Case Study: Overseas Investors Set Up German Trading Company (GmbH) II

The overseas investor is a private person who was managing director of a middle-sized Ltd. company. The company is involved in the import and export of goods, electronic equipment, measuring tools, metal, textiles, building materials and transfer of technical know-how.

The investor asked Sonnenberg Law Firm for advice on setting up a business in Germany, benefiting from the close relationship with the overseas company. After consultation the investor decided to establish a limited company in Germany (GmbH) and to act as the managing director, for which a residence permit for self employed persons is necessary. Sonnenberg Law Firm drafted the articles of association as follows (excerpt):

• Shareholders: investor (80%), his wife (20%)
• Registered capital: some tens of thousands of Euros
• Business areas:
  • Import, export and trade in investment goods; equipment and goods for textiles, households, foods and packaging
  • Marketing and consulting for German and European enterprises with activities in the household market

Sonnenberg Law Firm received all the necessary documents from the investor and prepared the visa application, esp. drafting the business plan showing the overriding business interest in the investor being in Germany. The preparation and consultation took about one month. The documents were forwarded to the investor, and following procedure he filed them personally at the overseas German embassy. Sonnenberg Law Firm forwarded copies to the relevant local authorities in Germany to speed up the procedure. The German embassy sent the filed application documents to the immigration office situated at the future business location, and Sonnenberg Law Firm kept in touch with the German authorities in order to prevent problems.

Having checked the application, two months later the local immigration office informed the German embassy that the application would be granted. The investor picked up his entry visa at the German embassy and came to Germany. One month later the articles of association were notarized and the investor was appointed as managing director, while the investor acted on behalf of his wife holding a proxy notarized by the German embassy. He opened the company’s bank account and transferred 50% of the registered capital. The bank statement was attached to the application for company registration.

After notarization, his entry visa was changed by the local immigration office into a residence permit for self employed persons which is limited to a one year period.

At the same time Sonnenberg Law Firm applied for development grants for foreign investors. The support program covers part of a founder’s expenses for consulting services. After company registration, the application was granted and the company received the grant.

Then Sonnenberg Law Firm applied for a tax number and the company started business. In the following year Sonnenberg Law Firm applied for an extension of the investor’s residence permit. The immigration office checked whether the business activities conformed to the business plan. The extension was granted the next month, for a period of one year.

Then the investor wanted to bring his wife to Germany. Her residence permit for family reasons was granted under usual circumstances, i.e. the investor has enough money to maintain his wife.

After three years residence as a self-employed person in Germany, the investor may apply for a settlement permit.