Administrative Court Berlin, September 11, 2020, Case No.: 31 K 462.19 V
To start a business in Germany, Chinese nationals generally require a valid residence permit. The type of residence permit depends on the nature of the activity:
Self-employment: Self-employment: To establish a business, particularly a start-up or a limited liability company (GmbH), Chinese nationals can apply for a visa for self-employment. This visa is regulated by Section 21 of the Residence Act (AufenthG). The issuance of the visa depends on certain criteria, such as the existence of an economic interest or regional need, the viability of the business idea, and securing funding.
Investor Visa: Germany does not have a specific „Investor Visa,“ but a residence permit for entrepreneurs can be granted based on Section 21 of the Residence Act if the planned business venture has positive economic impacts. There is no special "investor visa" in Germany, but a residence permit for entrepreneurs can be issued on the basis of § 21 AufenthG if the planned business has a positive economic impact.
Lawsuit for Issuance of a Visa to Pursue Self-Employment in Germany
In this case, the plaintiff, a Chinese national, sought the issuance of a visa to engage in self-employment in Germany. In the years prior, she had founded a company in China and subsequently established another company in Germany. However, her visa application, aimed at performing her duties as managing director of the company founded in Germany, was rejected by the relevant German authorities. The plaintiff filed a lawsuit against this decision and pursued her case in court. The administrative court, however, dismissed the lawsuit, as the plaintiff failed to meet all the necessary requirements for visa issuance.
Background and Application of the Plaintiff
The plaintiff is 32 years old and a Chinese citizen. She completed a degree in accounting at a technical college in China and, after an au-pair stay in Germany, worked as a financial advisor in Shanghai. In November 2018, she founded two companies: one in China and one in Germany. The German company was established by an authorized representative on her behalf, and the plaintiff assumed the role of sole managing director. According to the company’s articles of association, the business fields included international trade in household appliances and food, as well as organizing business trips and providing business consulting services.
In March 2019, the plaintiff applied for a visa at the German Consulate General in Shanghai to carry out her duties as managing director in Germany. Her application was initially assessed positively by the Chamber of Commerce and Industry in the region, and the relevant authority initially approved it. Nonetheless, the Consulate General rejected the visa application in May 2019. The reasoning given was that the plaintiff’s business plan was not sufficiently credible and there was suspicion that she was primarily interested in obtaining a long-term residence permit in Germany.
Rejection of the Visa Application and Reasons
The Consulate General cited significant doubts about the plausibility of the plaintiff’s business plan. It specifically criticized her inability to establish a clear connection between her professional experience and the planned business activities in Germany. Additionally, the financial projections in the business plan regarding the company’s development and its potential impact on the German labor market were not convincing.
During a personal interview, the plaintiff, according to the authorities, failed to convincingly explain how she intended to run the business in Germany and which products she would actually export. The company plan presented verbally deviated significantly from the details provided in the business plan, further deepening doubts about the feasibility of the project. Furthermore, it was noted that the plaintiff had paid a significant sum for services such as the company formation and the drafting of the business plan to a business center manager, which reinforced the suspicion that the true purpose of her investment was to obtain a residence permit.
Court Decision and Legal Reasoning
The court dismissed the lawsuit, upholding the decision of the Consulate General. The legal basis for the court’s assessment was Section 6(3) in conjunction with Section 21(1) of the Residence Act (AufenthG). According to these provisions, a visa for self-employment can be issued if there is an economic interest or regional need, if the activity is expected to have a positive impact on the economy, and if the financing of the venture is secured.
However, the court found that the requirements for visa issuance were not met. The plaintiff could not demonstrate either a clear economic interest or a regional need for her planned business activities in Germany. Her investment amount was significantly below the previous standard requirements, which called for an investment of €250,000 and the creation of at least five jobs. Although this regulation had been abolished, such criteria still served as a point of reference. Additionally, it was unclear whether and when the plaintiff would create jobs, as neither the business plan nor her statements during the interview provided concrete details.
Moreover, the court pointed out that the plaintiff’s business plan was not viable. The information regarding the company’s formation and its objectives were vague and sometimes contradicted the documents submitted by the plaintiff. Particularly, the discrepancies between the oral statements and the business plan raised serious doubts about the implementation of the venture. The lack of clarity regarding potential suppliers and the sourcing of products to be exported further contributed to the rejection.
Lack of Entrepreneurial Experience and Business Viability
Another key factor in the rejection was the plaintiff’s failure to demonstrate sufficient entrepreneurial experience. The business plan portrayed the plaintiff as a successful entrepreneur with extensive experience in trading baby and toddler products. However, the court could not corroborate this depiction, as the plaintiff stated in the personal interview that she had only engaged in such trading as a „hobby,“ generating a turnover of about €1,500 per year.
The court concluded that the plaintiff did not possess the necessary entrepreneurial skills to successfully run a business of this magnitude. This was compounded by the significant discrepancies between the business plan and the plaintiff’s personal statements. These inconsistencies led the court to question the viability of the proposed business.
In summary, the court ruled that the plaintiff did not meet the requirements for the issuance of a visa for self-employment under Section 21 of the Residence Act. Since the plaintiff failed to provide sufficient evidence of an economic or regional interest and lacked the necessary entrepreneurial experience, the lawsuit was dismissed.
Source: Administrative Court of Berlin
If you need assistance with starting a business in Germany, we are happy to advise you.
Important Note: The content of this article has been prepared to the best of our knowledge and belief. However, due to the complexity and constant evolution of the subject matter, we must exclude liability and warranty. Important Notice: The content of this article has been created to the best of our knowledge and understanding. However, due to the complexity and constant changes in the subject matter, we must exclude any liability and warranty.
If you need legal advice, please feel free to call us at 0221 - 80187670 or send us an email at or send an email to info@mth-partner.de info@mth-partner.de
Lawyers in Cologne advise and represent clients nationwide in immigration law.