The Business Plan: German Residence Permit for Entrepreneurs and Investors

According to § 21 German Residence Act (AufenthG), foreign nationals can obtain a residence permit under certain circumstances if they set up a business in Germany.

However, the prerequisite for this is that there is an economic interest or a regional need. Furthermore, the activity should be expected to impact the economy positively. Finally, the implementation financing must be secured by equity capital or a loan commitment.

Every business start-up is unique in some way: the entrepreneur’s own business idea and individual concept motivate them to face the uncertainties and difficulties of setting up a business. Drawing up a business plan helps you clarify where you stand with your idea and which points can still be worked out.

The business plan is also of considerable relevance for the authorities regarding granting a residence permit. In particular, it should contain the following points:

• Concept – what does the business deal with?
• Structure – which business structure will be chosen?
• Market analysis – what regional demand is the enterprise to cover?
• Employment – how many people are to be employed in the enterprise?
• Target group analysis – who should the product/service offered appeal to?
• Profit expectation and liquidity plan.

For the residence permit, the following are of particular importance:

• Does the activity meet an economic interest or a regional need?
• Does the activity have a positive effect on the German economy?
• Is the financing secured by equity capital or by a loan commitment?

Since these questions are complex issues requiring comprehensive analysis, seeking professional assistance is often essential.

Our lawyers have already worked with many companies and are highly experienced in preparing business plans. With this expertise, the insider knowledge gained, and in-depth legal knowledge, our team will support you in implementing your business idea in such a way that the legal requirements are met.

A promising business plan is not only required for a residence permit according to § 21 AufenthG but is also essential for financial support from banks and investors. The vital points to be carried out in your business plan can be divided into different categories. It should be noted that the relevance of the individual aspects depends on the type of product or service in which your company specialises.

• What is the name of your business?
• What products or services will be offered?
• What makes your business unique – how is it different from others?
• Where do you want to locate your business? In which city/region in Germany?
• Will the business be mainly online, or will there be a branch office?
• What form of company will your business take?
• How large is the share capital?

• How can the product offered be defined?
• How is it different from what is already on the market?
• What marketing strategies are in place?
• Do you have the necessary licences and permits to enter the market?
• Are there copyrights, patents and/or trademarks?
• Is the product ready for the market, or are there products that are still in development?
• Have the products been tested before entering the German market?

• Which competitors can be expected?
• What are your company’s strengths and weaknesses?
• How can the weaknesses be successfully addressed?
• What gap in the market is being filled? What is the advantage of your product/service?

• Which target group should be addressed? Have you carried out a demographic analysis?
• Is there a market for your product/service in your company’s location?
• Is there a broad market spread, or do individual large companies dominate the market?
• Which advertising media should be used to address the target audience?
• How do you intend to make a name for yourself in the target market?

• What are the short and medium-term sales projections?
• What is the expected turnover in the first year(s) of business?
• Does the company have sufficient financial resources to avoid or counter liquidity problems?
• What is the total capital requirement?
• How is the business financed?
• What are the monthly expenses of the business?

Regarding the business plan, you must remember that the competent authorities will ask for the relevant documents. For example, proof of university degrees or other qualifications must be submitted.

If you have already run a business in the past, it may be advantageous to enclose documents showing the success of this. Since granting a residence permit entails considerable advantages, the authorities carefully check whether the addressees are entitled to such a permit.

The following points, in particular, are considered when examining applications:

• The viability of the business plan,
• The business experience of the applicant,
• Investment amount,
• Impact of the enterprise on the employment and training situation,
• Contribution of the activity to innovation and research.

Setting up a business in Germany is time-consuming, and drawing up a business plan is only the beginning. It is also necessary to register the company with the competent authority. As a rule, registration with the tax and trade office and the chamber of commerce and industry is also necessary. In addition, the company must be entered into the commercial register. Where precisely the application and registration must take place depends on the respective form of the company.

Our website on company formation provides you with the information you need to choose a suitable company form.

Schlun & Elseven Rechtsanwälte offers our clients expert legal services in matters of company formation. We support our clients in searching for rental or purchase properties, insurance and tax issues, and all other areas of setting up a business. Should their employees need to move to Germany, we will assist them with entry and settlement.

As a full-service law firm, we are at your side so that you can successfully implement your idea in Germany.