Starting a business as a non-EU citizen in Germany

Starting a business in Germany calls for different steps for an EU and non-EU citizen. This is a part that might confuse some non Europeans when intending to start a career in Germany either through employment or self-employment, simply because they might compare themselves with the people who already reside in Europe for whom different prerequisite should be met. The very requirement that an applicant of a self-employed program should fulfill after choosing the right business model, and assuring a feasible business plan is to find out whether his business can provide him with a residency title or not.  There are several authorities in Germany which verify this matter and we will explain their criteria in this article.

EU citizens have the opportunity to start their own business in Germany just like a German citizen but Non-EU citizens are more likely to face obstacles for starting a business in Germany. A non-EU citizen may start a business once he has either a residence permit or a settlement permit.

You may contact us to acquire further information about the feasibility of your business idea in Germany.

Regulations for business start-ups for EU citizens

Citizens of the European Union – i.e. all EU member countries – can become self-employed in Germany and start a company. This is known as freedom of establishment. Citizens from Norway or Switzerland also have this option. It is important that citizens from these countries register with the responsible registration authorities. Then the same rules apply as for German citizens. This means that, as a founder from other EU countries, you must of course also comply with the existing regulations for start-ups in the skilled trades, employment requiring a permit or duties for freelancers.

Requirements for non-EU citizens in Germany for starting a business

Based on the so-called freedom of establishment, Non-EU citizens are also allowed to start a business in Germany requiring either of the following documents. 

• a (temporary) residence permit or
• a (permanent) settlement permit

A residence permit can be granted for starting a business in accordance with Section 21 of the Residence Act if:

1. there is an overarching economic interest or a special regional need or a positive impact on the German economy. This matter should be perfectly consulted by a business developer or an immigration expert because Germany has different economical needs in different regions due to its deferral nature. On the other hand, just because the project is predicted to be successful, it doesn’t necessarily mean that it can have regional interest. Especially for business immigration, the macroeconomic indicators are as important as microeconomic ones and they will all be verified by German authorities. 
2. the project finance is already secured by the investor himself or through the equity of the private partner or institute. 
3. It should also be proved that the applicant has enough capacity to deliver the project properly. This capacity can also be assessed from several perspectives including, age, academic or non-academic degrees, professional positions and experience, language proficiency, etc. 

You may learn more about a good business plan for residency in Germany here.

Another way for non-EU citizens to obtain citizenship is to start a business with high investment (starting from €250.000) that creates some job opportunities in Germany. The local chamber of commerce decides whether the requirements are being met and the related authorities will further assess the final procedure. Non-EU citizens receive up to three years residence permit upon starting a business which they can later change to permanent residence permit. A settlement permit is issued in accordance with Section 9 of the Residence Act (by securing the livelihood and sufficient knowledge of the German language).

Facts and Figures: Nationalities of the founders of businesses in Germany

In 2017, there were 32% non-German nationals who founded enterprises in Germany. These figures are from  the Institute for Research on Small and Medium-Sized Enterprises (IfM). It is broken down as follows:

• 24% from the 27 EU countries without Germany
• 6% from other European countries
• 2% from Asia
• 0.4% from Africa
• 0.3% from America

Pay attention to further regulations

Once a non-EU citizen is able to pass the initial barriers of residency, he should now be aware of the regulations that exist for German citizens. 

• Is the business activity subject to authorization ?
• Is he going to do the craft work and if so, is the test (Meisterpflicht) required?
• Is he willing to do freelance?
• Offices : Check the responsibilities of the health, construction or trade supervision offices in Germany.
• Is a  specialist examination or information necessary when setting up a company?.

Contact us for further requirements if you are interested to start your own business in germany. We can assist you in all various business fields.

After approval, continue to legal form

The next important step after informing yourself regarding the business and its required qualifications, is to choose the respective  legal form. The following legal forms are available, for example:

• one-man business
• Partnerships or
• Corporations

For further information regarding our company formation service, click here.