Business immigration to Germany: what you need to know in 2021
Articles about investment methods and business opportunities abroad are popular in the Directors Club, collecting thousands of reads and hundreds of reposts. We continue the cycle with material for those who want to open a business in Germany, buy real estate there or emigrate with their family.
We have tried to answer the most pressing questions that are heard from time to time in the comments:
Does the purchase of real estate give the right to live in the country
The owner does not automatically receive a residence permit, but having his own home is a weighty argument when officials are considering an application in the future. But you can legally apply for a long-term visa, which allows you to stay in Germany 180 days a year (up to 90 days in half a year).
If you are not planning to move yet, the purchased housing can be profitably rented out by entrusting the solution of all organizational issues to the local manager. The profitability of such an investment is 4-5%.
How to start a business in Germany on your own
There are several forms of ownership, among which foreign entrepreneurs usually choose GmbH - an analogue of a domestic LLC, the founder and director of which can be one person.
Here is a list of the main stages that separate an idea from its practical implementation:
1. The choice of activities, which will be further indicated in the constituent documents of the company, and the form of ownership.
Please note that many important points for the business depend on the form of ownership, for example, the liability of the owners in the event of bankruptcy of the company and the amount of taxes that will have to be paid.
2. Choice of name. You need to make sure that no one has used it before by yourself checking the option against the databases of the German Federal Patent Office and the Federal Trade Register, or by contacting a specialist.
If you do not attend to this issue in advance, the notary, having found a match, will refuse to register the company.
Germany is a small business country.
Small family enterprise (SME) is called there a company in which no more than 9 employees work on a permanent basis and where the annual income does not exceed 700 thousand euros. Today, there are almost 3.5 million small businesses in Germany, accounting for 80% of all businesses in the country. These enterprises employ 70% of the country's working-age population, which thereby provide 41% of all tax payments - half of the country's total GDP.
Small business in Germany helped the rapid growth of the German economy back in the 50-60s of the last century, providing the country with half of the jobs. And in 1978, the German government adopted a program to stimulate savings for starting their own business, thanks to which individuals began to issue loans for quite long periods at low interest rates with a fixed interest rate and repayment of the loan strictly according to the plan drawn up even before the conclusion of the loan agreement.
Features of small businesses in Germany
Today in Germany there are 600 thousand craft small businesses, covering 97 different activities. Almost a quarter of them work for export and thus provide 17% of the country's total foreign trade. Another 860 thousand people are representatives of the liberal professions, such as lawyers, consultants, medical workers, auditors. They work according to the principle "I am my own enterprise", provide jobs for another 2 million people and are second only to trade workers and artisans in terms of economic return. The volume of investments in the development of small businesses in Germany is 51.5% of all financial investments of the country. Small businesses take loans from the state in the amount of 50 billion euros annually.
Today in Germany, people from Serbia, Montenegro, Turkey, Algeria, Morocco, Poland, Croatia and other countries are engaged in the provision of various services. The emigrants open small restaurants with national cuisine, private dry cleaners, grocery stores, laundries, hairdressers, tobacco shops, ateliers and shoe repair shops.
This business situation suits the Germans very much. They themselves prefer to work in the field of information technology, research in the field of chemistry and pharmacology, biological laboratories and communications, where a high educational and intellectual level is required.
Government support for small businesses in Germany
One of the features of small business in Germany is the development of innovative business. In the early 1980s, a commission to stimulate technology transfer and an advisory office at the Chamber of Industry and Trade were established. In the 90s, technoparks, state and national programs for preferential and subsidized support of small companies were organized. Today, there is state support for small innovative business, namely, technological centers and research institutes have been opened, a special transport network has been developed.
Any native of Germany who decides to start a business can easily get a preferential state loan of up to 50 thousand euros for 20 years. For the first 2 years, an entrepreneur can use the funds free of charge - there is no need to pay either the debt or the interest on the loan. For the next 8 years, it is necessary to pay only preferential interest on the loan to the bank - this is 4-5% per annum. And the very amount of debt must be repaid only from the eleventh year of the loan. In addition, the German government compensates for various research and scientific work up to 40 thousand euros.
Small German companies can be safely called a real forge of personnel, because it is at such enterprises that 80% of university graduates begin their work. It is small businesses that conclude more than 80% of qualification improvement agreements with universities.
Business Immigration: What It Is
The countries of the European Union, including Germany, offer a variety of immigration programs for investors and businessmen. Thanks to them, persons who own successful companies or have invested at least 60-500 thousand euros (depending on the host country) in the local economy, receive a residence permit and the opportunity to develop their business in the EU.
Registering a business in most European countries is not very difficult, the main criterion for obtaining a residence permit is success: no tax debts, stable income for several years.
In Germany, issues related to the stay of foreigners in the country are regulated by the Law on Residence, Labor and Integration of Foreign Citizens in Germany - Aufenthaltsgesetz — AufenthG dated 30. 7. 004.
In recent years, the requirements for foreign businessmen in Germany have become easier, especially after the amendments to the law dated 01. 8. 2021: the limits on job creation, on the amount of investment have disappeared. According to paragraph 21, a business immigrant can apply for a residence permit in the Federal Republic of Germany, provided:
- the presence of economic attractiveness or the need in Germany for the proposed entrepreneurial activity;
- the positive impact of business on the economy of the region or the state of the Federal Republic of Germany (the business plan is checked by the regional Chamber of Commerce and Industry);
- sufficient financial support for doing business at the expense of his own assets or guarantees of creditors;
- the entrepreneur has high business and personal qualities that guarantee successful implementation of a business idea: high qualifications, dedication, creativity, law-abidingness.
Germany is in many ways ahead of other developed countries, making it more accessible to enter the country for qualified business professionals.
Business immigration to Germany: the most common ways
A business immigrant can exercise his right to obtain a residence permit in Germany in several ways:
- move your business to Germany or create a subsidiary;
- create a new company in Germany within the framework of an existing business;
- open a new one direction of its business activities and create an independent company in Germany;
- buy a share in a German company (become one of the directors) or acquire a ready-made business in the country.
The main requirement is that there are no "gray" schemes, the business should not be fictitious, but real. All of these methods of business immigration are characterized by a number of common advantages and disadvantages.
- doing business in a stable legal state: without corruption, raiding, nepotism;
- government subsidies and subsidies for innovative technologies, development of underdeveloped regions, eco- technologies;
- long-term loans for clients with an impeccable reputation (1.1% per year);
- well-developed infrastructure, high purchasing opportunities of the population;
- reduced VAT rates for the production of agricultural products, the provision of hotel services;
- the opportunity to open branches of the company outside Germany.
The idea of starting a business in Germany looks tempting. It is beneficial for many Russians to start such a business, because these are guaranteed conditions for conducting a legitimate business and respecting all the rights granted by German law. It is also an excellent opportunity to market production and the absence of restrictions for foreigners.
Pros and cons of doing business in Germany for Russians
The main advantages of opening a company in this country are:
- Low interest rates on loans, which range from 4%. To obtain a large loan, you will need a good credit history.
- Highly qualified specialists who will help you develop and raise your business. Even the seller in the grocery store has a special specialized education, which he studied for at least 2-3 years.
- There is no minimum wage, which means that staff can work as long as it takes to run a business. If a person works one hour a month, he will receive wages exactly for this hour of work.
- All communications with the tax service usually take place in absentia. Basically, the first three years of the service practically do not touch the businessman. But after this period, all your data will be carefully examined.
- You will have the opportunity to sell goods manufactured under the German brand.
- Ability to apply for a permanent residence permit for you and your family members.
- Doing a transparent business and the ability to expand and open branches in the EU.
- Insurance at special rates, receiving subsidies and loans from banks in Germany.
But there are also disadvantages. These include:
- sufficiently high competition that can destroy the business;
- small margin, when compared with the Russian one;
- completely different mentality of people, including employees, customers and partners;
- if you violate the laws, severe sanctions will be applied.
If you look at the situation in general, opening a business in Germany has more advantages than disadvantages, so it's worth trying your hand.
Forms of ownership in Germany
There are several types of ownership, which we will look at next.
Joint Stock Company
This is a form of company called Aktiengesellschaft (AG). All of its activities are regulated in accordance with special laws on joint stock companies, which, in turn, are legal entities and are liable according to the allocated shares and the availability of shares.
One or more members have the right to create such a society. They can be people or organizations.
Participants divide the authorized capital of the company into shares, the value of which cannot be less than one euro. In the event that the price is lower, the shares are considered invalid.
Germans are also late for meetings, and their top managers don't always drive modest cars. Igor Knyazev, consultant, business advisor on entering new markets, talks about stereotypes and myths that have formed about businessmen and companies from Germany. What is true and what is fiction in them: read interesting observations that help to adopt the useful experience of German entrepreneurs.
- Today there are many discussions about what our business environment lacks and what exactly we ourselves can change in our daily work in order to realize the potential of human capital and come closer to the level of development of the business community and the economy of developed countries ...
This year I attended an internship organized by the Federal Ministry of Economics and Energy of Germany and GIZ GmbH, a state-owned company for the development of international cooperation. I will share experiences and observations that, perhaps, can induce someone to think and start changing their daily business habits.
Myth All Germans are punctual
In fact, the more you travel, the more you realize that we all have a lot in common. And at the same time, you realize how useless stereotypes are.
Germans are different. And they can be late too. Planes are running late. The trains of the largest state-owned company, the operator of the railway transport network Deutsche Bahn AG, are late. But at the same time, there are indeed signs of mutual respect in Germany. How is this expressed? For example, if your partner is late, then as soon as he finds out, as a rule, he will contact you and inform you about the delay and the time required to overcome it.
The same goes for doing business.
Myth All Germans are boring
In fact, in Germany, unlike, say, the Slavic, Arab, Asian states, when communicating, people really noticeably separate work and personal issues. However, small talk is always inherent in doing business. Trust remains a key factor in starting a business.
An interesting feature is the fact that when doing business, the main thing always comes from the very beginning. Germans value both their time and the time of a partner, therefore in a business environment it is customary to speak simply, to the point and discuss the essence of the most important issue as early as possible. And by the way, as a rule, the Germans mean what they say. And they say what they mean. In other words, "yes" most likely means "yes." And no means no.
Myth All Germans are stingy
Understanding the differences between Protestantism and Catholicism lies at the heart of the concept of the German mentality. In regions dominated by Protestants, such as northern Germany, this is especially evident. In Protestantism, in the consciousness of the individual, there are two worlds - the world of the family and another world side by side, including work. And people tend not to confuse one with the other.
This also applies to the practice of using even such a trifle as a car, in which a business owner or top manager gets to work. In addition to the fact that any prestigious car is additionally subject to higher taxes, among the top it is much more common to use fairly modest car models, comparable to those on which other employees of the company can come to work. And even if the owner is a multimillionaire, this will hardly be manifested through ostentatious external signs of success, so valuable, for example, for the Asian, Arab and Slavic mentality. Why?