Foreigners‘ Law: Even a sole shareholder with sufficient rental income is required to submit a business plan.

OVG Berlin Brandenburg, January 5, 2017, OVG 3 B 25.17

Case Summary: Lawsuit for the Issuance of a Visa for Self-Employment

In the present case, the plaintiff, a Turkish national, seeks the issuance of a visa in accordance with Section 21 of the Residence Act (AufenthG) to engage in self-employment as the managing sole shareholder of K… GmbH in Germany. Specifically, the plaintiff plans an investment project and seeks a residence permit for commercial activities. Initially, the plaintiff applied for a visa at the Consulate General of the Federal Republic of Germany in Istanbul, but the application was rejected. A subsequent remonstration was also denied by decision on July 3, 2012. The plaintiff then filed a lawsuit at the Administrative Court of Berlin, aiming to compel the issuance of the visa. This lawsuit was dismissed by judgment on March 21, 2013.

Rejection Reasons by the Administrative Court of Berlin

The Administrative Court of Berlin argued that the plaintiff had no entitlement to a visa for the purpose of self-employment. The decision was based on Section 21(1) of the Residence Act, which makes the issuance of a residence permit contingent, among other things, on the public interest in the applicant’s self-employment. The plaintiff must prove that his business activity is economically viable and that he can succeed in the market with his business idea.

The court found that these requirements were not met, as the plaintiff failed to present a viable concept for his planned commercial activity. During the oral hearing, it became clear that the plaintiff’s business plan lacked sufficiently detailed information about the planned business activity and its prospects for success. It was unclear how the plaintiff would be able to support himself with his venture.

Additionally, the court noted that even if Section 21(1) of the Residence Act potentially conflicted with the „standstill clause“ of Article 41(1) of the Additional Protocol to the Association Agreement between the European Economic Community and Turkey, this issue was irrelevant to the case. Regardless of this question, the business model presented by the plaintiff was insufficient to warrant a positive decision.

Contradictory Jurisprudence on the So-Called „Goodwill Clause“

The plaintiff also invoked the „Goodwill Clause“ from the Treaty of Establishment and Shipping between Germany and Greece during the proceedings. This clause stipulates that an individual’s personal interests must be considered when deciding on the purpose of their stay. The plaintiff argued that general considerations, such as the lack of overriding economic interest or specific local need, should not be sufficient grounds for denying a residence permit.

The court disagreed with this argument. It pointed out that, even under the earlier Aliens Act of 1965, similar requirements were in place, requiring a foreign national to provide the necessary information for self-employment. The court held that, under current Residence Act regulations, the personal interests of the foreign national are only one aspect of the discretionary decision, and this does not override the obligation to present a viable business concept. In this case, the plaintiff had not submitted either an adequate business plan or the necessary evidence of successful commercial activity.

Appeal by the Plaintiff and New Business Plan

The plaintiff appealed the judgment of the Administrative Court and introduced a new business plan in his defense. He also argued that, due to his considerable personal wealth and previous investments in Germany, there was no need for him to submit a business plan. He provided evidence that he owned three rented properties in Germany valued at approximately €196,000. Additionally, he had made investments in Germany exceeding €500,000.

The plaintiff further argued that his personal wealth would secure his livelihood, meaning he was not dependent on the earnings of his business. The Administrative Court should have considered this before rejecting his application. He also noted that the financial losses of his company in 2011 were due to the bankruptcy of a German business partner, not his own errors.

The court found these new arguments insufficient to justify granting the plaintiff a residence permit. The newly submitted business plan was, in the court’s opinion, even less detailed than the previous one. It lacked specific information about the planned business activity, production processes, and supply and distribution channels. The court emphasized that without a sufficient description of the business idea, a positive assessment of the prospects for success could not be made.

Negotiations on Visa-Free Travel and Investment Protection Agreement

The plaintiff also referred to ongoing negotiations between Germany and Turkey regarding visa-free travel for Turkish businesspeople, arguing that a visa should be granted in light of these negotiations. He also invoked the German-Turkish Investment Protection Agreement and its „most favored nation“ clause. However, the court rejected this argument, stating that neither the visa-free travel negotiations nor the Investment Protection Agreement granted the plaintiff a right to a visa for self-employment.

In conclusion, the court confirmed that the plaintiff had no claim to a visa, as he had failed to present a viable business concept or sufficient evidence for the intended activity. The submission of a new business plan and references to his personal wealth did not change the court’s assessment of the facts. The plaintiff’s appeal was thus unsuccessful.