German law does not restrict foreigners from owning shares in German companies: a citizen of any country can found a GmbH or UG. However, running the company and opening a bank account involve practical legal issues.

The legal position of a non-resident founder

The GmbH Act does not require a founder to have German citizenship, a residence permit or residence in the EU: a foreigner can own 100% of a German company. The founder can come on a short-stay visa to sign the deed before a notary or grant a power of attorney to a representative.

Requirements for the managing director (Geschäftsführer)

Unlike a shareholder, the managing director bears civil and criminal liability, for example for filing returns on time and for insolvency. The law does not require the director to have a residence permit or the right to enter Germany at any time; most higher regional courts have abandoned that former requirement. However, if the director will work in Germany, they need an appropriate residence permit, and banks and authorities expect them to be reachable. This is why a resident of Germany or the EU is often appointed.

Getting through the bank's compliance checks

The hardest hurdle for a foreign founder is often opening a business account with a German bank. German banks must apply strict checks on the source of funds (Mittelherkunftsnachweis). Without a local residence permit or a resident director, the risk of refusal rises sharply.

A residence permit for self-employment under Section 21 AufenthG

Owning a company does not in itself give you the right to live in Germany. If the founder plans to move to Germany to run the business personally, they apply for a residence permit for self-employment under Section 21 of the Residence Act (AufenthG), showing an economic interest and secured financing.

What to check

  • Prepare proof of the legal origin of the founder's personal funds in English or German.
  • Consider appointing a local managing director to make dealing with banks easier.
  • Agree the articles of association with a notary who is used to working with foreign powers of attorney.
  • Do not start operational deals before receiving the official commercial register extract (HRB).

Example situation

An entrepreneur from Kazakhstan sets up a German GmbH, appoints a specialist living in Germany as second managing director, opens an account with a commercial bank within two weeks and successfully supplies European customers.

Next step

Setting up a company as a non-resident is legal and realistic; the critical success factors are a transparent source of funds and a reliable managing director.

Official information on this topic

Checklists and examples are organisational recommendations. Requirements depend on the procedure, the city and your situation; check them with the relevant office before you act. Please discuss legal and tax questions with an authorised professional.

This article was prepared with the help of AI. The example illustrates the approach and does not describe a client case.