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Residence Permit for employees and self employed persons in Germany

Residence Permit for employees and self employed persons in Germany

This series explains the right of residence of foreign nationals from the EU, the European Economic Area (EEA) and Switzerland. The 2nd part deals with the various residence titles (visa, residence permit, EU Blue Card, Settlement Permit and Permanent EU Residence Permit) and their general prerequisites. In the 3rd part of this series we explain the prerequisites subject to which a foreign national is permitted to live and work as an employee in Germany. The 4th and last part of this series explains the prerequisites subject to which a foreign national is permitted to live and work in Germany as a self-employed person.

1. Right of residence of foreign nationals from the EU, the European Economic Area (EEA) and Switzerland

For answering the question as to whether a foreign national, i.e. everyone who is not German, may reside in Germany, the initial decisive criterion is the country from which s/he comes, or his/her nationality. 

Citizens of the European Union and of the European Economic Area (Iceland, Liechtenstein and Norway) on principle do not require a residence title. These citizens are entitled, on the basis of the right of free movement, to freely move about in Germany and to reside there for a period of up to three months. 

When citizens intend to stay in Germany for more than three months, the provisions of the Act on the General Freedom of Movement of Union Citizens must apply to them, e.g. as employees, self-employed persons or job-seekers (for a maximum of 6 months) or as EU citizens who are not gainfully employed, as well as students or trainees, each of whom must dispose of sufficient own resources and health insurance cover. Family members of an EU citizen entitled to free movement (spouses, registered equal-sex partners in a quasi-matrimonial relationship, children and other family members to whom a person entitled to free movement grants support) also enjoy the EU freedom of movement. They do not require a residence title f. 

Nevertheless, a citizen may lose his/her right to general free movement, if the prerequisites for the freedom of movement lapse within five years after the commencement of permanent residence in Germany (for instance because the citizen is unemployed for more than 6 months and/or no longer disposes of sufficient resources). 

A permanent right of residence may be granted after a period of legal residence of five years. 

Citizens with Swiss nationality are obliged to notify their stay when it lasts longer than three months and apply for a purely declaratory Residence Permit-Switzerland. 

When a foreign national does not come from the European Union, Switzerland or the European Economic Area, but from a third country, a residence title is on principle always required. The relevant details are explained in the following articles.

2. Various residence titles (visa, residence permit, EU Blue Card, Settlement Permit and Permanent EU Residence Permit) and their general prerequisites

Foreign nationals from a third country, i.e. not from the European Union, Switzerland or the European Economic Area, on principle always need a residence title for their stay in Germany. We distinguish among the following residence titles, each of which is subject to different prerequisites and conveys the right to stay for different periods: visa, residence permit, EU Blue Card, Settlement Permit and Permanent EU Residence Permit. 

1. Visa:

A visa is required for entering Germany. It is on principle issued for a period of up to 90 days within a 180-day-period. 

For nationals of Andorra, Australia, Brazil, El Salvador, Honduras, Israel, Japan, Canada, Monaco, New Zealand, San Marino, South Korea and the USA, it is sufficient, if they apply for the visa only after entering Germany (unless they intend to become gainfully employed). 

All other foreign nationals are obliged to apply for a visa at the competent German diplomatic mission abroad before entering Germany. 

2. Residence Permit

The Residence Permit is a residence title for a limited period of time, which is on principle granted only for a specific purpose of residence. Such purposes may be:

  • residence in Germany serves education and training purposes,
  • the foreign national seeks employment in Germany (as an employee, self-employed person or freelancer),
  • residence is taken up under international law, or for humanitarian or political reasons,
  • the residence is taken up for family reasons (to establish or preserve family life),
  • there are particular reasons that justify residence (right of return, residence title for ethnic German repatriates and residence permit for persons with long-term right of residence in other Member States of the European Union).

3. EU Blue Card:

The EU Blue Card is issued for a limited period of up to four years or, for longer-term employments, for the term of the employment contract plus three months. The prerequisites for the issuance of an EU Blue Card are:

  • the foreign national holds a university degree,
  • the foreign national has already held a qualified job for five years,
  • the residence in Germany serves the purpose of pursuing employment commensurate with the person's qualification in Germany; 
  • a concrete job offer has been made or an employment contract has already been signed  or the employment relationship already exists,
  • in this job, the foreign national earns a minimum annual salary amounting to two thirds of the annual contribution assessment ceiling for general pension insurance (at present EUR 49,600.00). This salary threshold may be reduced in the case of jobs for which a particular need exists in Germany, to 52 per cent of the assessment ceiling (at present EUR 38,688.00).

A foreign national who is a holder of the EU Blue Card may obtain a permanent settlement permit, after s/he has held a relevant qualified job for at least 33 months and paid contributions to general pension insurance during this period. If the foreign national has German language skills at level B1, the required contribution period is 21 months. 

4. Settlement Permit: 

The Settlement Permit is a residence title unlimited in time, which in addition grants the right to work in Germany. As a rule, the prerequisites for obtaining a settlement permit are the following:

  • the foreign national has held a residence permit in Germany for five years,
  • living expenses are covered (sufficient health insurance cover, sufficient means to cover the costs of living),
  • the foreign national has made contributions to general pension insurance for a minimum of 60 months,
  • such permit is not precluded for reasons of public order or safety,
  • a work permit (for employees only) and other permits that may be required for gainful employment (such as an admission to practice as a lawyer) has been obtained,
  • the foreign national has German language skills at level B1,
  • the foreign national has basic understanding of the legal and social system and of living conditions in Germany,
  • the foreign national has sufficient living space available.

 

5. Permanent EU Residence Permit: 

The Permanent EU Residence Permit is also a residence title not limited in time, which grants the right to take up gainful employment. The difference to the Settlement Permit is that the Permanent EU Residence Permit entitles the foreign national to obtain a residence title limited in time in another Member State of the European Union. The prerequisites for obtaining this permit are the following:

  • the foreign national has held a residence permit in Germany for five years,
  • the living expenses of the foreign national and his/her family members are covered by fixed and regular income (sufficient health insurance cover, sufficient means  to cover the costs of living),
  • the foreign national has German language skills at level B1,
  • the foreign national has basic understanding of the legal and social system and of living conditions in Germany,
  • residence is not precluded for reasons of public order or safety,
  • the foreign national has sufficient living space available.

 

3. Right of Residence in Germany - Employees

For EU citizens and nationals of the countries belonging to the European Economic Area and for those of Switzerland, the freedom of movement of workers applies in general. They do not need a work permit to work as an employee in Germany. For EU citizens, citizens from the European Economic Area and citizens of Switzerland, legal residence indeed often results from the fact that they are working as employees in Germany. 

In contrast, foreign nationals from a third country (countries not belonging to the European Union, the European Economic Area and Switzerland) may on principle work in Germany only, if this is expressly stated in the residence permit. These foreign nationals therefore always require a residence title and a work permit in order to be able to work as employees in Germany. 

Both the residence permit and the work permit are applied for with the immigrant authority. In the internal contact between the German Federal Labour Office and the immigration authority, the German Federal Labour Office consents to or rejects the application for the work permit. The prerequisites for the consent by the German Federal Labour Office to taking up gainful employment are in particular:

  • there must be a concrete job offer,
  • the employment is necessary for Germany as an economic centre, taking the situation in the labour market and the need to fight unemployment into consideration,
  • no employee with higher-priority rights is available for the concrete job (Germans, nationals of the EU, of the European Economic Area or Switzerland or foreign nationals who already hold a work permit),
  • the working conditions are comparable to those applying to national workers.

The imminent employment of a foreign national from a third country as an employee under certain prerequisites makes it possible to obtain a limited residence permit in Germany. On principle, the residence permit is limited in time to the duration of the work. After five years of legal residence in Germany, a foreign national may obtain an unlimited residence title, subject to further prerequisites.

A special provision in addition applies to foreign nationals holding a university degree. Subject to certain prerequisites, they may obtain an EU Blue Card which constitutes a special residence title. Residence in Germany within the scope of the EU Blue Card serves the purpose of pursuing an employment in Germany that is commensurate with the qualifications.

4. Right of Residence in Germany - Self-employed Persons

For EU citizens and nationals of the countries belonging to the European Economic Area, the freedom of movement of workers applies in general, so that they are able to become self-employed in Germany without holding a residence permit. 

Foreign nationals from third countries (i.e. countries not belonging to the European Union, the European Economic Area, and Switzerland) may obtain a residence title by exercising a self-employed activity. The general prerequisites for the granting of a residence permit for the purpose of exercising a self-employed activity are:

  • there is an economic interest or regional need for the execution of the activity,
  • the activity suggests that there will be a positive impact on the economy,
  • the financing of the activity is secured.

Whether these prerequisites are fulfilled in the individual case is also assessed on the basis of the viability of the business idea, the entrepreneurial experience of the foreign national, the amount of capital employed, the impact on the employment and training situation and the contribution to innovation and research. To enable the competent authority to examine the application, foreign nationals are as a rule obliged to submit many documents. Among these are the company profile, business plan, business concept, funding plan, CV describing the professional career, evidence of qualifications, proof of health insurance cover, and tenancy agreement or evidence of residential property. 

When the foreign national is older than 45 years, s/he is moreover granted a residence permit for the time of execution of self-employed activity only, if s/he has made adequate provision for retirement. Adequate provision for retirement means a monthly retirement pension of EUR 1,109.88 for a minimum period of 12 years or assets in an amount of EUR 180,000. 

The residence permit is limited for a maximum period of three years. In the event that the company successfully established itself and achieved its objectives, and the foreign national is able to provide sufficient means of subsistence for him/her and his/her family members from the income, a settlement permit may be granted. Sufficient means of subsistence in addition includes sufficient health insurance cover and sufficient living space. This settlement permit then grants the foreign national an unlimited right of residence in Germany. 

The formation of a company for the purpose of becoming active as the managing director in Germany may under certain circumstances create the prerequisites for obtaining a residence title. It must be taken into consideration that the mere fictitious formation of a company is not sufficient and may lead to expulsion. Whether a self-employed person is granted a residence title is always a case-by-case decision. The formation of a Germany company which in fact can also be controlled from abroad is in itself not a basis for receiving a residence title.