an LLC with each of them only as a minority shareholder, but who jointly have an economic control over the company and can give instructions - independently, for example, of the appointment of a German managing director - are to be regarded as independent entities.


Activity of foreign legal entities in Germany


Foreign legal entities do not require any specific registration or permission for activity in the Federal Republic of Germany. Naturally, they are subject to the same requirements as German independent entities (for example, proof of permission for specific activities). Foreign enterprises with operating facilities in Germany (for example, representative branches, dependent branches without their own bookkeeping and accountancy or branch establishments entered in the Register of Commerce) must however prove their legal capacity, their administrative headquarters by presenting suitable documents. Independent of this, foreigners living here or foreigners wishing to become active for the foreign enterprise as a managing director, member of the Board, holder of a limited commercial power of attorney, general agent or representative, must fulfil the requirements of foreigners’ law.


Procedure


A foreigner who would like to become active independently in Germany can be given a residence permit limited to three years to start with. The prerequisite is that there is an economic interest or regional requirement for the start of the independent activity, the activity gives rise to the expectation of positive effects on the economy and that the financing of the project has been secured by equity or by a loan assurance.

Assessment of the prerequisites is based in particular on the sustainability of the underlying business idea, the foreigner’s entrepreneurial experience, the amount of capital used, the effects on the employment and apprenticeship situation and the contribution for innovation and research.

Foreign independent workers aged 45 and above are only to be given a residence permit if they have sufficient old-age provisions.

After three years, permission for professional freedom can be granted if the foreigner has successfully implemented the planned activity and sustenance has been secured (§ 21 Residence Act).

 

Decision by the foreigners’ authority


The Foreigners’ Office decides in “due discretion” and is not bound to the comments from an economical point of view in its decision. The comments made by the Chamber of Industry and Commerce to the foreigners’ authority merely have an internal character. The decision is notified to the foreigner by the foreigners’ authority in a written form.


Applications from foreigners living abroad


Foreigners wishing to enter the Federal Republic of Germany in order to start independent activity for gain must apply for a  corresponding residence permit at the responsible German foreign representation before entering the country. The applications are forwarded from there to the foreigners’ authority responsible for the intended place of residence with a request for examination. The examination procedure is held as stated above.

 

 

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