Residence Permit for Managing Directors in Germany

Self-employed or employed? The decisive distinction

Whether a managing director needs a residence title for self-employment (§ 21 AufenthG) or for employed activity (§ 19c AufenthG) is not a formality. It is the central immigration classification — and it depends not on the contract title alone but on the overall legal and factual structure, including the shareholding and voting rights, legally secured control, shareholder instructions, the service agreement and the managing director’s actual decision-making powers.

A managing director without entrepreneurial control will generally require an employment-based residence route. This immigration classification does not mean that the managing director is necessarily treated as an ordinary employee for every purpose of German labour, corporate, tax or social-security law. The organschaftliche position and representative authority are separate from the immigration classification.

The competent immigration authority assesses the classification on the basis of the individual corporate and contractual structure. Forming a GmbH — even as sole shareholder — does not automatically suffice to establish residence under § 21 AufenthG. The business concept, the actual activity and the financial substance must be presented convincingly.

Residence routes for managing directors — which apply

§ 21(1) AufenthG may apply where the shareholder-director carries out genuine entrepreneurial self-employment. The statutory assessment considers whether there is an economic interest or regional need, whether the activity is expected to have positive economic effects and whether its financing is secured. The viability of the business concept, entrepreneurial experience, capital commitment and effects on employment, training, innovation and research may be relevant. The general residence requirements, including secured subsistence, apply additionally.

§ 21(5) AufenthG concerns self-employed freelance activity. Acting as the corporate managing director of a GmbH does not ordinarily constitute a liberal-profession activity merely because the individual holds a professional qualification. A genuinely separate freelance activity must be assessed independently.

§ 19c(1) AufenthG in conjunction with § 3 no. 2 BeschV is the specific employment route for members of the governing body of a legal entity who are authorised to represent it, including a GmbH managing director without sufficient entrepreneurial control. The employment route generally involves approval by the Federal Employment Agency, including review of the employment conditions, unless a statutory exception applies.

An ICT Card under § 19 AufenthG may be relevant for a temporary intra-corporate transfer from an undertaking outside the EU to an entity belonging to the same undertaking or group in Germany. The applicant must fall within the statutory category of manager, specialist or trainee and satisfy the additional requirements concerning prior employment, the transfer structure and its temporary nature. Where the individual already holds an ICT Card from another participating member state, the special mobility provisions under §§ 19a or 19b AufenthG may also require consideration.

Which route is appropriate must be assessed in the individual case. We analyse structure, shareholding, voting rights and actual activity — and develop from that the legally sound classification.

The shareholder-managing director — a frequent and legally complex constellation

The shareholder-managing director — the person who simultaneously holds shares in the GmbH and manages it operationally — is a frequent and legally complex constellation. The immigration classification depends on whether the shareholding is sufficient to establish a position independent of instruction.

A majority of the voting rights is a strong indication of entrepreneurial control, but there is no single statutory shareholding threshold that determines every immigration case. A legally secured and comprehensive blocking minority or other control rights may also be relevant, while a nominal majority may not resolve every question by itself. The immigration classification should not be equated unthinkingly with the assessments used for social-security or labour-law purposes.

Those who do not document the corporate structure clearly from the outset — in the articles of association, the shareholders’ list, the service agreement and the business plan — risk the authority reaching a different classification than expected. The corporate documents should reflect the intended legal and operational structure consistently; they should not contain artificial control rights or contractual provisions that will not be implemented in practice merely to support a particular immigration classification.

Business plan and economic viability

For residence under § 21 AufenthG, the business plan is a central evidentiary document. It should explain the business model, financing, market and German economic connection, the applicant’s entrepreneurial role and qualifications, realistic revenue and cost assumptions and the expected economic effects. The authority may examine whether the proposed activities in Germany and the applicant’s operational role are plausible and consistent with the business concept.

General or unsupported projections may lead to additional queries or may weaken the application. We assess the business plan and corporate structure from an immigration and corporate law perspective, so that the project can be presented coherently and credibly.

GmbH formation and residence — timing matters

Formation of or participation in a GmbH does not in itself confer the right to enter Germany, reside here or carry out managing-director activities in Germany. The corporate appointment as managing director does not itself authorise the person to enter Germany or carry out operational management activities here.

Operational managing-director activity in Germany may begin only once the individual holds a visa, residence title or existing residence status that expressly authorises the relevant activity. Filing an application alone does not generally create a right to commence the activity. Where § 81(4) AufenthG applies, it generally continues the existing residence title and its existing employment or self-employment conditions; it does not automatically authorise a new managing-director activity that was not previously permitted. Taking up the activity without the required authorisation may constitute unauthorised gainful activity and create immigration and compliance risks.

A GmbH can generally be formed and registered by foreign shareholders without the shareholder already holding a German residence title. Corporate formation and immigration authorisation are separate matters. We accompany GmbH formation and residence proceedings in a coordinated way — so that the commercial register entry, articles of association and residence title application are aligned.

Service agreement, remuneration and their immigration significance

The managing director’s service agreement is more than a corporate law document. It shows the immigration authority which tasks the managing director actually takes on, how the activity is structured and how the relationship with the company is legally constituted.

The remuneration and financing structure depend on the applicable residence route. Under § 21, subsistence may be demonstrated through a credible combination of available funds, remuneration and realistically supportable business income. Anticipated profits or distributions that are uncertain or not yet available should not be presented as automatically sufficient. For an employment-based managing-director route, the service agreement should provide clear duties, working conditions and appropriate remuneration; the employment conditions may also be reviewed in the Federal Employment Agency approval procedure.

We review managing director service agreements in the context of immigration law, corporate law and the overall economic structure.

Advice at the intersection of immigration and corporate law

Corporate and immigration law are legally distinct but often require close coordination where a foreign shareholder or managing director intends to work operationally in Germany. Advising only on immigration without understanding the corporate structure may miss decisive classification questions. Advising only on corporate law without keeping immigration law in view may lead to a situation where the formation is completed but the managing director is not yet authorised to act.

We combine both areas in one mandate. This concerns in particular the alignment of the articles of association, business plan, service agreement and residence title application — as well as the coordination of the commercial register entry and the initiation of proceedings with the immigration authority. We advise in German and English. Advice in Russian may be available by prior arrangement.

Advice is provided by Alexander Kagan, a German Rechtsanwalt advising on immigration and corporate-law matters and a member of the Hanseatic Bar Association Hamburg (Hanseatische Rechtsanwaltskammer Hamburg). More about Alexander Kagan →

The content of this page is general information only and does not constitute legal advice. The immigration law classification depends on the circumstances of the individual case.