Germany: Is The Newly-Enacted Residence Act a Cure For Germany’s Soccer Woes?

Last Updated: 16 September 2004
Article by Jörg Rehder

Though tongue in cheek, some have recently concluded that there is a direct correlation between Germany’s migration policies and its showing in major international soccer tournaments, with the reasoning that Germany may need to add some top players from foreign countries to be competitive. Shortly after Germany’s poor performance in the 2000 European Soccer Championship, Chancellor Schröder introduced the "Green Card". Foreigners holding a Green Card are permitted to work in the IT and software sectors in Germany for up to five years. The introduction of the Green Card was a fundamental change in Germany’s migration policy as it was the first time that foreigners were permitted to work in Germany based merely on their high qualifications. In 2002, when Germany made it all the way to the finals of the World Cup, the German legislature did not introduce any migration policy changes. This summer Germany once again had an abysmal showing in the European Soccer Championship. The response? The passage of the Act Governing the Residency, Employment and Integration of Foreigners in Germany (otherwise known as the "Residence Act"), a statute which is to open Germany’s labor market to highly-qualified foreigners.

It has become apparent that despite an unemployment rate that is hovering at about 10%, Germany has a relatively high number of unfilled positions for highly-qualified people. Once the Residence Act enters into effect on January 1, 2005, it is hoped that employers will be able to hire top foreign engineers, scientists, researchers and business people more easily to fill these jobs (and maybe the Residence Act will facilitate the German Soccer Association’s efforts to attract the world’s top foreign soccer players to Germany’s national team).

Though the Green Card is often seen as a forerunner to the Residence Act, there are significant differences between the two. First, the Residence Act is not limited to the IT and software sectors, but instead applies to all business sectors. Second, there is not a maximum number of work permits that may be issued under the Residence Act (the Green Card is limited to 20,000 people). Finally, residence permits issued under the Residence Act may be permanent, unlike the Green Card which was limited to five years. For purposes of this article, the two most significant provisions of the Residence Act are that (i) highly-qualified foreigners may work in Germany because of their skills and know how, and (ii) foreign investors who invest capital and create jobs will be entitled to pursue self-employment or to work as an entrepreneur in Germany.

As for highly-qualified foreigners, they may be entitled to a permanent residence permit if they can demonstrate that they are (i) highly-qualified or recognized scientists or scholars, or (ii) specialists with unique qualifications or managers with unique skills who will earn at least two times the then-current social security contribution ceiling (the ceiling is currently EUR 41,850 per year, which is equal to slightly more than U.S. $50,000 per year). In addition to having to be highly-qualified, the authorities must be satisfied that the applicant will be able to integrate him/herself into German society and will not become a welfare case. These provisions obviously give the authorities great discretion to decide whether to grant such a residence permit, but it is hoped that employers will soon be able to attract highly-qualified employees to Germany more easily as a result of this new law.

Also, borrowing a page from U.S. legislation, foreigners will be able to apply for permanent residency in Germany if they invest at least EUR 1 million (approximately U.S. $1.2 million) and create at least ten jobs in Germany. This provision is very similar to a U.S. statutory provision that has been in place since 1990. In the United States, if a foreigner invests at least U.S. $1 million (or U.S. $500,000 in economically-depressed areas) and creates at least ten jobs, he will be able to obtain permanent residency in the United States. However, for a number of reasons, the U.S. program has met with only mixed success. Much like in the United States, the investor in Germany will initially be entitled to a conditional residence permit for three years (in the United States it is for two years) during which time the entrepreneur must realize his business plan. If, after three years, the authorities determine that the entrepreneur has satisfied his investment plans and created the promised jobs, they will remove the conditional status from the residence permit and issue a permanent residence permit.

As is always the case with significant new legislation, it remains to be seen whether the new law will lead to a reduction in Germany’s unemployment rate and cause Germany to be able to attract highly-qualified or entrepreneurial foreigners. However, one step in the right direction has already been taken. Ailton, a Brazilian who led the German soccer league in goals last season and has been playing in Germany since 1998, recently announced that he would be excited to play for Germany during the 2006 World Cup. It is probably not fair to credit Ailton’s statement to the Residence Act, but at this point, we will take what we can get.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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