Self-Employment in Germany – Residence Permit under Section 21 German Residence Act

By Attorney-at-Law Dr. Theresa Rath

Self-employment in Germany: Who may obtain a residence permit under Section 21 Residence Act?

Germany allows foreign entrepreneurs, founders and certain managing directors to obtain residence permits for self-employment under specific conditions. The relevant legal basis is Section 21 German Residence Act.

The provision does not only apply to traditional company founders. Managing directors and legal representatives of partnerships or corporations may also fall within Section 21. At the same time, careful distinction from employment-based residence permits remains important because different immigration categories may apply.

Self-employed or employee? Why classification matters

Not every economic activity qualifies as self-employment for immigration purposes.

Indicators supporting self-employment may include:

By contrast, fixed instructions, integration into another organisation or employee-like conditions may indicate employment rather than self-employment. Classification can significantly affect immigration options.

Which requirements apply under Section 21?

Residence permits generally require several cumulative elements:

Intentions alone are insufficient. Authorities commonly assess whether the project appears viable and economically sustainable.

Which factors are examined?

Authorities make forward-looking assessments and frequently consider:

Statements from chambers of commerce or other competent bodies may also become relevant.

Additional requirements for applicants above 45

Applicants over 45 are generally expected to demonstrate adequate retirement provision.

Relevant considerations may include:

Exceptions remain possible depending on individual circumstances.

Can permanent residence become available later?

Residence permits under Section 21 are initially temporary. Under certain circumstances, permanent residence may become possible after three years.

Relevant factors include:

Permanent residence pathways for successful entrepreneurs are among the distinctive features of Section 21 and may support long-term settlement in Germany.

Is a minimum investment amount required?

Fixed thresholds have largely been abandoned. Authorities focus more strongly on viability, financing and economic impact.

Can small businesses or online businesses qualify?

Potentially yes. Authorities usually assess whether economic relevance and sustainability can be demonstrated.

Does Section 21 only apply to founders?

No. Managing directors and representatives of companies may also qualify in certain circumstances.

Can permanent residence become available after three years?

Under specific conditions, permanent residence may become possible following successful business activity and secured livelihood.