Residence for self-employment

If you are a third-country national and want to work for yourself in Germany, you need a residence title that allows it. Section 21 of the Residence Act provides routes for self-employment, but approval is discretionary rather than automatic.

In short

• Section 21 provides a discretionary route for third-country nationals; approval is not automatic. EU, EEA and Swiss citizens do not use it for self-employment covered by free movement.
• Subsection 1 can be issued if there is an economic interest or a regional need, positive economic effects are expected, and financing is secured by equity or a loan commitment. It names no minimum sum in euros.
• For applicants older than 45, the permit should be issued only if they have adequate old-age provision. Subsection 4, first sentence, limits the residence permit to a maximum of three years. That cap includes a permit under subsection 1 and under subsection 2a. Subsection 5 exempts a freelance permit from subsection 4. A scholarship permit under subsection 2b lasts for the scholarship and at most 18 months.
• After three years, subsection 4 allows a settlement permit, departing from section 9 (2), when the person has been self-employed for three years, the activity now carried on gives reason to expect further sustainable development of the business especially because of its success and its duration, the livelihood of the applicant and of dependent family members living in the household is secured by sufficient income, and reasons of public security or order do not stand in the way under section 9 (2) sentence 1 number 4.
• Ask for the permit before you start the activity, unless subsection 6 has already allowed it on your current title. A search card does not itself authorise setting up a business.

What you need to know

Section 21 (1) says a residence permit for self-employment can be issued if there is an economic interest or a regional need, the activity is expected to have positive effects on the economy, and the financing is secured by equity or a loan commitment.

The assessment looks in particular at whether the business idea is viable, at the person’s business experience, at the capital invested, at the effects on employment and training, and at the contribution to innovation and research. The competent local bodies, the trade authorities, the public professional bodies, and the authorities that license the profession must be involved.

Subsection 2a says a permit should be issued, departing from subsection 1, to a foreigner who has successfully finished a degree at a state or state-recognised higher-education institution or comparable training institution in Germany, or who, as a researcher or scientist, holds a residence permit under section 18b, 18d, or 19c (1), or an EU Blue Card. The researcher or scientist condition also applies to that Blue Card route. The intended self-employment must show a link to the degree or to the research.

Subsection 2b allows a permit to prepare a business start if you are a skilled worker and a German economic organisation or a German public body awards you a scholarship from public funds that secures your livelihood. That permit lasts for the scholarship, and at most 18 months.

For applicants older than 45, the permit should be issued only if they have adequate old-age provision.

Subsection 4, first sentence, limits the residence permit to a maximum of three years. That cap includes a permit under subsection 1 and a permit under subsection 2a. Subsection 5 exempts a freelance permit from the whole of subsection 4. Subsection 2b has its own cap: the scholarship permit lasts for the scholarship and at most 18 months.

After three years, a settlement permit can be issued, departing from section 9 (2), when the person has been self-employed for three years, the activity now carried on gives reason to expect further sustainable development of the business especially because of its success and its duration, the livelihood of the applicant and of dependent family members living with the applicant in a family household is secured by sufficient income, and the public-security condition in section 9 (2) sentence 1 number 4 is met.

That condition is that reasons of public security or order do not stand in the way, taking into account the seriousness or nature of a breach, the danger the person poses, how long the person has already stayed, and ties in Germany.

Subsection 5 allows a permit for a freelance activity even without subsection 1, if any licence required for that profession has been issued or promised. Subsection 4 does not apply to that freelance permit. Subsection 6 allows self-employment to be permitted while you keep another purpose of stay, if the other licences have been issued or promised.

Section 2 of the Free Movement Act gives Union citizens the right to enter and stay in order to exercise a self-employed activity they are entitled to pursue. They do not use section 21. The same idea extends to EEA and Swiss nationals under the rules on the EU page. The trade-office registration on the self-employment page is a separate step from the residence title.

What to do

1. If you are an EU, EEA, or Swiss citizen, read the free-movement page. Section 21 is not your permit.
2. If you are a third-country national, decide which subsection fits: the general test in subsection 1, the graduate or researcher route in subsection 2a, the scholarship route in subsection 2b, freelance work under subsection 5, or permission added to another title under subsection 6.
3. Prepare the evidence needed for your route. Subsection 1 does not set a minimum investment in euros. The authority involves the local trade and professional bodies in its assessment.
4. Ask for the permit before you start the activity, unless subsection 6 has already allowed it on your current title. A search card under the opportunity-card page does not itself authorise setting up a business.

Common mistakes

• Quoting a minimum investment in euros. Section 21 (1) requires secured financing and names no national sum.
• Using the three-year limit in subsection 4 for a freelance permit under subsection 5, or for the scholarship permit under subsection 2b. Subsection 5 says subsection 4 does not apply to freelance work. Subsection 2b caps that permit at 18 months.
• Assuming a Union citizen needs an Aufenthaltserlaubnis under section 21 for a self-employed activity covered by free movement.