Reason for Residence: Freelancing
Before going into details, we need to clarify the meaning of “freelancing” first! Generically, it is pretty much synonymous to "self-employment" of individuals running a business – not incorporated. This is already a very good start and you are almost there! German law has its specialties... Here, we consider as freelancers what you would call "white collar" professionals. The "official" translation of the Residence Act translates the German word "Freiberuf" as "self-employment". A good explanation, isn’t it? Go ahead and read §21 V AufenthG. Please click the work “Freiberuf” which will lead you to a more detailed description on another page.
I want to start a business in Germany as a freelancer and while doing so, I want to live here, too. How can I do that?
Since the amendment of the law in 2012, the law wants to promote business immigration in order to combat the needs of German economy. The latest changes in 2019 have brought no difference. Pursuant to §21 V AufenthG, you need to show:
- the economic interest or a regional need for your line of business,
- positive effects of your business for the German economy,
- the ability to secure the financing of your project through equity or a credit promise of a domestic bank.
This sounds just like your description of the investor visa. I am not an investor and only run my personal business. What is the difference?
Well yes, at first glance it sounds the same. However, the requirements for freelancers are much less strict.
Now how much money do I really need?
Well, the law does not answer this question. Let us think practically, you have to have funds to open and run your business and funds for your private livelihood for one year. If you want numbers, I can hardly give you any. The amount of money for your line of business (= “investment capital”) depends on your setup (personal vs. corporate). Your private livelihood depends on your marital status and whether you have children. Immigration expects that you bring the financing for the first year – for business as well as private.
The thing is, I personally do not have so much money. Will this ruin my chances?
Yes and no. You have to have either equity, or a bank loan or customers lined up eager to hire you. If you lack own money and need a loan from a bank, any normal house bank will want securities from you and a normal bank loan is expensive. An alternative will be existing assignments that you can take latest when you are granted the permit. N.B. You will have to prove all this!
Hey, wait a moment, you mentioned “customers lined to up eager to hire me”! What do mean? Can I really just say that I have a hoard of clients constantly knocking on my door wanting me to work for them? Sounds simple.
Well, it is almost that simple. You need to produce “Letters of Interest” from these clients to prove this. Don’t forget, German authorities want it all proven. Also, keep in mind, the overall maxim for German business immigration: you have to bring momentum to German economy! How does relate to your customers? Simple! They have to be based in Germany!
What is interesting for German economy?
Generally, everything, that will bring momentum to Germany, is welcome. IT, export, enhancing business relationships abroad will typically always work. What German authorities typically do not want are illegal or businesses already existing in abundance or only minor retail businesses. Typical examples of professional services are:
- business consultants,
- foreign accountants, like CPAs,
- foreign attorneys,
- language teachers (N.B. exclusively native speakers for their native language),
What is not wanted in Germany?
German authorities understand as economically uninteresting, any such businesses that are:
- purely oriented on private consumption,
- beauty shops of any kind,
- restaurants / bistros / cafes,
Sounds thrilling! I am so sad, but I have been running a beauty shop in my home country for decades, becoming more elderly, my kids in Germany, I want to follow them that they can take care of me when I need their help. Is there no workaround for this private consumption business of mine?
Oh, indeed there is! You will have to take over an existing business that is either failing or only surviving or the owner retiring. When doing so, you will have to communicate to the authorities that you will be turning this business around to a profitable one. Yes, you will have to invest a significant amount and at least keep the existing employees – if not even increase the number.
How will they test the workability?
You will have to hand in a business description. Based upon that description, the authorities will test your case. This description can be just a few page long story on what you want to do and how you will make ends meet financially. They will test your idea based upon:
- your experience / knowledge / training in your field,
- a general need for your line of business,
- previous success,
- first clients lined-up,
I’m a 45-year-old artist with 20 years of professional experience. I heard that I need old-age precautions. Um, what is that? What constitutes as a reasonable old-age precaution?
You need to show a private or public pension plan that will "guarantee" your financial sustainability when you turn 67. Private assets are also feasible. You need to show that you will have around 171 k€ p.a.
I guess, I will have to go every year to immigration and get my permit renewed. How long do I get from the beginning?
You will get up to two years from start. After this period, you will have to show the authorities that you are making money. The practical reason for this is that the authorities want to test your numbers at least once before granting you permanent residency.
I'm worried about my son. He just graduated and got his masters. Since he has no experience in business whatsoever, does this mean, he will have no chance at all?
Relax. If a graduate has no experience, they will not instantly kick him out. He will get his chance when he has clients lined-up waiting so he can “finally” serve them. Everybody knows and understands that graduates as well as start-ups generally lack a long-standing business record.
I graduated here and got my German diploma. How does that help me?
First of all, congratulations on your success! It does significantly help you. The authorities have to use their discretion to grant you the permit. This might sound complicated. Normally, the authorities search for loopholes in the application in order to deny. Graduates of German universities are by all reasonable means to be accepted with their planned business ventures. So, if your business idea is only "so-so", you are supposed to get the permit. In the case, you have no idea, no funds, no nothing but the pure wish to remain, then do not even expect an approval.
But what if my plan fails? Will they kick me out immediately?
Relax. Plans can change – for good or for worse. Latest when the extension is due, you will have to show as a minimum that you break even and have enough private assets to finance yourself for another year – in spite of your business losses. However, do not reckon that the authorities will be very happy with such "failure". If you cannot explain your negative situation and convince them on a prosperous future, then you will have to expect that they might decline the second extension. It is a truism that business income is not always stable, you already invested a lot and worked hard. You are generally entitled to at least one renewal.