Foreign management in Germany

EU citizens need a valid ID or passport for entry into the Federal Republic of Germany. The requirement of an EC residence permit has been abolished. EU citizens are now issued with a certificate of their right of residence. Therefore, they are not obliged to initially contact the immigration authorities. In this respect, only the general reporting obligations exists for them.

Nationals from third countries need a valid and recognized national passport and a residence permit in the form of a residence permit for the purpose of self-employed activity. It is issued by the immigration authority for a period of at least three years and only upon application, in compliance with following conditions:

• Superior economic interest or special regional need
• The prospect of positive impact on the economy
• Secure financing

It also takes into account the expected impact on the training and employment situation in Germany, whether the underlying business idea is viable and how big the investment is, as well as the professional qualification of the business owner/applicant. The applicant is also required to provide an appropriate pension scheme if he/she is above 45 years old.

Tip: In the face of these sometimes-complex issues, you should be prepared to make decisions based on the expertise of the regional trade authorities, the relevant professional representatives, the Chamber of Commerce and, if applicable, the competent professional licensing authority.

German law generally does not require prerequisites for eligibility for shareholders, managing directors, permanent representatives or business owners who are not in their place of residence or habitual residence. Foreign nationals who are resident or habitual residents abroad may therefore be appointed to the managers of German subsidiaries, branch offices, permanent business establishments or representative offices. When appointing a third country national as managing director, it should be noted however that, proof of current possible entry into the Federal Republic by means of a passport and visa is required.

If subsidiaries, branches or permanent business establishments are run by foreign natural persons, it is to be noted that such persons - apart from EU citizens - require a residence permit in accordance with the Law on foreign nationals, which allows the intended employment. This residence permit is required regardless of whether those concerned wish to be resident in the Federal Republic of Germany in the long term.

The residence permit may however be granted under facilitated conditions if while retaining their usual residence abroad, foreigners only conduct meetings or negotiations in the federal territory for foreign companies or, for example, they assemble or maintain installations, provided that their stay does not exceed a total of three months within a period of twelve months. If a foreigner already has a residence permit with the stipulation that independent entrepreneurial activity must not to be exercised, there is the possibility to apply for an amended to this stipulation at the immigration authorities.

A GmbH is managed and legally represented by its managing directors (Geschäftsführer). The corporation must have at least one managing director which can be a legal or a natural person. The managing director does not have to be a shareholder or a German resident and may receive an income for carrying out his duties, although this is not required by law. The shareholders have the power to exercise direct influence on the GmbH's management by issuing binding instructions or directions to the managing director. When no binding instructions are given, the managing director is free to act.